Leaseholders have been blocked from intervening in a legal challenge brought by freeholders against key parts of the Leasehold and Freehold Reform Act 2024. A Court of Appeal judge rejected applications from the Leasehold Knowledge Partnership (LKP) and several consumer groups seeking to support the government's position.

Leasehold Reform: A group of six freeholders, including prominent landowners and investment firms, has launched a judicial review

They claim that reforms introduced last year infringe their rights under human rights law. Their challenge focuses on whether the Act interferes with their private property interests in a way that fails to balance the rights of freeholders and leaseholders.

The hearing involved a large legal team representing both sides, including multiple KCs, junior barristers, and solicitors. The judge considered over 600 pages of written submissions from LKP. He also reviewed a last-minute, incomplete application from four other consumer organisations. All applications to intervene were refused.

The court did not reject these applications due to arguments from the freeholders' legal team. The freeholders made few objections to the interventions.

Leaseholders case against Leasehold Reform not heard by Court of Appeal

The Court of Appeal's main concern cited for deciding not to hear leaseholders' arguments in the legal challenge raised by a consortium of Freeholders against Leasehold reform was the burden of responding to arguments that went beyond the government's position. They also objected to being required to address criticisms of their past treatment of leaseholders.

Leasehold justice:  in the hands of the Law Commission

The judge appeared to acknowledge that issues raised by the leaseholder groups had been addressed in earlier reports by the Law Commission. Those reports formed the foundation of the reforms. He questioned whether additional evidence from campaign groups added new legal arguments that differed from the government's defence.

The judge noted the need to focus the case on a narrow legal question. He stressed that the court would not enter political territory or review whether the reforms went far enough.

Human rights and leasehold reform: what are the issues?

The Court of Appeal said that its role is to assess whether the legislation violates the freeholders’ human rights by failing to balance competing property interests fairly.

Freeholders are specifically challenging three reforms in the Act. They include removing marriage value from lease extension and enfranchisement calculations, capping ground rents at 0.1 per cent of the property’s value, and the new requirement for freeholders to pay their own legal costs in these processes. Usually, legislation is not retrospective to allow the markets and market pricing to adjust.

The court has previously shown little interest in some of the human rights arguments that freeholders are now repeating. However, the legal challenge is moving forward, and a full hearing is scheduled for mid-July.

Despite being excluded from the process, leaseholder groups and their legal teams invested significant effort in preparing their submissions.

Legal professionals supported these efforts, in many cases pro bono. Though their arguments for intervention were not accepted, their efforts highlighted concerns across the leasehold community.

For many leaseholders, refusing to include their perspective in a case directly affecting their housing rights is disappointing. However, the judge’s decision suggests that the key issues will still be addressed by referencing the existing evidence base from earlier investigations.

The judicial review is expected to proceed strictly on legal grounds. It will examine whether the government has acted lawfully and proportionately in reforming leasehold rules.

The broader political or moral questions surrounding leasehold reform will remain outside the court's consideration.

Both sides will closely watch the case. Leaseholders fear that reforms could be delayed or weakened if the challenge succeeds. Freeholders, meanwhile, hope that a favourable ruling could restrict or overturn parts of the Act.

Whatever the result, this legal process could be only the beginning. Freeholders with deep financial resources are likely to continue pursuing legal routes to limit the scope of the reforms. The risk remains that long and expensive litigation may discourage future governments from implementing or expanding leasehold reform.

For now, leaseholders will be left waiting for the July outcome of the judicial review. The court’s decision will shape the future of leasehold law and the balance of power between homeowners and those who own the freeholds beneath them.

FAQs

1. What is the Leasehold and Freehold Reform Act 2024?

It is a new law aiming to simplify and reduce the cost of extending leases or buying freeholds by removing marriage value, capping ground rents, and making freeholders pay their legal costs. The proposals are upsetting Freeholders who will loose value in their reversions if lease extensions are cheaper and/or ground rent payable is reduced.

2. Why are freeholders challenging the Leasehold and Freehold Reform Act 2024?

They claim the Act breaches their property rights under human rights law and argue that it unfairly reduces the financial value of their interests. Usually, legislation is not retrospective to allow the markets and market pricing to adjust. The freeholders seeking judicial review claim that the proposals

3. Why were leaseholders not allowed to intervene in the judicial review case in relation to Leasehold and Freehold Reform Act 2024 at the Court of Appeal?

The court decided their arguments did not add anything new beyond what the government is already presenting in defence of the Act.