UPDATED: 3 February 2025
Assorted freeholders last week were granted leave to apply for judicial review to challenge the threat to their income streams posed by last year’s Leasehold and Freehold Reform Act.
A hearing has been set to take place before the end of July 2025.
This was the first stage, in which the court was limited to deciding whether an arguable case existed.
It would be wrong for leaseholders to think that this decision were somehow surprising, or a defeat to the cause of leasehold reform.
The High Court held that the freeholders had an arguable case, that provisions in the Leasehold and Freehold Reform Act relating to (i) the cap on existing ground rents, (ii) the payment of marriage value when enfranchisement rights are exercised, and (iii) the removal of freeholders rights to recover reasonable legal and valuation costs on enfranchisement or lease extensions claims breached landlords’ private property rights under the Human Rights Act 1998.
This means the human rights of anonymous punters in residential freeholders who are investors in the Long Harbour, Wallace Estates and ARC Time Freehold Income Fund – as well as the human rights of the London aristocratic estates Grovesnor and Cadogan, and charities Portal Trust and John Lyon’s Charity.
That might offend many leaseholders, but it should be recalled that the rights in A1P1 is a legal right as determined by a Labour government in 1998 and are included in Sch.1 of the Human Rights Act. A1P1 has protected some of the most vulnerable from the worst excesses of austerity, including women facing the impact of the bedroom tax but who needed safe rooms due to abuse and violent ex-partners.
As Lord Sales noted in Maharaj v Petroleum Company of Trinidad and Tobago Ltd [2019] UKPC 21 “The threshold for the grant of leave to apply for judicial review is low”. As such, it should come as no surprise that the courts should grant this permission for a judicial review given the important changes in property rights set out in the 2024 Act.
The move was widely anticipated before the passing of the 2024 Act, with Susan Bright, professor of land law at Oxford University, and barrister Dr Douglas Maxwell addressing the All-Party Parliamentary Group on leasehold and commonhold reform on January 15 last year.
They noted that the existing case law demonstrated that when a deprivation of property occurs, compensation does not necessarily have to be at market value. This is significant as the estimated combined loss of the Claimants was estimated to be in the range of £289m – £404m, with the Government’s own Impact Assessment estimating significant costs including over £1.9 billion in the first 10 years due to the abolition of marriage value alone.
When the Bill was debated in Parliament, Clive Betts raised the probability of a challenge – believing it would fail – and a few Conservative peers argued that it amounted to a fundamental and unlawful confiscation of property rights.
Leaseholders should not feel cast down by the approval of a judicial review, although frustration at the constipated pace of the leasehold reforms is completely understandable.
If the landlords were to win their judicial review before the High Court, it would likely be appealed and could end up being determined by the Supreme Court. If the landlords were to prevail, then Parliament would need to bring forward new primary legislation to continue with the reforms.
If the government wins, the programme of secondary legislation outlined in November will continue. However, it cannot be ruled out that further challenges would not follow the enactment of secondary legislation.
Resolving rights around enfranchisement – the amount payable to the landlord to buy out their interest – is the key part of the journey that allows us to move existing housing stock from leasehold to commonhold. It was always going to be complex, and it was always the issue that landlords would take to court.
Nonetheless, after more than a decade of campaigning by LKP, with the support of MPs and peers across all parties and groups such as the National Leasehold Campaign, we remain convinced that it is a matter of when leasehold comes to an end rather than if it comes to an end.
The ruling granting leave for a judicial review can be read here:
https://www.leaseholdknowledge.com/wp-content/uploads/2025/02/FreeholdersJudicialReview30Jan25.pdf
Leaseholders interested in how the High Court might approach some of the freeholders’ arguments in their challenge to the enfranchisement provisions in the 2024 Leasehold and Freehold Reform Act, could read paragraphs 545 to 633 of the attached decision of the Annington case May 2023.
It specifically discusses balancing the peaceful enjoyment of possessions with public interest under human rights law.
Article 1 of the First Protocol to the ECHR (A1PI) states [given in this ruling at paragraph 545]:
“Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of his
possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
“The preceding provisions shall not, however, in any way impair
https://www.leaseholdknowledge.com/wp-content/uploads/2025/02/Annington2023PropertyHumanRights.pdf: Freeholders win right for a judicial review to challenge 2024 Act
the right of a State to enforce such laws as it deems necessary to
control the use of property in accordance with the general
interest or to secure the payment of taxes or other contributions
or penalties.”
Solicitor Liam Spender, who is asking leaseholders to join his group action on freeholders’ insurance commissions, responded on X / Twitter below:
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I found that the freehold on my block of 13 flats,was bought for 32 thousand.
Compensation should take this figure into account rather than the gyrations including marriage value etc, etc.
The whole corrupt, feudal system needs to be abolished, and soon. Thank God for LKP and people such as Sebastian and Peter Bottomley; without whom avaricious freeholders such as FirstPort (previously the notorious Peverels/Tchenguiz brothers and the ubiquitous McCarthy Stone/Churchill Estates would continue their profiteering unabated.
We have fought with FirstPort for 9 years to get our Crib Wall repaired (which is now underway).
We failed to get any contribution from McCarthy Stone (who liquidared) or Fairhold Homes/Tchenguiz Bros the freeholder. at a cost of approx 300k to the residents who are all mentally exhausted by the fight.
The Residents Associations current fight is to get the external Redecoration carried out, our lease states “as often as may reasonably be required to maintain repair tend cleanse repaint and renew” no time limits! Then coming up, possible replacement of the lift, call system updated to digital, new furniture and carpets. It is an endless fight.
Legal challanges was always expected. But doubt the freeholders will win against what is clearly in the public interests.
Just hope this will not delay other reforms such as the regulation of managing agents so desperately needed in retirement housing.
How comes the human rights law is always used to protect freeholders why have leaseholders not been able to use the human rights law to challenge leasehold laws?
I look forward to reading the reports from that hearing. I am convinced a great deal of positive publicity will be generated in favour of the often down trodden “medieval serf” also known as the Leaseholder.
I am particulary interested in how the cost of less extensions are calculated, and to see examples of the actual costings used including time scale for a job cycle. In other words what is the actual cost in time taken to extend a lease versus the actual cost charged to the Leasehold.
I would like to see similar examples for marriage value and for the outright purchase of the Freehold. The Freeholder may be expected to provide documentary evidence of the aforementioned to the Court in my opinion.
I some times wonder what the return on investment is for those who purchased Freeholds? In basic terms what was the cost to purchase a Freehold and what is the return including from connected companys, if applicable? In those examples written documentary evidence must exist audited or otherwise in my view.