The Central London residential property market is known to have risen to dizzying heights over the last few years, which has led to the victory by residents of a prestige mansion block in their five-year struggle to acquire the building's freehold proving to be a mixed blessing.
As a result of their victory in court, they must pay more than £20 million for the privilege.
The eight-storey 1920s block comprised 25 flats, was close to Regents Park and was typical of houses within the Harley Street Conservation Area. Some of the leases were long, but others had less than 12 years to run. The majority of the tenants had participated in the leasehold enfranchisement process under the Leasehold Reform, Housing and Urban Development Act 1993.
The tenants had, in 2009, offered just over £12 million to acquire the freehold and an underlying headlease. However, numerous issues arose as to the correct method of valuing the freeholder's reversionary interest.
The Leasehold Valuation Tribunal had assessed the sum payable by the tenants at £21,340,923.
The Upper Tribunal cut the price of enfranchisement to £20,823,592. However, in refusing to make a more substantial reduction, it noted that, if the freehold interest were to be offered for sale on the open market, there would be significant interest from property investors 'with very deep pockets'.