In an article that I recently published on this site looking at relativity and the 47 Philimore Gardens decision see http://www.leaseholdreformnews.com/latifa-kosta-v-the-trustees-of-the-phillimore-estate-2014-ukut-0319-lc-47-phillimore-gardens/ I made a reference to graphs of relativity and the site www.graphsofrelativity.co.uk to show the general shape of the relativity curve.
I have noticed that the link did not appear in the article properly and so it is posted again here so that the link can be more easily accessed www.graphsofrelativity.co.uk
The case of Westbrook Dolphin Square (see http://www.leaseholdreformnews.com/westbrook-dolphin-square-ltd-v-friends-life-ltd-2014-ewhc-2433-ch/) is a long decision of the High Court and has been appealed by the landlord on what might be termed the ‘policy point’ – i.e the question of whether the creation of a scheme that successfully avoids Section 5 of the 1993 Act actually offends public policy. We will have to see how this particular aspect plays out.
What is more interesting and in my view the most interesting aspect of the case is the discussion of what constitutes a ‘valid’ offer figure for the purposes of a notice of claim. The Court was at pains to point out (and as the decision shows) that there is not an ‘objective’ benchmark of what constitutes a reasonable offer. Rather it must be an offer that is a genuine opening shot in negotiations. It is acceptable for the tenant to view this as being a figure that will be ‘knocked back’ but it cannot be a purely nominal figure.
For all of the unique features of the Dolphin Square case this is the point that is likely to have the widest effect in practice.
It was interesting to hear the views of opposing valuers in the discussion at the 15th ALEP Conference (http://www.alep.org.uk) on 21st October 2014, in a debate that I was pleased to chair.
Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area. It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.
If you require legal advice please visit www.bishopandsewell.co.uk or email email@example.com
This was the question posed by Philip Rainey QC in his case update at the 15th ALEP Conference at the Royal Institution on 21st October 2014.
The case of Jewelcraft v Pressland (see http://www.leaseholdreformnews.com/jewelcraft-v-pressland/) does somewhat leave that question open. The facts of this case were very similar to Henley v Cohen (shop with flat above, no internal access). The landlord won at first instance and the tenants have now appealed to the Court of Appeal. More on this in the new year.
The question of deferment rate is generally thought to be settled at around 5% following the decision in Voyvoda (see http://www.leaseholdreformnews.com/voyvoda-v-grosvenor-west-end-properties-2014-lt-r-10/).
However, there was some interesting debate at the 15th ALEP Conference on 21st October 2014 http://www.alep.org.uk between valuers on this point. Interestingly, long term market evidence could perhaps show much lower yields than the ‘lower’ rates applied in Sportelli, suggesting that the ‘real growth rate’ might need to be adjusted (downwards). Thank you Savills for a very enlightening review of the market trends. Whether any of the major landlords are willing to take this point, remains to be seen, but if this were to happen, enfranchisement costs (and as a consequence, the value of reversionary freehold interests) would rise significantly. Definitely one to watch over the next few months.
22 October 2014