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

Leasehold Reform: Does leasehold reform prejudice wealthy freeholders?

The group of six freeholders, who launched a judicial review, claim that reforms introduced in 2024 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 Court of Appeal 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.

Leasehold Reform: Why did the Court of Appeal reject the leaseholders who attempt to block freeholders objection to leasehold reforms?

The Court of Appeal did not reject these applications due to arguments from the freeholders' legal team. The freeholders made few objections to the interventions. Their main concern 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.

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.

Leasehold Reform: Politics or Law - interesting comments from the Court of Appeal on leasehold reforms?

At the Court of Appeal rejected the leaseholders position saying that the court's 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.

Naturally freeholders reject any leasehold reform that includes removing marriage value from lease extension and enfranchisement calculations, they would, given that marriage value for a lease extensions shares the uplift in value between freeholder and leaseholder proportionately. And, capping ground rents at 0.1 per cent of the property’s value, ends income of say 20 to 25 times the ground rent being added to the lease extension or freehold purchase premium.

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Freeholders also object to the new requirement for freeholders to pay their own legal costs in these processes.

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.

Judicial Review in leasehold reform, politics or law?

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.

2. Why are freeholders challenging the Act?

They claim the Act breaches their property rights under human rights law and argue that it unfairly reduces the financial value of their interests.

3. Why were leaseholders not allowed to intervene in the case?

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