Leasehold reform challenged in High Court – what it means for property owners?

This week, a significant legal challenge has reached the High Court as a group of landowners and charitable freeholders seek to overturn elements of the Leasehold and Freehold Reform Act 2024. This judicial review began just months after the Act received Royal Assent and began to come into force. The outcome could shape the future of leasehold property law in England and Wales for years to come.

Six claimants, including some of the UK’s oldest and wealthiest landowners such as the Cadogan Estate, the Grosvenor Group and the John Lyon’s Charity, argue that the Act’s reforms infringe their human rights. Their challenge centres on new rules around lease extension pricing, which they claim could cost them hundreds of millions of pounds and amount to an unlawful interference with property rights.

The legal challenge is seen by campaigners as a major setback to reforms they have fought decades to secure.

What does the leasehold and freehold reform act change?

The Leasehold and Freehold Reform Act 2024 was introduced under the former Conservative housing secretary Michael Gove and passed swiftly through Parliament ahead of the 2024 general election. It received Royal Assent in May 2024 and has already seen some initial implementation.

One key change is the abolition of the so-called ‘two-year rule’. As of 31 January 2025, leaseholders no longer need to wait two years after purchasing their property before being eligible to extend their lease or acquire the freehold. This amendment removes a longstanding barrier to these processes.

In addition, the Act’s Right to Manage (RTM) provisions came into force on 3 March 2025. These changes have expanded access for leaseholders and made the RTM process less burdensome. The requirement for a property to have no more than 25% commercial space has increased to 50%. Furthermore, freeholders are no longer be able to recover their legal costs from the leaseholders when resisting or assessing an RTM claim. This has reduced financial barriers to building management reform.

Further reforms contained within the Act, such as the banning of excessive commissions on building insurance and increased transparency around service charges, are expected to follow. The government is currently consulting on how to implement these measures, along with changes to insurance remuneration practices and the dispute process for service charges.

The judicial review: who is challenging the act and why?

The claimants argue that the reforms, particularly those affecting how lease extension premiums are calculated, violate their rights under Article 1 of Protocol No. 1 of the European Convention on Human Rights. They contend that the new rules deprive them of a fair return on their assets and fail to provide adequate compensation.

John Lyon’s Charity, one of the claimants, has stated that the financial impact of the changes could lead to a 10% drop in its income. The charity, which supports education, mental health and youth programmes across London, has called for an exemption from the Act. Its chief executive, Dr Lynne Guyton, warned that without such protection, the reforms could place vital services at risk.

Some claimants have also expressed concern that the new system benefits corporate leaseholders with large portfolios in prime areas like central London, rather than individual homeowners.

Leaseholders Not Heard in Court

One of the most controversial aspects of the judicial review is the absence of leaseholder representation. Applications by leaseholder groups to intervene in the case were rejected by the court, prompting criticism from campaigners.

Harry Scoffin, founder of Free Leaseholders, said that despite efforts to participate in the proceedings, not a single leaseholder voice would be heard in the High Court. He questioned whether this exclusion was consistent with democratic principles and urged the government not to bow to what he described as a campaign of intimidation by vested interests.

Many leaseholders are concerned that the challenge could delay implementation of reforms which they have been eagerly awaiting.

Government Response

This Labour government had pledged to abolish leasehold altogether and introduce a commonhold system. In practice, they have been cautious about setting implementation deadlines while the challenge is ongoing. Draft secondary legislation is expected later this year.

Deputy Prime Minister, Angela Rayner, told Parliament this week that the government would defend the legislation robustly in court. Beyond this, the government has declined to comment while litigation is in progress.

The outcome of the judicial review is expected to have wide-reaching implications not only for the property sector but also for how parliament legislates in areas where there are competing economic and legal rights.

How can Anthony Gold help?

Leasehold law is undergoing its most significant transformation in decades. Whether you are a leaseholder seeking to extend your lease or buy the freehold, a landlord reviewing your position under the new regime, or a managing agent navigating RTM claims, we can provide clear, practical advice tailored to your circumstances.

Our leasehold services specialists are experienced in enfranchisement, RTM, and leasehold reform. We are monitoring the case closely and are available to guide you through this evolving legal landscape.

If you are interested in hearing more from us on these long-awaited changes to the leasehold system, please register here for updates.

Our expert team can assist you if you have any questions, contact us on 020 7940 4060 or send us an email at mail@anthonygold.co.uk.