ALEP Autumn Conference. Material Enhancement. Deferment Rates. Definition Of A House.

Material enhancement, deferment rates, and the definition of a house, were among the subjects discussed at the autumn meeting of the Association of Leasehold Enfranchisement Practitioners.  The basic rule applying to material enhancement in respect of claims for enfranchisement under the 1967 Act (Houses) is that the landlord cannot require the continuance of any of the covenants imposed by the tenant’s lease except in very limited circumstances:

1.    The restriction must be capable of benefiting other neighbouring property and must  materially enhance the value of the landlord’s other neighbouring property.

2.    The restriction must be in the existing lease.

3.    In either of the above unreasonable restrictions are not allowed.

The previous leading case was Morrow v The Howard de Waldon Estate (LRA/2/2002).  Cases involving properties at 87 Hamilton Terrace NW8, 39 Cadogan Square and 13 Cadogan Square are currently being pursued and Upper Tribunal decisions are awaited.  Any one of these may be appealed.

Discussion turned to the Kelton Court/Zuckerman case for insights into the level of deferment rates which should apply on either lease extension or leasehold enfranchisement in respect of 1993 Act claims. Another case, the Ashdown case in Hove, is not wholly reliable because of questions raised over the expert evidence which was given.  In cases where the share of freehold value is below a basic rate of £279 per square foot a departure from Sportelli is more likely to succeed. Wellcome and other leading London estates are now beginning to argue for deferment rates below the Sportelli line.


What is a house?

The conference heard that the definition of a ‘house’, in relation to claims for enfranchisement under the 1967 Act, is a building which:

1.    Is designed or adapted for living in.
2.    Can reasonably be called a house.
3.    Does not have to be detached.
4.    May be divided horizontally into flats or maisonettes.
5.    Is not divided vertically.