Good news for Tenants: Bad news for Landlords (and Developers.)

The recent decision of the Court of Appeal in LM  Homes Ltd & Oths v Queen Court Freehold Company Ltd [2020] EWCA Civ 371 confirms the entitlement of a nominee purchaser when claiming the collective freehold under the Leasehold Reform, Housing & Urban Development Act 1999 (as amended) to acquire the leases of the airspace, subsoil and boiler plant room pursuant to s.2(3)

The Court of Appeal upheld the Upper Tribunal’s decision that where the freeholder had sold off leases of the airspace above the property and separate leases of the subsoil and part of the boiler room, these leases can be acquired as part of the enfranchisement.

So it is bad news for investors who may have paid significant sums for leases of say air spaces in the hope of realising a future development potential and have a significant impact on the practice of freeholders seeking to preserve development value by granting leases to associated companies prior to a collective enfranchisement.

It is also bad news for landlords in general as it also reinforces any argument a tenant’s solicitor will have to resist any attempt the freeholder’s solicitors may make to exclude the airspace in the draft transfer following acceptance of a collective claim for the freehold.

A copy of the Upper Tribunal decision can be found at:

and that of the Court of Appeal at: