The question of deferment rate is generally thought to be settled at around 5% following the decision in Voyvoda (see http://www.leaseholdreformnews.com/voyvoda-v-grosvenor-west-end-properties-2014-lt-r-10/).

However, there was some interesting debate at the 15th ALEP Conference on 21st October 2014  http://www.alep.org.uk between valuers on this point. Interestingly, long term market evidence could perhaps show much lower yields than the ‘lower’ rates applied in Sportelli, suggesting that the ‘real growth rate’ might need to be adjusted (downwards). Thank you Savills for a very enlightening review of the market trends. Whether any of the major landlords are willing to take this point, remains to be seen, but if this were to happen, enfranchisement costs (and as a consequence, the value of reversionary freehold interests) would rise significantly. Definitely one to watch over the next few months.

Mark Chick

22 October 2014