High Court Dismisses Freeholders’ Challenge: Leasehold and Freehold Reform Act 2024 Upheld
The High Court has now issued its much-anticipated judgment in Arc Time Freehold Income Authorised Fund and others -v- Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin), firmly rejecting the judicial review brought by several of London’s largest landed estates.
The claimants — including Cadogan Group, Grosvenor, Howard de Walden and John Lyon’s Charity — argued that the abolition of “marriage value” and the introduction of new restrictions on landlords’ cost recovery under the Leasehold and Freehold Reform Act 2024 (“LFRA 2024”) unlawfully interfered with their property rights under Article 1 of Protocol 1 (“A1P1”) of the European Convention on Human Rights (ECHR).
The Divisional Court (Lord Justice Holgate and Mr Justice Foxton) dismissed the claim in its entirety, holding that the reforms were lawful, proportionate and within Parliament’s social-policy discretion.
Key findings
Marriage value is not a property right and so it is not protected by A1P1 as argued by the claimants - “…it would be wrong to characterise marriage value (or at least the landlord's “share” of it) as a pre-existing asset of the landlord which, through the enfranchisement process as reformed by the LFRA 2024, is subject to compulsory transfer from the landlord to the tenant without compensation.” [386]
Even if the claimants’ property rights were interfered with by the measures, this interference would be proportionate to the government’s legitimate social aim of making enfranchisement fairer and more affordable for leaseholders – “Each of the three measures which form the basis of the challenges in issue at this hearing: i) the Ground Rent Cap; ii) the Marriage Value Reform; and iii) the Costs Recovery Reform; is rationally connected with what we have found to be the objectives of the LFRA 2024.” [338]
The High Court’s judicial role is to check the legality and rationality of the government’s policies, not to comment on the practical adequacy of those policies - “Parliament is best placed to form a view about what is in the public interest, and the court will respect Parliament's judgment on the public interest unless it is “manifestly without reasonable foundation” or outside the wide margin of appreciation which must be accorded to that judgment” [335]
Every claim was dismissed; the High Court declared that the measures are not incompatible with the ECHR – “For all these reasons, we conclude that the measures under challenge, the Ground Rent Cap, the Marriage Value Reform and the Costs Recovery Reform, whether considered individually or cumulatively, including their application to charities, are compatible with A1P1. Accordingly, each of the claims is dismissed.” [558]
Appeal intention
It should be noted that before the judgment was handed down, representatives for the major estates confirmed that they would seek permission to appeal if their challenge failed. An application to the Court of Appeal is therefore expected, though as at the date of writing no permission has yet been granted.
Unless and until that happens, the ruling removes the last major legal obstacle to the government bringing the remaining provisions of LFRA 2024 into effect.
Implications for leaseholders
Residential leaseholders such as flat owners who have waited in hope that the Government would implement the remainder of LFRA 2024 will be encouraged to wait longer in the hope that the Government will now, as promised, do so – in particular, scrapping marriage value—a change which can save leaseholders tens of thousands of pounds where their leases have fallen below 80 years.
LFRA 2024 also removes landlords’ entitlement to recover their legal and valuation costs in most enfranchisement and lease-extension claims, representing savings for leaseholders of around £2,500 for smaller claims and £15,000 or more for larger ones.
Flat owners seeking extended leases will also prefer to have 990 years added to the term of their lease rather than the existing 90-year statutory extension.
We may therefore see a temporary pause in leaseholders initiating claims, followed by a wave of pent-up demand once the new framework is in place.
Leaseholders unable to wait may feel aggrieved at paying current, higher premiums and missing out on the additional benefits that LFRA 2024 will bring.
Implications for landlords and managing agents
Landlords will now need to plan to adjust their procedures for handling leaseholder claims in a world where they are no longer entitled to recover their valuer’s report fee or legal costs, they cannot rely on the marriage value premium, and where further process changes under LFRA 2024 will soon take effect (such as expanded eligibility for enfranchisement claims).
Next steps
Attention now turns to the government, which is expected to issue a statement confirming how it intends to proceed with the valuation-rate regulations and other commencement orders.
Once those are laid before Parliament, the key financial reforms — including the abolition of marriage value — can take effect.
Mark Vinall, Partner, Ashley Wilson Solicitors LLP
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