Over the last week the Court of Appeal have has been hearing the Mundy v The Trustees of the Sloane Stanley Estate case which was disputing the use of the Parthenia technique in leasehold valuation. If the technique were permitted then the price of leasehold properties could plummet in the UK.
The developer of the Parthenia technique, James Wyatt, a chartered surveyor at Parthenia Valuations, claims that the traditional method of valuation, which relies upon the Gerald Eves relativity graphs commissioned by the Duke of Westminster’s Grosvenor Estate in 1996, has been unfairly inflating the price of lease extensions by up to 50%.
Mundy is a tenant in a Chelsea property with less than 23 years remaining on the lease. The freehold owner, the Sloane Stanley Estate, is asking £420,000 for the lease extension. Mundy, relying upon the Parthenia method, is disputing that figure.
For more information on the Parthenia model, follow this link.
Unfortunately for tenants of leasehold properties, the Court of Appeal decided on Wednesday to reject the use of the Parthenia model.
Pemberton Greenish, solicitors for the Trustees of the Sloane Stanley Estate, called the courts decision an, “emphatic rejection of the Parthenia model”. They say that the ruling pronounces that the Parthenia model, “has been consigned to history, at least in its current form.”
Though the decision marks a significant blow for the proponents of the Parthenia model, it does not quite sound the death knell yet…
The next steps
Not only is there one stage of appeal to the Supreme Court remaining, there is also significant political support for a change in the leasehold valuation system.
Wyatt, developer of the Parthenia model, has called upon the Government to intervene. His comments follow a statement from Sir Peter Bottomley MP, declaring that if the courts failed to establish the Parthenia model then the Government should seek to reverse the decision by statute.
The political capital for this has been fed by the feeling that leaseholders are not being properly protected by a valuation system that safeguards the interests of freehold land owners. Any government intervention would certainly be a welcome relief to many tenants, though as John Stephenson, solicitor for Bircham Dyson Bell representing the Mundy, points out such change cannot come soon enough.
Stephenson says that, ‘In London alone […there are] 500,000 flats and houses under 80 years left to run and needing to extend in the near future.’ All of these tenants will almost certainly pay a higher price to extend their lease or to buy the freehold under the current model of valuation than they would under the Parthenia model.
We can expect Mundy v The Trustees of the Sloane Stanley Estate to proceed to the Supreme Court, though beyond that it is not clear what the future holds. Whatever the next steps are, it is unlikely that the Parthenia model has quite been “consigned to history” just yet.
The outcome of this dispute could affect the prices of roughly 2.1m properties across the UK. Because of these changes, remaining well informed and well represented is more important than ever for those in the leasehold market.
Therefore, if you have, or are looking to buy, a leasehold property in Nottingham, Derby, London or elsewhere in the UK, please get in touch with Campions Specialist Leasehold Solicitors for up to date, expert information and advice.