The defeat of the Mundy case is a cue for Parliament to right the injustice of “uncivilised extortion” in the lease extension racket.
“It will cost every leaseholder in the country,” Sir Peter told the Mortgage Solutions website.
“Whenever a lease needs extending, there’s a potential impact of this judgment in a way which parliament never intended, and which parliament cannot allow to continue.”
“On the particular point about the price of leasehold extension in England and Wales, these problems don’t happen in Northern-Ireland, and they don’t happen in Scotland.”
In these countries, leaseholders can buy out freeholds for a government imposed multiple of annual group rent.
A similar scheme is proposed in a Bill by Justin Madders MP, which was to be called on Friday – now delayed until October.
“I can’t think of any other country in the civilised world where such uncivilised extortion is allowed to continue.”
On leasehold: The ‘uncivilised extortion’ cannot be allowed to continue – MP – Mortgage Solutions
Speaking to Mortgage Solutions about the recent court of appeal ruling on lease valuations, Sir Peter Bottomley MP slammed the case outcome and current practices in the leasehold market. Earlier in January, a landmark legal case over leasehold valuation methods failed to slash leasehold costs when the court of appeal ruled in favour of a major freeholder.
By ruling in favour of the freeholder, the court of appeal upheld a previous Upper Tribunal decision – meaning that an alternative relativity graph developed by James Wyatt of Parthenia Valuation cannot be used in leasehold calculations.
Experts say this model, had it been adopted, could have significantly lowered costs in cases where the remaining lease length had dropped below 80 years.
The Gerald Eve model was developed in the mid-1990s at the instruction of the Grosvenor Estate, but property management company, Leasehold Solutions, said the model overcharges leaseholders by an estimated £480m a year.
An estimated 2.1m homes in England and Wales have leases of fewer than 80 years, with 490,000 in London.
“My view is that the Parthenia model is more right [than Gerald Eve],” said Bottomley, who added that while the Parthenia alternative may not be the best conceivable method, it would have been a considerable improvement upon the Gerald Eve model.
Indeed. Why is this “ uncivilised extortion” allowed to continue? Hmmmmmmmm.
Anyhoo, fine words butter no parsnips.
PS . Are not ALL forms of extortion “ uncivilised “? Are there any civilised forms of extortion? Beats me.
Let’s hope Master Madders gets a hearing.
The Parliament website doesn’t think his Bill is this Friday. It thinks it is next back in October. https://services.parliament.uk/bills/2017-19/leaseholdreform.html
The second reading was due until recently on Friday 2 February 2018 and now delayed until 26.October 2018. I was starting to get excited about buying our freehold.
No one ever said that this was going to be a quick process?
However delayed the campaign has engendered a sense of uncertainty in the ground rent portfolio market, which is good. These offshore ground rent speculators and their financiers are beginning to get a tad nervous about their investments. Is it such a long term one way bet?
Before investing they need to consider that at some point freehold reversions may be linked to a Scottish or Northern Island model? It could be that ground rents are reduced to peppercorn or that leasehold terms are increased to 999 years? It may be that ground rent increases are changed to CPI from RPI which is cheaper for leaseholders?
And with interest rates creeping up, that has a dramatic effect on leasehold values. The higher the rate of interest the less value a freehold reversion value is.. That these ground rent portfolios have been bought on borrowed money makes these companies very vulnerable.
Only a latter of time
Strettons auction contains lots of ground rents which a so called “charity” is selling. This charity ( device set up to get round lessees rights) are feeling the wrath from the people and is in a panic are trying to dump their stock