Cadogan v Sportelli - Court of Appeal decision, 25th October 2007

Cadogan v Sportelli -
Court of Appeal decision, 25th October 2007

The Court of Appeal decision on Sportelli is now available. Click here to access the decision.

A more detailed report on the Sportelli Appeal is also available on this site. Click here to access the report.

The long awaited decision of the appeal hearing held at the Court of Appeal in July lodged by Sportelli and others was handed down on 25th October 2007.

There were a number of appeals, namely;

whether hope value is payable on the enfranchisement of a leasehold house;
whether hope value is payable on the enfranchisement of a block of flats; and,
what the appropriate deferment rate should be for calculating the reversion.

All of the appeals were dismissed. This means that the decisions of the Lands Tribunal stand.

Probably of most interest to both leaseholders and freeholders alike, is the deferment rate. This will remain unchanged at the rates set by the Lands Tribunal in September 2006, especially in the Prime Central London area (the "PCL" area - for example, the Howard de Walden, Cadogan, Portland and Grosvenor estates).

The Court of Appeal was concerned that these rates, following the decision of the Lands Tribunal, should be applied across the whole country. The Court stated in its judgment that each case outside of the PCL area should be judged on the evidence presented and this shall be a matter for each side's advisers to put forward in the LVT. However, the Sportelli rate of 5% for flats (under the Leasehold Reform, Housing and Urban Development Act 1993) and 4.75% for houses (under the Leasehold reform Act 1967) will be the starting point for all application to the LVT with regard to lease extensions and collective enfranchisements.

Hope value remains unplayable whether under collective enfranchisement or lease renewal under the 1993 Act; and although hope value under the 1967 Act was not an issue before the Court of Appeal the court made plain nonetheless its view that it is not payable under section 9(1A) and endorsed the view expressed by the Lands Tribunal in Pitts and Wang (click here to access that decision).