The Court of Appeal ruled today on a complicated issue of leaseholder enfranchisement relating to the valuation of a freehold when a lease has been extended.
Specifically, the court was asked to decided whether, when valuing a freehold with an extended lease, they should use the lease’s original expiry date, or the extended one.
Under the statutory leaseholder enfranchisement scheme, the shorter leasehold would lead to a higher price for the freehold. The Court of Appeal ruled today that the extended date should be used, leading to a lower price.
Natasha Rees, head of property litigation at law firm Forsters, said that the case was an interesting example of the complications caused by multiple changes to the legal apparatus governing enfranchisement. Her firm represented the claimants.
“Although it is a short point, and one which only impacts on a discrete class of leaseholders, the decision could have wider ramifications in terms of construction where statutory provisions have been subject to successive amendments,”she said.
The case was brought by the London Sephardi Trust, which represents London’s Sephardi Jewish community.
In 2013 the trust exercised its right to buy the freehold of a house in Maida Vale to be used as the home of the community’s senior rabbi, Joseph Dweck. However, the trust is now in disagreement with the former freeholder, the John Lyon’s Charity, over the price.
The original lease of the property in this dispute expired in 2013, three years after the trust exercised its rights to the freehold. However, tenants in the 1980s had extended the lease by 50 years, to 2066.
Therefore, the court had to decide whether, when valuing the freehold, they should use 2013 as the expiry date or 2066.
The trust maintains the date should be 2013, valuing the property at £1.748m. The former freeholders argue that 2066 should be used, valuing it at £2.866m.
In a 48-paragraph ruling handed down today and written by Lord Justice Briggs, the panel of judges backed the earlier date. Briggs LJ said in the ruling that their reasoning “largely” replicated the decision of the lower court.
John Lyon’s Charity v London Sephardi Trust
Court of Appeal (Arden LJ, Briggs LJ, Ben LJ)
Nicholas Dowding QC and Mark Sefton (instructed by Pemberton Greenish LLP) for the appellant.
Philip Rainey QC (instructed by Forsters LLP) for the claimant.
