New lease of life for flats

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The Independent Online
A RISING tide of applications by flat owners who want to extend the leases on their homes could turn into a flood in the wake of a London tribunal's decision last week.

The leasehold valuation tribunal ruled that Stephanie Black, who has a 43-year lease on her flat, must pay its freehold owner £9,600 to extend the lease by 90 years.

The ruling is the first to determine a price on the extension of a relatively short lease.

The decision also sets a precedent for other leaseholders who had previously found it difficult to sell their flats because their leases had so little time left to run.

Ms Black's flat in Swiss Cottage, north London, was worth £65,000 without the extension. The tribunal determined that lengthening the lease to 133 years would increase its value to £80,000.

It rejected a claim by Eton College, the freeholder, that the property would be worth £110,000 with the extension.

The tribunal also dismissed a claim that Eton College was entitled to more than 50 per cent of the increase in value of the property once the lease was extended.

Eton's lawyers had argued Eton College's share of the marriage value - the extra value derived from bringing together the leasehold and freehold interests - traditionally 50 per cent, should be greater, because the short lease meant its holder would be prepared to pay more to extend it.

However, the tribunal decided that Eton College deserved compensation for losing ground rent for 12.7 years, not the 8.2 years that Ms Black's father, who represented her at the hearing, had argued for, adding to the cost of buying the extension.

Tim Curran, a chartered surveyor who runs Leasehold Enfranchisement, a company that helps people extend their leases or buy their freeholds, said: "Through this ruling, a leaseholder was able to add £15,000 to the value of her flat at a cost of £9,600. There are increasing signs that previous tribunal decisions are now being quoted at new tribunal hearings. Clearly, such a ruling sets a further precedent for shorter leases."

He added: "All this is good news for leaseholders."

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