In Sportelli [2008] the discount rate for leasehold enfranchisement calculations was fixed at 5% for prime central London locations and all other locations.

It is worth noting that in Zuckerman [2009], the Lands Tribunal allowed a discount rate of 6% for some flats in Birmingham. However, a detailed article in Property Law Journal makes the point that it would be wrong to interpret this as a general retreat from Sportelli. What can be said, however, is that:

if L does not manage (eg where there is a head lessee) then there is no difference between a flat and a house. Thus the Sportelli differential of 0.25% should not apply (ie the discount rate should be 4.75%). This will also apply to maisonettes where the lessees hold full repairing leases with no L involvement;

arguments about deterioration and obsolescence may possibly arise to properties of a low value (and so it would be worth another 0.25%). But, in general terms the risk of deterioration or obsolescence will normally be reflected in the property’s capital value (ie there should be no need to adjust the deferment rate).

In most cases, however, Sportelli will remain the correct discount rate. For the detailed arguments see [2010] 245 PLJ 2.