The Court of Appeal will rule on Wednesday in a landmark case in which a tenant is arguing in favour of a new way of valuing the premiums to be paid for lease extensions and collective enfranchisements.
If the appeal is allowed, the case could affect more than a million leasehold properties, with billions of pounds said to be at stake.
Leaseholder Adrian Mundy claims that the traditional method used has meant that landlords have been overpaid for years, but the Upper Tribunal (Lands Chamber) (UT) banned use of the Parthenia model he says is a fairer way of calculating premiums.
He hopes the court will overturn that decision, and send the case back to the UT for reconsideration.
The dispute involves the complex valuation process involved when it comes to valuing the sums that must be paid by tenants to landlords in cases of lease extension applications and collective enfranchisement.
While the amount in dispute between the parties is said to only be £58,000, the far-reaching consequences of the case mean far greater sums are at stake across the country.
Opening the appeal on Mundy’s behalf last week, Edwin Johnson QC said that the case involves a “serious problem” that affects all new lease claims and collective enfranchisements under the Leasehold Reform, Housing and Urban Development Act 1993.
He continued: “As such, the common point affects over a million leasehold properties, and has financial implications running to billions of pounds.”
He argued that a new mathematical model should be applied in such cases, which demonstrates that the value of a key factor in the calculation has been consistently underpriced over the years, favouring landlords.
He added: “If the Parthenia model is right, there has been a massive, and unintended, transfer of wealth from tenants to landlords.”
Landlord, the Trustees of the Sloane Stanley Estate, maintains that the UT was correct to reject the Parthenia model, and ban its use in all future cases.
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