Lease Extension and Enfranchisement Specialists

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April 2018 | The search for The Holy Grail Part 2

In the words of Bob Geldof and Boomtown Rats and no doubt a few poor leaseholders in their million-pound flats up and down the Kings Road:

 

“I don’t like Mundy” or something like that.

 

However, there may still be a glimmer of light at the end of the tunnel, as suggested by Lord Justice Lewinson’s plea that hopefully

 

“The Holy Grail will one day be found”, in the recent Court of Appeal case of Mundy v Sloane Stanley (2018).

 

It is now even clearer than before, that when considering a method to find the relativity, the courts will consider that market transactions are at the top of the hierarchy of evidence, followed by graphs. This poses a major challenge for valuers as short lease sales evidence is sparse and maybe tainted.”.........

March 2018 | The search for The Holy Grail

Following Lord Justice Lewinson’s plea that hopefully “The Holy Grail will one day be found” in the recent Court of Appeal case of Mundy v Sloane Stanley (2018), we have set about trying to find a graph that will hopefully satisfy both Leaseholders and Freeholders alike in the absence of short lease sales evidence.

 

The original Upper Tribunal Decision found favour with the Gerald Eve Graph (“industry standard”) and both Savills 2002 and Savills 2015. As part of that decision and on several cases after that decision there has generally been a view that relativities have fallen since the graph was formulated: “One of the concerns that the UT had about the reliability of the Gerald Eve graph was that because the relativities shown by that graph had not changed since the graph was first compiled, it no longer reflected relativities as they were in 2014. Structural changes in interest rates and rates of investment returns, changes in the nature of the market such as an influx of foreign buyers, and changes in the institutional and legal structure of the residential market all suggested that the Gerald Eve graph overstated the relative value of a lease by comparison with the value of a freehold. These concerns were summarised at [28] to [32] of Appendix B to the UT’s decision and reiterated in Appendix C at [64].”.........

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