Judicial Review of LAFRA 2024: High Court Rejects Freeholders’ Challenge

On 24 October 2025, the High Court delivered its judgment in the case of R (ARC Time Freehold Income Authorised Fund and others) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751, rejecting a high-profile judicial review brought by six major freeholders. 

The case involved significant challenges to key provisions of the Leasehold and Freehold Reform Act 2024 (“the Act”), a cornerstone of the Government’s leasehold reform programme. 

The decision is a significant affirmation of the Government's approach to reforming leasehold valuation and enfranchisement, while setting a precedent for future challenges under the Human Rights Act 1998. 

Background

The judicial review was heard in July 2025 before Lord Justice Holgate and Mr Justice Eyre. The claimants included prominent freeholders such as the Cadogan Group, Grosvenor Group, and John Lyon’s Charity. They argued that LAFRA 2024 unlawfully interfered with their property rights, and sought a declaration of incompatibility under section 4 of the Human Rights Act 1998.

Their challenge focused on three specific reforms contained in the Act but not yet in force:

• Marriage value removal – The Act proposes removing the requirement for leaseholders with leases under 80 years to pay 50% of the marriage value to the freeholder.
• Ground rent exclusion – The Act proposes that ground rents exceeding 0.1% of the freehold vacant possession value would be excluded from being included in the calculation of the price payable for the extension.
• Costs reform – The Act proposes that leaseholders would no longer be obliged to cover the freeholder’s costs of an extension. 

The freeholders claimed that the measures violate their right to private property under Article 1 of Protocol 1 (“A1P1”) to the European Convention on Human Rights.

The High Court's Decision 

In a detailed judgment, the Court concluded that “the measures under challenge, the Ground Rent Cap, the Marriage Value Reform and the Costs Recovery Reform, whether considered individually or cumulatively, including their application to charities, are compatible with A1P1. Accordingly, each of the claims is dismissed.” 

It held that the reforms did not constitute an unlawful interference with property rights and were justified by the public interest objectives behind the legislation.

The judges found that:

• The removal of marriage value and the cap on ground rent were rational policy choices aimed at improving fairness and transparency in leasehold transactions.
• The changes did not amount to a deprivation of possessions but rather a regulation of property use, which is permissible under A1P1.
• The Government had provided adequate justification for the reforms, and Parliament was entitled to legislate within its margin of appreciation.

The Court also noted that the claimants retained the ability to derive value from their freehold assets, albeit under a revised statutory framework.

Next Steps: Appeal?

Within the High Court Judgment, no permission to appeal was sought, granted, or refused. 

Under the Civil Procedure Rules, an application for permission to appeal from the High Court to the Court of Appeal must typically be made within 21 days of the date of judgment. Alternatively, if the claimants wish to bypass the Court of Appeal and apply for a leapfrog appeal directly to the Supreme Court, such an application must be made within 14 days of the judgment.

Given the substantial financial and legal interests at stake, it remains to be seen if the freeholders will seek to appeal the decision. 

Judgment = R (ARC Time Freehold Income Authorised Fund and others) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751

For more information, please contact Mark Foxcroft.