A coalition of major freeholders, including two London-based charities, has launched a High Court challenge against the UK Government’s flagship leasehold reform laws, claiming the changes breach their property rights under human rights law and could result in financial losses amounting to millions of pounds.

The legal action targets provisions in the Leasehold and Freehold Reform Act (LAFRA)—a sweeping piece of legislation passed in 2024 that aimed to make it cheaper and easier for leaseholders to extend leases or purchase freeholds. Among other measures, the Act abolishes ground rents on new leases and eliminates marriage value, a key component in calculating the cost of lease extensions on short leases.

Under the old rules, marriage value—defined as the increase in a property’s value once a lease drops below 80 years—would be split between the leaseholder and freeholder during enfranchisement. Removing this uplift, freeholders argue, significantly devalues their interests without adequate compensation, violating their rights under Article 1 of Protocol 1 of the European Convention on Human Rights (ECHR), which protects the peaceful enjoyment of possessions.

Charities and Historic Estates Among Claimants

The six claimants include heavyweight property owners Cadogan Group and Grosvenor Group, as well as the John Lyons Charity, which said the legislation would reduce its grant-giving by 10%, or £1.4m annually.

“We’re not a typical freeholder—we don’t make profits,” said a spokesperson for the charity. “If we’re not exempted, our ability to fund youth projects across London will be irreparably damaged.”

The claimants argue that not all freeholders are corporate profiteers and that charities and institutional investors are being unfairly punished under a blanket reform.

Leaseholder Rights vs Freeholder Claims

Campaigners supporting the reforms have criticised the legal challenge as an attempt to derail long-overdue protections for millions of leaseholders in England and Wales.

“This is about people owning their homes outright—not being at the mercy of distant landlords,” said Harry Scoffin, founder of campaign group Free Leaseholders. “They’re invoking human rights, but what about the rights of leaseholders being gouged through service charges and ground rents?”

Mr Scoffin warned that if the High Court sides with the freeholders, the Government’s broader leasehold reform agenda—outlined in its 2024 manifesto—could be delayed by years, especially if the case escalates to the European Court of Human Rights in Strasbourg.

Legal Experts Weigh In

Legal and property commentators say the outcome could set a precedent for future property rights cases.

“This Act requires freeholders to part with assets for less than market value,” said Samuel Hughes, of the Centre for Policy Studies. “That’s unprecedented, and it’s not surprising they feel it breaches their rights.”

Reema Chugh, a partner at Hodge Jones and Allen, added: “The retrospective removal of contractual rights will be very difficult to defend without clear compensation mechanisms. It’s not just landlords—pension funds and other investors are also exposed.”

Potential Impact on Future Reforms

The challenge threatens to delay the Government’s broader housing reform package, which includes:

• Making commonhold the default tenure for new flats

• Removing the threat of forfeiture

• Capping existing ground rents

• Strengthening collective enfranchisement rights

Deputy Prime Minister Angela Rayner has pledged to defend the case in court, saying:

“We’ll be robustly defending these reforms. Leasehold reform is a core part of delivering housing justice for millions.”

Yet with litigation now active, housing insiders warn that further legislative progress could be stalled indefinitely.

“People who are struggling to pay service charges will not welcome further delays,” Scoffin said.

Both Cadogan Group and Grosvenor Group declined to comment on the case. The Government also said it was unable to comment due to ongoing legal proceedings.