Leasehold Enfranchisement Update - Snowball Assets Ltd

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Leasehold Enfranchisement Update

Collective Enfranchisement, rights offered in lieu

Snowball Assets Ltd v Huntsmore House (Freehold) Ltd [2015] UKUT 338 (LC)

Summary

The FTT had been correct to find that the terms of acquisition should include the freehold of the additional premises because the rights offered by the freeholder did not satisfy the equivalence test in s.1(4).

Facts

In this collective enfranchisement claim the nominee purchaser, in addition to the block of flats, claimed the right to purchase the freehold interest in the adjacent gardens, driveway, parking spaces and leisure complex. The freeholder claimed to be entitled to offer permanent rights over, in lieu of the freehold of, appurtenant land under s. 1 (4) of the Leasehold Reform Housing and Urban Development Act 1993. The qualifying tenants’ leases stated that the garden and leisure complex were facilities which were provided "from time to time". The freeholder claimed that the right to use the garden and leisure complex were therefore precarious. The freeholder claimed to be entitled to reserve out of the right to use that property a right to develop premises by demolishing the leisure complex and constructing new residential units in its place.

Issues

(i) Whether the freeholder was entitled to reserve out of the right to use a garden and leisure complex a right to develop premises by demolishing the leisure complex and constructing new residential units in its place.

(ii) Whether the rights offered by the freeholder over the appurtenant land were equivalent to the rights enjoyed by the tenants over that land at the date of service of the notice of claim

First Instance

The FTT decided both issues against the freeholder.

Decision on appeal

The Upper Tribunal held that there was nothing in the lease to indicate that there was the right to provide or withdraw a facility. Once a facility had been allocated for the use of lessees, there was no right to withdraw its provision. Even if there was such a right, it would be vested in the management company, in which all lessees were shareholders. Accordingly the FTT had been correct to find that the terms of acquisition should include the freehold of the additional premises because the rights offered by the freeholder did not satisfy the equivalence test in s.1(4).