Court of Appeal rejects Mundy Appeal


The much awaited decision of the Court Of Appeal in the case of Adrian Howard Mundy v The Trustees of the Sloane Stanley Estate [2018] EWCA Civ 35 the so-called ‘Mundy case’ was handed down yesterday.

The outcome was a rejection of the application for leave to appeal the decision of the Upper Tribunal which had rejected the Parthenia model of calculating relativity.

The outcome of this decision has been much vaunted by parts of the press as having been the ‘great hope’ of leaseholders and that if the Court had granted leave that suddenly all relativities would have been calculated on a higher basis meaning that those with leases under 80 years would pay less to extend or buy their freehold. The truth is a little more complicated and more detail appears in the article below.

Mark Chick, head of the Enfranchisement team at Bishop & Sewell LLP commented as follows:

“Many had hoped that the Mundy decision would pave the way for lower premiums for flat owners with leases under 80 years. Sadly, this was not to be the case. The reasons are complex and as the court acknowledged the wider principles of how relativity is calculated may well be looked at by the Law Commission. However, for the moment there is no ‘holy grail’ (i.e. a simple and universal way of calculating relativity). Given that this is a complex valuation concept this is perhaps not entirely surprising.

What is interesting is that in the climate of the current debate on leasehold issues and the Government’s determination to look at other matters such as ground rents for new leases of flats and houses that there is no doubt further reform on the agenda and if the government does find the parliamentary time to commit to this, we are bound to see some changes in leasehold in the future.”

What is clear is that if your lease is under 80 years that the method of working out the marriage value is going to be approached by looking at the current accepted method – which is effectively either use of available current comparable transactions (adjusted to take account of the rights given by the 1993 Act) and or approaching the Savills 2015 enfranchiseable graph of relativity and making a deduction for the presence of these rights.

If you would like to discuss any leasehold issues then please contact our Enfranchisement team by emailing leasehold@bishopandsewell.co.uk

Read more: Don’t like Mundy? So why did the Court of Appeal reject this case?


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