Arbib2 - Explanation

[JPHCCFC]

Ive just had a response from the company im negotiating my lease extension with - In response to my counter offer they have infact increased their previous lease extension by 4k because of the Arbib2 findings - does anyone know what this is or where i can find any information and why this would effect the offer?

Many Thanks

[Corinne Tuplin]

Hi,

Unfortunately for many leaseholders, the Lands Tribunal (the Court of Appeal for leasehold cases) last week ruled in the case of Cadagon -v- Sportelli. It was held that the deferment rate (i.e. the amount that would, after compound interest, be the same as the value of the property when the lease expires) as paid to the freeholder for a lease extension or freehold purchase should be a fixed percentage rate for all flats and houses, irrespective of location or condition.

This case set the deferment rate for leasehold flats at 4.75% and 5% for leasehold houses.

In consequence, whilst this may be of benefit to leaseholders in prime Central London locations, it is financially detimental to those elsewhere in the United Kingdom.

I am in the process of writing an article about the effects of Cadogan -v- Sportelli and this will be uploaded to the Pro-Leagle website shortly.

Regards,


CORINNE TUPLIN
DIRECTOR
PRO-LEAGLE
www.proleagle.com

[JPHCCFC]

Corrine,

many thanks for your response. Do you know whether the Lease tribunals post the Cardogan and Sportelli case have used the new figures suggested from the case.
Do you know of any plans to appeal against the decision as it appears on face value that this is an unfair ruling for the leaseholders in areas where property/land value is less than that of London.

If i was to refer my current dispute to the LVT would i have to incurr any costs for the Lease company i was disputing against?

[Corinne Tuplin]

Hi,

As the case was only deciced last week, its effect on decisions by the Leasehold Valuation Tribunal (LVT) is unclear. It is presumed, however, that the Tribunal will follow the ruling.

As yet, it is not known whether there will be an appeal, although it does seem likely given the long reaching effect of fixed deferment rates for the whole of the UK.

Generally costs in the LVT are borne by each party although this cannot be guaranteed.

I hope this assists.

Regards,


CORINNE TUPLIN
DIRECTOR
PRO-LEAGLE
www.proleagle.com

[JPHCCFC]

Many thanks for your resonse. The Cadogan Sportelli case was based on London property do you think that tribunals will adjust the rate according to regional variations?

[steve-morris]

Hi Corinne,

A few weeks ago I had the lease on my flat surveyed by a chartered surveyor, is this decision likely to have much of an impact on the price of my lease extension? The flat in question is located in the London borough of Bexley.

[Corinne Tuplin]

Hi,

The case held that the rates should be fixed for all areas, as per my first post on this subject, throughout the UK.

All leasehold flats and houses are, therefore, potentially affected by the ruling, irrespective of whether they are in Bexley or outside London. It very much depends on whether your chartered surveyor and/or the freeholder's surveyor has been informed of the case as to how much your flat will be valued at for the purposes of lease extension/freehold purchase.

Regards,

CORINNE TUPLIN
DIRECTOR
PRO-LEAGLE
www.proleagle.com

[JPHCCFC]

Steve Im by no way an expert, but the Cadogan Sportelli case was decided on the 15th September so if it the survey was done before then i suspect this will affect your valuation. Do a search for Lease extension calculator and use the new figure of 5% for yield rate - this should give you an indication on the extension cost - Corrine - have you seen this calculator and is it accurate???

Also my lease company have offered a lease on the basis of a 66 year extension - What are the legalities to this - i read somewhere regarding the extension should be 90 years (something with the 1993 act?) Would a 90 year extension greatly affect the price?