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Leasehold reform case rules in favour of freeholders

A landmark case that could have reduced leasehold extension costs by thousands of pounds has gone against leaseholder reform campaigners. They had argued that the current system was unfair and penalised those with only a short time left on their lease.

However, the Court of Appeal ruled that Chelsea-based Sloan Stanley Estate was within its rights to charge a leaseholder £420,000 to extend their lease beyond its remaining 23 years.

The court also put the ball for reform firmly in the court of the Law Commission, which has been charged by the Government with simplifying the way leaseholds are valued within the current legislation, the Leasehold Reform, Housing and Urban Development Act 1993.

Surveyor James Wyatt of Parthenia Valuation had brought the challenge to the Court of Appeal, arguing that a new statistical system, known as the Parthenia model, would be fairer and reduce the costs to leaseholders for extensions and freehold purchases by up to 50 percent.

‘Deeply disappointing’

Paula Higgins of the Homeowners Alliance, which has been pushing for leasehold reform, said the ruling was “deeply disappointing”.

She said: “This ruling means leaseholders will continue to hand over huge amounts to their freeholders for very little in return. The method of lease valuation currently employed is over two decades old and is no longer appropriate.

“The Government must now act to ensure there is a fairer way to calculate leasehold extensions that is not subjective and favours the freeholders over leaseholders. The fight must go on.”

Mr Wyatt added: “Now we need the government to act.”

Housing Minister Sajid Javid has described the current leasehold system as “feudal” and hit out at “unfair and abusive” practices from freeholders dealing with leaseholders. He announced a ban on newbuild leasehold sales in December and said legislation outlawing that practice and setting ground rent on new long leases for flats and houses at zero would be introduced.

There are around 4.1 million leasehold properties in England and Wales with around 2.1 million with less than 80 years left on the lease. Of those, around 500,000 are in London.

When you’re buying leasehold, you need expert legal advice from the start. Fridaysmove can put you in touch with an experienced property solicitor who will act in your best interests so you will not face a huge bill further down the line. Call Fridaysmove now on 0800 038 6446.

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