A landmark court ruling has given the Government the green light to continue with its long-promised leasehold reforms. The decision confirms that key elements of the Leasehold and Freehold Reform Act (LAFRA) 2024 — including the abolition of marriage value — are compatible with human rights law. The outcome provides long-awaited certainty for leaseholders, freeholders, and the wider property industry, clearing the path for further reform, including the move toward commonhold.

The Case

The Government successfully defended a judicial review brought by a consortium of major freeholders against LAFRA, in what is being seen as one of the most significant property law challenges in recent years.

The case, heard between 15 and 18 July, was brought by several prominent freeholders, including Arc Time Freehold Income Authorised Fund, Alpha Real Capital LLP, Cadogan Group Limited, Grosvenor Limited, Abacus Land 1 (Holdco 1) Limited, Wallace Partnership Group Limited, John Lyon’s Charity, and the Trustees of the Portal Trust.

At the heart of the dispute were the unimplemented provisions of LAFRA, particularly those abolishing marriage value — a key component in calculating lease extension and freehold purchase premiums. The freeholders argued that removing marriage value deprived them of a legitimate income stream, amounting to an unlawful interference with property rights under the Human Rights Act 1998.

The High Court Decision

The High Court rejected the challenge, ruling that the Government’s approach was lawful, proportionate, and justified in the public interest. The decision enables ministers to press ahead with implementing the remaining provisions of LAFRA that had been on hold pending the outcome of the case.

Mark Chick, director of the Association of Leasehold Enfranchisement Practitioners (ALEP) and senior partner at Bishop & Sewell LLP, welcomed the judgment, commenting: “At the centre of the dispute were unimplemented sections of LAFRA, specifically those relating to the removal of marriage value, which the freeholders had challenged under Human Rights law. The High Court found that the Government’s approach was lawful and proportionate. The ruling paves the way for ministers to proceed with implementing the remaining provisions of LAFRA, which were delayed pending the outcome of this case.”

Chick added that the ruling “is widely seen as a necessary step in clarifying the legal position around leasehold enfranchisement and is essential to advancing future reforms, particularly the introduction of commonhold through a future Leasehold and Commonhold Reform Bill.”

What Happens Next

The claimants are expected to seek leave to appeal, which could ultimately see the case reach the European Court of Human Rights.

Chick warned that while the ruling represents a significant victory for the Government, “it may only be a first-instance decision.” He said ministers would be carefully considering their next steps, balancing the desire to move forward with the risk of further appeals.

He added:  “This leads to the inevitable question: will the Draft Leasehold and Commonhold Reform Bill now be published this autumn as originally planned, or will it continue to be delayed pending the appeals process?”

For now, the ruling removes one of the biggest obstacles to the Government’s leasehold reform agenda and gives a clear signal that marriage value abolition and lease extension reform are on a firm legal footing.