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Leasehold Reform

Our latest case study

Riccardo Carrelli of Knight Frank’s Leasehold Reform department was instructed to advise on valuation matters in a recent mediation over damages. The case more specifically concerned a leaseholder who built an extension to his flat at ground floor level, despite there being an absolute prohibition on external alterations in his Lease. The matter was heard by a Mediator in neutral offices and both parties were represented. Riccardo represented the Claimant, a local authority and owner of the freehold interest. The property was leased to the Defendant on a then 94 year unexpired term.

 

The Lease stated at Clause 3:

“Not to make any structural alterations or structural additions to the Flat, without previous consent in writing of the Council such consent not to be unreasonably withheld”

The Defendant claimed that his understanding was that this was a qualified covenant and therefore no premium would need paying to the Council for the works.

However, in the Third Schedule to the Lease, the Defendant also covenanted:

“Not to alter the external appearance of the flat in any way”, and “if the Flat has a garden to use it only for the purposes of a garden and keep the same neat and condition free from weeds”.

Accordingly, the Claimant argued that, having erected an extension to the flat without their prior consent, the Defendant was in breach of his lease. As a result, the Claimant pleaded that they had suffered loss and damage and claimed damages in lieu of an injunction restraining the breach of covenant.

The Claimant said that they were entitled to damages which reflected the outcome of a notional negotiation which might have taken place had the Defendant initially sought the consent of the Claimant to the development carried out. Furthermore, it was claimed by the Claimant that they were entitled to an appropriate proportion of the Defendant’s profit which had been enjoyed or resulted from the breaches.

Riccardo assessed the damages and it was agreed at the mediation that compensation was payable closer to his figure than the damages assessed by the Defendant’s representative. Payment of the Claimant’s costs of dealing with the consent and a deed of variation was also deemed to be payable by the Defendant.


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