The long-awaited Leasehold and Freehold Reform Act 2024 is now facing a significant legal challenge from a group of freeholders, with a judicial review hearing now underway in the High Court. The outcome could affect the future of millions of leaseholders across England and Wales.
Legal Challenge to Leasehold Reforms
The claimants, including historic London estates such as the Cadogan and Grosvenor Groups, as well as John Lyon’s Charity, argue that the legislation introduced under the Conservative government breaches their rights under the European Convention on Human Rights (ECHR). Specifically, they contend that reforms to how the prices to be paid for lease extensions and enfranchisements are calculated unfairly interfere with their right to enjoy private property and fail to provide adequate compensation.
At the heart of the case are new valuation rules introduced by the Leasehold and Freehold Reform Act, designed to simplify and reduce the cost of extending leases and purchasing freeholds. Campaigners hailed the legislation as a much-needed shift away from what successive governments have described as a “feudal” system.
However, freeholders argue that the changes could cost them hundreds of millions of pounds and significantly reduce income streams used to support charitable giving and local investment.
Leaseholders Left Frustrated and Voiceless
Leaseholders across the country have expressed concern that this legal challenge could delay reforms for years. With around 4.5 million leasehold properties in England and Wales, many feel their voices are being excluded from a process that directly impacts them.
Leasehold reform group Free Leaseholders has criticised the exclusion of leaseholder representation in the court proceedings. Founder Harry Scoffin commented: “Despite our best efforts to intervene, not a single leaseholder voice will be heard at the High Court. Is this how democracy is supposed to run?”
Charities Raise Concerns Over Financial Impact
John Lyon’s Charity, which funds initiatives supporting disadvantaged children in London, argues that the reforms could strip 10% from its annual income. CEO Dr Lynne Guyton said: “This reform pulls the rug out from underneath those who need the most support across the capital.”
While the charity has stated it supports leasehold reform in principle, it is seeking an exemption to avoid what it describes as “unintended consequences” that redirect wealth from charitable activity to private leaseholder landlords.
Government Stands by the Reforms
Deputy Prime Minister Angela Rayner addressed the issue in Parliament, confirming that the government will “robustly defend” the challenge. Labour has pledged to go further by abolishing leasehold altogether during this Parliament and introducing a commonhold system.
However, with legal proceedings ongoing and full implementation of the reforms still pending, the future of leasehold reform remains uncertain.
