Is your lease younger than we are?
As we celebrate our 80th anniversary, property owners with less than 80 years left to run on their lease were hoping for a different ruling in a recent Court of Appeal case.
The Mundy case was of interest to homeowners planning to extend their leases especially those with less than 80 years left on them. Some, perhaps unwisely, have been waiting to extend the leases pending the outcome of the case.
Success in the Court of Appeal would have meant that those with leases of less than 80 years could have paid up to 30% less to extend their lease or purchase the freehold of their property.
The claim was brought by a surveyor challenging the existing model freeholders have used to calculate the cost of lease extensions.
Unfortunately the awaited Court of Appeal decision of Mundy –v- Trustees of the Sloane Stanley Estate is not what many had hoped.
There is general feeling that even if Mundy had been successful, it is likely that there would have been a further appeal, funded by the wealthiest freeholders, who would have seen a huge drop in the premiums received when granting lease extensions and selling freeholds under the statutory provisions.
It is highly likely that there will be future changes on the horizon in the view of the government’s focus on changing leaseholds generally. In fact, Lord Justice Peter Jackson in concluding his judgment stated:
"the Law Commission is to consider the simplification of valuations under the Act. It may be, therefore, that the holy grail will one day be found"
For the moment however, it remains that once a lease reduces below 80 years, extending it will become significantly more expensive. Extending a lease at the earliest opportunity really will provide the most cost-effective option.