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Spotlight: Leasehold Enfranchisement

Research Article

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Launching the Savills 2015 Enfranchiseable Graph of Relativity

■ A recent decision from the Upper Tribunal will result in a modernised approach to calculating relativity in leasehold enfranchisement valuations.

■ Evidence of the market at the valuation date is paramount. Outdated graphs of relativity are unreliable and should not be used.

■ Market and economic changes mean relativity has shifted downwards over time, as discount rates have fallen.

■ Savills 2015 enfranchiseable graph, which was submitted in evidence to the Upper Tribunal, shows real world relativity in the current market and is based on objective analysis of over 5,000 transactions of leasehold flat sales in prime central London.

■ The statutory “no Act world” assumption refers to the subject lease only. All other leases in the market at the valuation date have the right to extend or buy the freehold. The effect is to reduce the rights a leaseholder possesses in holding the subject lease compared to leases in the market.

■ A discount needs to be made from the Savills 2015 enfranchiseable graph to calculate relativity for the purpose of carrying out a leasehold enfranchisement valuation. This discount declines with increasing unexpired lease term and we have collected a range of reference points.

■ Relativity tables are provided for the new enfranchiseable graph and a new unenfranchiseable graph.

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