House of Lords gives judgment in Sportelli
Stephen Jourdan appeared in two of the appeals - for Mr and Mrs Sportelli and for 27/29 Sloane Gardens Limited.
The appeals concerned the question of whether, as a matter of law, a landlord could claim “hope value” as part of the price payable under the Leasehold Reform Act 1967 or the Leasehold Reform, Housing and Urban Development Act 1993.
Where a landlord sells the freehold at a time when the tenant is not in the market, the value of the freehold interest can in some cases be increased because of the hope of a possible future sale of the freehold or an extended lease to the tenant, thereby enabling a release of the marriage value. That increase is known as “hope value”.
The House of Lords held that, as a matter of law:
- No hope value was payable in the case of houses, under the 1967 Act.
- No hope value was payable in the case of a new lease of an individual flat under the 1993 Act.
- No hope value was payable in the case of participating tenants in a collective enfranchisement under the 1993 Act.
- Hope value could be payable in the case of non-participating tenants in a collective enfranchisement under the 1993 Act. The decision on this point was the only one where there was a disagreement. The majority of the House of Lords (Lords Hope, Walker, Mance and Neuberger) held that any additional value attributable to the hope of granting to non-participating tenants new leases of their flats could be reflected in the price. Lord Hoffmann dissented; he agreed with the Lands Tribunal and the Court of Appeal that no hope value was payable in this case.
The result was that all the appeals were dismissed, except the two appeals relating to collective enfranchisements. In those cases, the appeals were allowed, to the extent that it was determined that, as a matter of law, the landlord was entitled to claim hope value under Schedule 6, paragraph 3 of the 1993 Act in relation to non-participating tenants’ flats, albeit not in relation to participating tenants’ flats.
The judgment can be downloaded from the House of Lords website at:
http://www.publications.parliament.uk/pa/ld200809/ldjudgmt/jd081210/earl.pdf
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