Landmark ruling dashes hopes for leaseholders

Landmark ruling dashes hopes for leaseholders

Court rules no changes to lease extension costs

A ruling by the Court of Appeal has rejected changes to the formula for calculating the cost of lease extensions. Leaseholders all over the country had been hoping that the court would accept an alternative formulat. If it had, it would have meant lower costs for obtaining a lease extension, potentially saving thousands of pounds.

The Mundy v. Sloane Stanley Estate case centred on a flat in Chelsea, where property prices are among the most expensive in the world. The flat had only 23 years left on the lease and the freeholder was demanding £420,000 for a lease extension. Surveyor James Wyatt, who brought the case, argued that the current formula favoured freeholders and that his ‘Parthenia’ model was fairer to leaseholders. He recently explained to The Guardian why he had brought the case“I hear from lots of people, many of them pensioners, who are trapped in declining leases and can’t afford to extend them. For example, I know one where the lease extension should be £30,000 but the freeholders want £50,000 and the pensioners can’t afford it.”

Impact on wealthy freeholders

If the case had gone in Mr. Wyatt’s favour, it would have had a serious impact on many wealthy freeholders, particularly in London. Large landowners such as the Grosvenor Estate, owned by the Duke of Westminster, own freeholds worth many millions of pounds.

The Government is reviewing the current system of leasehold property ownership after recent well-publicised scandals. Homes that are unsaleable because of onerous ground rent terms, new-build houses sold as leasehold rather than freehold, and excessive costs to buy freeholds have all been in the news. In December, the Communities Secretary, Sajid Javid, said. “It’s unacceptable for homebuyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms. It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices.”

What to do if you want to extend your lease

If your lease is approaching 80 years or less, it will start to impact the saleability of your property. Reece Suter, solicitor at PM Property Lawyers, comments: “We have seen buyers and their lenders become increasingly concerned about the length of leases over recent years. As such, leaseholders should consider whether the length of their lease is sufficient before they market their property. They may wish to consider extending their lease at that point in order to avoid potential delays later.”

You may be able to do this informally, i.e. by discussing it with your landlord and agreeing on the terms. However, your landlord may not agree to an extension or may ask for an unacceptable price or unacceptable terms.

If you have owned the lease on your property for two years, you have the right to extend your lease. You have the option to take the formal ‘statutory’ route to an extension.

In both cases we strongly recommend that you take legal advice as these are complex matters with a lot at stake.

We have many years of experience in lease extensions and will be happy to talk you through your options. Contact us on 0114 249 6926 or email

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