Sir Peter Bottomley told the Commons yesterday that leaseholders are overpaying for their lease extensions and called on the government to end the “injustice”.
The veteran MP, who is patron of LKP and co-chair of the All Party Parliamentary Group, strongly criticised existing methods to value short leases – almost all of which were commissioned and paid for by the sector.
As a result, the market has been distorted which “means leaseholders are overpaying for their lease extensions by thousands, and often tens of thousands, of pounds”.
The early day motion “calls on the Government to end this injustice to millions of leaseholders”.
Sir Peter’s intervention supports the case made by chartered surveyor James Wyatt, of Parthenia, who commissioned an Oxford mathematics professor and a PhD student to come up with a fairer relativity graph to estimate lease values.
“On a 50-year lease flat-owners are overpaying freeholders £13,000,” he says. “Under the Gerald Eve methodology they would pay £33,500, instead of £20,500 using Parthenia.
“Lease extension experts reckon there are 40,000 lease extensions a year, which would equate to an annual overpayment of £500 million to freeholders!”
At an Upper Tribunal in May, Mr Wyatt failed to persuade the tribunal that his methodology be adopted, but he did manage to demolish the rationale behind the existing graph by surveying giant Gerald Eve. It had been commissioned by the Grosvenor Estate of the Duke of Westminster, England’s richest landlord.
The case was reported on LKP here
Mr Wyatt is now seeking leave to appeal to the Court of Appeal at a hearing scheduled for June next year.
Last week the issue was debate at the Law Society conference, where many felt the existing lease extension methodology was unfair.
Ironically, Mr Wyatt’s court case has made the situation far worse for leaseholders as Savills stepped in to provide yet another insiders’ relativity graph which is even less favourable than the Gerald Eve original.
As a result, leaseholders are being asked to pay considerably more for lease extensions than they were before the ruling last May.
Sir Peter’s early day motion reads:
“That this House believes that, in determining the price for a residential lease extension, relativity, which is the ratio of leasehold value without rights to freehold value, should be set according to empirical evidence untainted by the effects of the 1993 Leasehold Reform, Housing and Urban Development Act 1993 and untainted by most existing relativity graphs; further believes that injustice to leaseholders is perpetuated in the current situation by relying upon relativity graphs which have no pre-1993 market evidence and lack robust methodology; declares that the current situation is not in the public interest and that it means leaseholders are overpaying for their lease extensions by thousands, and often tens of thousands, of pounds; and calls on the Government to end this injustice to millions of leaseholders.”