Saturday, 1 November 2025
The High Court in London has dismissed all six judicial review claims brought by major landlord and investment groups challenging core provisions of the Leasehold and Freehold Reform Act 2024 (LAFRA). The decision confirms the Government’s right to overhaul leasehold valuation rules and rejects arguments that the reforms breach property rights under the European Convention on Human Rights (ECHR).
The case — R (ARC Time Freehold Income Authorised Fund & Others) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin) — was heard by Lord Justice Holgate and Mr Justice Foxton. Their joint judgment, handed down on 24 October 2025, represents a major victory for the Government’s leasehold reform programme.
At issue were three controversial elements of LAFRA: the 0.1% ground-rent cap, the abolition of marriage and hope value, and the change requiring each party to bear its own non-litigation costs in enfranchisement and lease-extension cases.
Landlords argued that the 0.1% cap on ground rent used in enfranchisement valuations was arbitrary, retrospective and unfairly stripped them of contractual income. The Court disagreed, finding that Parliament acted within its “wide margin of appreciation” on social and economic policy. The judges said the figure had a reasonable evidential basis in the Law Commission’s work, CMA analysis, and the Government’s impact assessment.
The claimants also attacked the abolition of marriage value — a long-standing valuation concept that gave freeholders 50% of the uplift when leases under 80 years were extended. The Court said the change was a legitimate policy choice designed to correct an inherent unfairness in the leasehold system, which forces leaseholders to pay again for an asset that naturally declines in term. Concentration of the impact in London did not make the measure disproportionate, the judges ruled.
On costs, the Court upheld Parliament’s decision to end automatic recovery of landlords’ non-litigation expenses, noting that in normal market transactions each party bears its own professional fees. The reform was found to make the process simpler and fairer while retaining limited exceptions for small-value cases.
In a significant passage, the Court confirmed that Article 1 of Protocol 1 to the ECHR — which protects property rights — does not entitle landlords to “full market value” compensation, only to compensation “reasonably related to value.” The judges said the reforms strike a “fair balance” between public interest and private rights.
Landlord groups have 21 days from 24 October to seek permission to appeal. The judgment leaves the Government’s leasehold reform agenda intact, though officials have yet to publish the promised 2025 consultation on remaining valuation components.
Legal commentators say the ruling cements LAFRA’s position as the most far-reaching shake-up of leasehold law in a generation — and signals the courts’ willingness to defer to Parliament on broad questions of housing fairness and market regulation.
Source: CMS
