Freeholder group loses judicial review application of LAFRA 2024 on all three grounds

The recent decision by the High Court in the judicial review brought by major freeholders against the Leasehold and Freehold Reform Act 2024 (LAFRA 2024) is an important step forward for leasehold reform.

With the ruling upholding key provisions of the Act, the way is now clearer for the Government to move ahead with secondary legislation. Clearer, but not clear entirely (read on below).

In this blog we summarise the commentary of key industry figures, including lawyers and leasehold valuers, on the judgment and what it means for leaseholders, freeholders, and the market. We then set out our view at Peppercorn Law, as ever, in as plain English as possible.

What was the leasehold reform judicial review challenge?

To recap briefly: The freeholder lobby brought a judicial review challenging three of the core reforms affecting lease extension and collective enfranchisement claims in LAFRA 2024:

• The abolition of marriage value in lease extensions and freehold purchases (affecting leases with less than 80 years remaining and constituting a huge part of the premium)

• The cap on ground rents (when valuating premiums) at 0.1 % of the freehold vacant possession value rather than basing this on a doubling ground rent or RPI linked ground rent increasing every 5 or 10 years, as the case may be; and

• The removal of the traditional rule that a leaseholder must pay the freeholder’s reasonable costs (such as valuation and solicitors costs) when claiming a new lease or when enfranchising the freehold.

On 24 October 2025 the Divisional Court (Holgate LJ and Foxton J) dismissed the claims, concluding that the changes are compatible with Article 1 of Protocol 1 (A1P1) to the European Convention on Human Rights, and that Parliament was entitled to legislate for reform of the system. The judgment ran to 167 pages and the reasoning is detailed.

In short, the Government’s legal victory means that the reforms can now proceed. However, as commentators emphasise, that doesn’t mean everything is done yet or that things will necessary proceed at pace.

Commentary from the industry on LAFRA 2024

At Peppercorn Law, we aim to keep appraised of the ever-evolving landscape by looking to other experts in this area to see how they are interpreting the latest turn of events. We set out below some opinions which should be of use to leaseholders looking at whether to proceed now or wait for the reforms.

The legal perspective from a leading expert

Mark Chick, director of the Association of Leasehold Enfranchisement Practitioners (ALEP), has consistently followed the reform agenda. In response to the judgment he stated:

“Victory for the government means that they are theoretically now free to move ahead with the implementation of remaining provisions of LAFRA. But will they do so?

It would be a bold move given that it’s more than likely that there will be an appeal and this was simply first instance decision in relation to the position of the unimplemented legislation under human rights law.

There is the prospect of a UK appeal and then possibly onward appeal to the European Court of Human Rights.”

Clearly in this case a further challenge is anticipated. However what could the decision mean from the perspective of valuers that estimate lease extension premiums and who are at the coal-face, negotiating on behalf of flat owner and freeholders?

A leasehold valuers perspective

Colin Horton, RICS-registered valuer and founder of Project & Co, has spoken at length about the freeholder and leaseholder positions. In a LinkedIn post he observed:

“The Key Factor: Deferment Rates

This is where the next battle will be fought.

The deferment rate, the rate used to discount a freeholder’s future interest, will decide who really benefits from this reform. Historically it sat around 5% for flats under the Sportelli precedent.

The Government has already hinted that it could drop to around 3.5%.

If that happens, lease extensions could actually become more expensive again, effectively rebalancing some of the marriage value that’s just been removed.

In other words, the headlines say it’s cheaper for leaseholders, but the maths might tell a different story.”

This provides some food for thought for a anyone with more than 80 years remaining on their lease, who will not benefit for the removal of marriage value, but who might, based on this view, be subject to a higher premium if the deferment rate changes.

The leading voice on leasehold law

In an interesting interjection, Tony Radevsky, barrister and the author of a leading text on leasehold reform (Hague on Leasehold Enfranchisement – basically the bible for practitioners in this area) commented on a LinkedIn post as follows:

“I don’t agree that an appeal is almost guaranteed. The judgment is thorough and robust and even if an application for permission to appeal is made it is far from certain that it would be granted. If permission were to be granted I would expect an appeal to be dismissed.”

We cannot think of a more authoritative voice than that of Tony Radevsky. What is clear is that there is still a broad range of views on what happens next with leasehold reforms.

A leaseholders view

The below post on Twitter indicates that a leaseholder of ARC Time Freehold has information that means an appeal could be forthcoming in the next few weeks:

What does this mean for leaseholders, freeholders and the market?

For leaseholders, the decision is very good news. It confirms that the legal framework underpinning certain promised reforms is not defeated by the freeholder lobby, yet.

With marriage value removed and ground rents capped under LAFRA 2024, the cost of lease extensions and enfranchisement should fall. This opens up opportunities for leaseholders who have struggled with short leases, escalating ground rents or high premiums.

For freeholders, the decision will be less welcome. The removal of marriage value means one of larger parts of the premium for leases under 80 years will disappear.

This might be particularly difficult to stomach for those that valued a freehold reversion based on this expected return, or for leaseholder groups that had to pay marriage value of a non-participating flat when enfranchising, only for the non-participating flat to then extend the lease for a much lower premium.

The 0.1 % cap on ground rents reduces premiums further (and rightly, in our view) and the prohibition on recovering non-litigation costs from leaseholders shifts more of the cost burden onto the freeholder.

Our view at Peppercorn Law

From our perspective here at Peppercorn Law, the judgment is a significant and welcome step: it is one more road-block out of the way in the path of leasehold reform. With the freeholders’ challenge dismissed, the Government now has a cleaner legal field to bring the rest of the reforms forward.

Though we accept that there could be more procedural bumps in the road if an appeal does materialise or if the legislation drops down the government agenda.

The Act passed in 2024 still contains many elements which are unimplemented and depend on further acts of Parliament: for example, the exact method for valuations, transitional arrangements for existing leases. These must now be delivered by the government (and Minister Matthew Pennycook) without further long delays. We have already been waiting since January 2021 when these reforms were first announced.

What should you do next?

For leaseholders, property advisers and freeholders we suggest the following steps:

1. Stay updated on the secondary legislation: keep an eye on Government consultations and draft regulations that will give effect to the provisions of LAFRA. Bookmark our guidance note on lease extensions for constant updates.

2. Review existing leases: particularly if you hold a short lease, escalating ground rent or are approaching a lease extension decision. The changes may offer significantly improved terms (or could cost you more).

3. Valuation strategy: we take the view that until we know more around the changes to deferment rates, and whether marriage value will be abolished completely or replaced with something else, it is simply speculation to wait for a better outcome. An comparison can be made with waiting on mortgage rates to drop; it is simply a decision based on your appetite for risk.

4. Seek professional advice: every case is different and the information set out in this post is not specific to your lease and circumstances - there is simply no substitute for quality specific advice.

   
   

Leasehold reforms under LAFRA 2024 – still on the cards but a long way to go

The decision in the judicial review is a major win for flat owners up and down the country. The key reforms in LAFRA 2024 – the abolition of marriage value, the cap on ground rents and the cost recovery changes have survived a major and well-funded legal challenge.

At Peppercorn Law we see this not as the end of the story, but as the enabler of the next phase: legislation and implementation. The ball is now in the court of the Government (and Minister Matthew Pennycook) to deliver the regulations and detailed rules that will bring the reforms into effect in a meaningful way. The road ahead will require clarity, timing and careful drafting — but the legal barrier has now been removed.

If a short lease is preventing you from moving on, we offer a fixed fee lease extension service here based on over a decade of experience in assisting leaseholders.