Leasehold reform measures under the LFRA 2024 - Judicial review decision

Summary

The recent judicial review decision in R (ARC) Time Freehold Income Authorised Fund) and others v The Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 has significant implications for property owners, developers, and investors in the real estate sector.

Proceedings were brought by six claimant groups representing a number of freehold landlords. They sought to challenge certain leasehold reform measures being introduced by the Government under the Leasehold and Freehold Reform Act 2024 (LFRA 2024) based on incompatibility with Article 1 of the First Protocol of the European Convention of Human Rights.

However, the High Court dismissed their claim on the basis that the reform measures in question do not unlawfully interfere with property rights of landlords.

More detail

The LFRA 2024 contains various Government reforms to the residential long leasehold regime.

Judicial review proceedings were brought against the Government in the summer of 2025 by six claimant groups representing a number of freehold landlords, including investment funds, pension schemes and charitable trusts. The proceedings were brought by the freehold landlords on the basis that key changes to the enfranchisement process under the LFRA 2024 were incompatible with and amounted to a breach of their peaceful enjoyment of their property under Article 1 of the First Protocol of the European Convention of Human Rights.

The key changes challenged were:

• The abolition of "marriage" value
• The cap on the cost to leaseholders of buying out the ground rent at 0.1% of freehold value
• The removal of the ability of landlords to recover certain costs for enfranchisement claims.

The High Court did accept that the LFRA 2024 reforms would interfere with the property rights of landlords to some extent, but stressed that the Government is entitled to proceed with reforms intended to make the enfranchisement process simpler and more cost effective for tenants. It found that:

• The measures struck a fair balance between public interest and landlord property rights
• The measures were a proportionate means of achieving legitimate aims
• Landlords would be compensated reasonably relative to the value of their interests
• There is no incompatibility for failing to exempt charitable landlords.

What happens now?

No permission to appeal was sought as part of the judicial review. However, following the dismissal, applications for permission to appeal have been filed by the freehold landlords, except one estate funded charity which has said that it will not take part in future proceedings. If permission to appeal is granted, the appeal process is likely to delay Government plans to bring the remaining provisions of the LFRA 2024 into force. However, most commentators are of the view that the Judicial Review decision is clear and it will encourage the Government to proceed with its full programme of leasehold reform.

It is important to note here that this judicial review challenge was only in relation to specific reforms within the LFRA 2024. There are likely to be other areas of challenge to the wider programme of Government leasehold reform in the future, such as in relation to the proposed reform to cap ground rents in existing residential leases, and in relation to Government plans to make commonhold the primary ownership model for flats and to ban new leasehold flats.

If you want to discuss any of the points raised in this article please contact Luke Exton in our Real Estate team.