Introduction

A group of major freeholders, including two large charities and several wealthy landowning estates, has launched a judicial review at the High Court. They are challenging parts of the Leasehold and Freehold Reform Act 2024, arguing that the new law infringes on their rights under the European Convention on Human Rights.

The challenge began this week and is expected to last several days. Freeholders argue that the law, which aims to simplify and reduce the cost of lease extensions and freehold purchases, will result in significant financial losses.

What do wealthy freeholders say is unfair about the Leasehold and Freehold Reform Act 2024?

They say the new price calculation method for lease extensions could strip them of hundreds of millions of pounds and leave them with inadequate compensation. Some have also raised concerns that the changes may affect their ability to invest in local communities or fund charitable work.

The legislation was introduced under the previous Conservative government and was passed into law before the 2024 general election. It was designed to improve leaseholder rights and to address longstanding criticisms of the leasehold system.

What are the key changes included in the Leasehold and Freehold Reform Act 2024

Key changes include simplifying lease extensions, eliminating ground rent escalation clauses, and reducing legal costs for leaseholders.

However, the new rules have not yet been fully implemented. Some reforms are still pending, and the current legal challenge is likely to further delay progress.

The Labour government, which came to power in 2024, has stated its intention to abolish leasehold entirely by the end of the current Parliament. It has also committed to replacing it with a commonhold system and regulating ground rents.

The case has drawn criticism from leaseholder groups. Campaigners argue that leaseholders are not being represented in court proceedings and that their concerns about unaffordable ground rents and property restrictions are being overlooked. They worry that delays caused by the legal challenge could stall meaningful reform for years.

Leaseholders in England and Wales, where the leasehold system remains in place, now number over 4.5 million. In contrast, Scotland abolished leasehold in the 1980s, and the system in Northern Ireland is structured differently.

Many leaseholders claim that the outdated system traps them in homes that are unsellable and causes long-term financial stress.

Cadogan Group, John Lyon's Charity and Grosvenor or Estate challenge leasehold reform

The six claimants behind the High Court challenge include the Cadogan Group and the Grosvenor Estate, which have owned land in London for centuries.

The John Lyon’s Charity is also part of the group. The charity argues that it will lose a significant portion of its income under the new rules and is seeking an exemption from them.

Charity used as an excuse to thwart leasehold reform
It says this income is used to fund programmes for underprivileged children, and that the reforms would divert money from charitable purposes to wealthy leaseholders who own flats in its portfolio.

Leaseholder advocates continue to urge the government to proceed with its reform plans. Many have expressed frustration that the legal system may allow a small group of powerful landowners to delay or weaken changes that were promised in the last two general election manifestos.

Despite this, the government has been cautious in announcing new deadlines while the legal challenge is underway.

The leasehold system, which originated in medieval times, has long been criticised as unfair and outdated. Although both Conservative and Labour governments have called for its replacement, implementation has been slow to progress.

The hearing this week is seen as a critical test of how much progress can be made in modernising the system and how much resistance reforms may face from those with entrenched financial interests.

FAQ

What is the aim of the Leasehold and Freehold Reform Act 2024?

It is a law aimed at improving leaseholder rights by simplifying lease extensions, reducing costs, and preparing the way for a commonhold ownership model.

Who is challenging the Leasehold and Freehold Reform Act 2024 in court?

Major landowning estates and charities, including Cadogan Group, Grosvenor Estate, and John Lyon’s Charity, have filed a legal challenge.

How might legal challenge to the Leasehold and Freehold Reform Act 2024 affect leaseholders?

The legal action by the Cadogan Group, John Lyon's Charity and Grosvenor Estate could delay or weaken reforms, potentially extending the time leaseholders must wait for fairer rules on ownership and costs.