Hundreds of central London flat-owners are about to discover whether they could be obliged to pay tens of thousands of pounds extra to the capital’s richest aristocratic family estates in order to extend the lease or buy the freehold on their properties.

These freeholds are big business: those owned by the Cadogan estate on and adjoining the King’s Road and Sloane Square in Chelsea go some way to explaining how Earl Cadogan and his family have a fortune estimated at £2.1 billion by The Sunday Times Rich List; the estate belonging to Viscount Portman and his family, worth £1.2 billion, controls freeholds on flats around Marble Arch Tube station, through Portman Square and Upper Berkeley Street; while the Howard de Walden family estate, headed by Mary Czernin and worth an estimated £1.5 billion, controls vast swathes of Marylebone.

Those who live in a leasehold flat are entitled under a 1993 law to extend their lease by 90 years at any time, provided they have owned the property for a minimum of two years (and that the original lease was for more than 21 years). The amount charged depends on formulas that partially reflect the amount such an extension would add to the market value of the property.

Last September, however, the Lands Tribunal — which determines appeals relating to disputes between leaseholders and freeholders — changed one of the key elements used in the calculation.

Robert Orr-Ewing, head of Knight Frank’s leasehold-reform department, said the ruling, if upheld, would further push up the amount people must pay to extend their leases — which already went up in 2004. “There is no doubt that there is a great appetite among leaseholders to extend,” he says. “But if the cost keeps on going up, there will come a time when it will not be worthwhile to do the exercise.”

Among those hit will be speculators who have bought up flats with short leases with the intention of extending the leases and selling on the properties for a quick profit.

For nine months, an appeal process has been under way involving leaseholders and the Portman and de Walden estates. The result, expected in the next few weeks, is being watched by the other London estate families and will have implications for flat-owners with short leases, not just in the capital but across Britain.

The de Walden, Portman and Cadogan estates declined to comment on the forthcoming ruling, but estate agents selling short-lease flats are up in arms about the prospect of more expensive extensions. “My big concern is existing owners on short leases. They’ve lived in the area for decades and are often elderly,” says Ed Mead of Douglas & Gordon, a central London agency. “It’s old-fashioned capitalism at its worst. Perfectly decent owners now face having to pay much more to big estates. It’s unjust and it’s unfair.”

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