Freeholders’ challenge to Leasehold and Freehold Reform Act 2024

The claim was brought by some of London’s largest landed estates, being six Landlords (1) the ARC group companies; (2) the Cadogan and Grosvenor Estate; (3) Abacus; (4) the Wallace Partnership Group; (5) John Lyon’s Charity; and (6) Portal Trust; who challenged that LFRA 2024 unlawfully interfered with ‘A1P1,’ (being Article 1 of Protocol 1 of the European Convention on Human Rights).

The arguments presented in support of this challenge were the (i) abolition of Marriage Value; (ii) the capping of Ground Rent; and (iii) the Costs Recovery Reform. Every claim was dismissed, with the High Court finding the reforms being compatible with A1P1.

It remains to be seen whether the decision will be appealed by the claimants to the Court of Appeal, or even whether permission would be granted to appeal. This ruling moves what is seemingly the remaining legal obstacle to the Government bringing in the remaining provisions of LFRA 2024, however an appeal may prolong the legal uncertainty. LFRA 2024 was paused pending the judgement of this case, however the Government is now clear to proceed with introducing secondary legislation to fill in the details within LFRA 2024 following being fast-tracked in the 2024 wash up period.

It is important to note that the LFRA 2024 secondary legislation has yet to come, and the relevant legislation remains as being the Leasehold Reform Housing and Urban Development Act 1993, as amended. Leaseholders will welcome this decision, with Landlords needing to plan for the possibility of marriage value not being included within the premium and not being able to recover professional fees and to stay alert to further changes pursuant to LFRA 2024. In any event, both Leaseholders and Landlords hope this will provide some certainty.

If you are a leaseholder or a freeholder seeking legal advice, please contact our Residential Real Estate team on 020 8290 0440.