Landlords Win Ruling Protecting London Aristocratic Holdings
By Simon Packard – Oct 10, 2012 8:05 AM ET
Landlords including one of Britain’s wealthiest families won an appeal in the U.K. Supreme Court that allows them to block forced sales of their land holdings to long-term company tenants.
The court upheld an appeal by the Howard de Walden Estateand the Day family enabling them to stop the sale of the freehold to properties in central London demanded by corporate leaseholders Hosebay Ltd. and Lexgorge Ltd.
The decision has the greatest effect in central London, home to the most expensive real estate in the U.K. and the basis for the fortunes of aristocratic families including the Duke of Westminster and the Earl of Cadogan. Had the court rejected the appeal, tenants could have diminished landholdings held by the estates in London’s Mayfair, St. James’s, Marylebone and Fitzrovia districts.
“The large estates will be breathing a huge sigh of relief,” said Sara Dolley, an associate at London-based law firm Eversheds LLP who works as a real estate litigator. The ruling “makes a much-needed return to common sense and reality. It fits completely with the original intention of the legislation.”
The ruling limits a law allowing residential tenants on long-term leases to force the landlord to sell the freehold, or outright ownership of the property. It clears up an inconsistency created when the law was changed in 2002 that enabled companies occupying a property originally built as a house to demand the freehold sale, even though the property was being used commercially.
Not a House
Neither building involved in the appeal could be considered a house under the law at the relevant time, Lord Cornwath wrote in the London court’s ruling.
“It is clear that it was never Parliament’s intention to extend enfranchisement rights to commercial or business tenants,” Grosvenor Group Ltd., the property company owned by the Duke of Westminster’s family trusts, said in an e-mailed statement.
The Duke, Gerald C. Grosvenor, is the world’s 72nd-richest man with a net worth of $12.3 billion, according to theBloomberg Billionaires Index. Grosvenor manages about 300 acres of property in Belgravia and Mayfair, two of London’s most expensive neighborhoods. The Day family owns buildings in areas such as Rosary Gardens in London’s South Kensington neighborhoods.
Lawmakers adopted the 1967 Leasehold Reform Act to permit tenants in low-income housing to acquire homes they had occupied for years. The 2002 amendments changed the way of determining which properties were affected, allowing business leaseholders of mansions in areas such as Mayfair to claim freehold purchasing rights originally intended for occupiers of miners’cottages in South Wales.
Many of the offices in Mayfair and its southern neighbor, St. James’s, were originally built as homes and converted after the areas were damaged by bombing in World War II.
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