High Court Upholds Leasehold Reform: Landmark Ruling Clears the Way

Here at Peter Barry, we continue to handle a significant number of lease extension and freehold enfranchisement claims each month. Still, the vast majority are on leases that are greater than 80 years and have reasonable ground rents, meaning that they have less to gain from ongoing leasehold reforms. That does, of course, leave those who don’t meet that criteria in a somewhat nervous disposition, especially when rich and powerful estates bring legal action.

In a major win for leaseholders, the High Court has dismissed a legal challenge brought by several of London’s largest landed estates, confirming the legality of the Leasehold and Freehold Reform Act 2024 (LFRA 2024).

The case — Arc Time Freehold Income Authorised Fund and others v Secretary of State for Housing, Communities and Local Government [2025] — was brought by estates including Cadogan, Grosvenor, Howard de Walden, and John Lyon’s Charity. They argued that key reforms under LFRA 2024 unlawfully interfered with their property rights under Article 1 of Protocol 1 (A1P1) of the European Convention on Human Rights.

The Divisional Court, led by Lord Justice Holgate and Mr Justice Foxton, rejected the challenge in full.

What Was Challenged?

The claimants opposed three central reforms:

• Abolition of marriage value — the additional value created when a leaseholder extends a lease or buys the freehold.
• Ground rent cap — limiting ongoing costs for leaseholders.
• Restrictions on cost recovery — preventing landlords from reclaiming legal and valuation fees from leaseholders.

They argued these measures amounted to an unlawful deprivation of property. But the Court disagreed.

Key Findings

• Marriage value isn’t a protected asset: The Court ruled that landlords’ share of marriage value is not a pre-existing property right under A1P1, so removing it doesn’t breach human rights law.
• Proportional and legitimate: Even if property rights were affected, the reforms were found to be proportionate and aligned with the government’s aim of making leasehold ownership fairer and more affordable.
• Parliament’s discretion respected: The judges emphasised that it’s Parliament’s role to decide what’s in the public interest, and courts will only intervene if those decisions are “manifestly without reasonable foundation.”
• All claims dismissed: The Court concluded that none of the challenged measures — individually or collectively — breached the ECHR.

What’s Next?

The estates have indicated they intend to appeal, but no permission has yet been granted. Until then, this ruling removes the final legal obstacle to implementing the remaining provisions of LFRA 2024.

The government is expected to announce its next steps in early 2026, including the timetable for laying commencement orders and valuation-rate regulations before Parliament.

Impact on Leaseholders

Leaseholders stand to benefit significantly:

• No marriage value: Leaseholders with leases under 80 years could save tens of thousands of pounds.
• Longer lease extensions: Statutory lease extensions will now add 990 years instead of 90.
• Lower costs: Leaseholders will no longer pay landlords’ legal and valuation fees, saving around £3,000 for a lease extension claim outside of Prime Central London.

Impact on Landlords

Landlords and managing agents must prepare for:

• Loss of marriage value and cost recovery
• Revised procedures for handling claims
• Expanded eligibility for leaseholders under LFRA 2024

If you are interested in extending our services, either phone or email us and we will be happy to help.