Leaseholders’ attempts to intervene against the freeholders’ judicial review into aspects of last year’s Leasehold and Freehold Reform Act were turned down by a Court of Appeal judge today.
A group of six freeholders, including the Duke of Westminster, the Earl of Cadogan and Long Harbour, are challenging the 2024 Act as being incompatible with their human rights. The freeholders claim the 2024 Act infringes their right to enjoy their private property interests in leaseholders’ homes because it does not strike a fair balance between them and the leaseholders.
At a hearing attended by seven KCs, 11 junior barristers and an equal number of solicitors, Lord Justice Holgate turned down LKP’s detailed written submissions – totalling more than 600 pages – and an 11th-hour, incomplete application by four other consumer groups.
The interventions were not thwarted by silver-tongued advocacy from the six freeholder group’s legal teams: they made almost no detailed points against the intervention at all.
The freeholders’ argument was that it was unfair and burdensome for them to have to answer LKP’s points that the 2024 Act does not go far enough. The freeholders also said they should not have to answer LKP’s evidence about their poor treatment of leaseholders.
Many leaseholders will find freeholders’ refusal to answer complaints a common issue. The irony of some of the wealthiest organisations in Britain employing some of the most expensive lawyers in London to make the same point was obviously lost on the freeholders (and their lawyers).
Instead, Lord Justice Holgate, who had clearly read the LKP witness statements from Sir Peter Bottomley and Sebastian O’Kelly, simply asked whether the points raised about abuses in the sector were not also covered in the Law Commission’s extensive reports which formed the basis for the 2024 Act.
That is perhaps an indication that all of the detail in those reports underpinning the 2024 Act will play a central role in the court’s determination of the case.
As it happened the examples – that is, court cases in the main – that we provided of landlords gaming the enfranchisement system overwhelmingly post-dated the publication of the Law Commission reports. It is worth adding that LKP and the National Leasehold Campaign were deeply involved with the Law Commission during its investigation, culminating in the reports.
LKP’s submission did address human rights and property ownership, but the judge did not feel that we had advanced arguments that differed sufficiently from those of government, the defendant in this case.
The judge offered little in the way of other comfort to the freeholders today. He emphasised the need to cut down the scope of the dispute and the volume of paperwork involved in the case. In his previous decision against Annington Homes in 2023, the same judge gave short shrift to many of the human rights based arguments now being run by the freeholders in this case.
The judicial review is likely to be confined to the narrow, dry legal question of human rights and property – and whether the government has infringed the freeholders’ human rights by failing to strike a fair balance between their private property rights and the interests of wider society in leasehold reform.
The judge was keen to ensure that the dispute was determined in narrow legal terms, without overstepping the line into political matters, such as whether the government should have gone further in its reforms (as LKP stated would have been desirable, en passant, in its submissions).
Freeholders are arguing against the ending of marriage value – whereby they get half of any notional increase in value that leaseholders have paid for by extending their leases – the 0.1% cap on ground rents in enfranchisement calculations, and having to pay their own legal costs for the process.
LKP, which makes no pretence of impartiality in these matters, believes marriage value to be a try-on too far that should never have been accepted, and giving freeholders the opportunity to load the enfranchisement process with its alleged legal costs was always likely to be thoroughly gamed.
It is regrettable that no leaseholder group is involved in a process which directly impacts leaseholders, but today can hardly be heralded as a victory by freeholders – whose small army of attending lawyers will have cost them a fortune, likely to amounting to many hundreds of thousands of pounds.
LKP – and leaseholders generally – owe huge thanks to solicitor Liam Spender for submissions that were praised by other lawyers present.
LKP also thanks Justin Bates KC; his junior Barney McCay; Douglas Maxwell, PhD and expert in human rights and property law; and solicitor Matt Lewis, of Commonhold and Leasehold Experts for their extensive pro bono – that is, free – work on the case.
The freeholders’ judicial review will be heard on 15-18 July: and those who were unfortunate enough simply to have bought a flat in England and Wales, and thus inadvertently became the long-term tenant of a usually anonymous freehold owner determined to monetise them, will have to keep their fingers crossed that the court kicks it out.
Whatever the answer on 15-18 July turns out to be, LKP fears that this litigation will continue to run for years more.
Deep-pocketed freeholders – who with the 2024 Act failed to nobble Parliament as they so successful did with the 2002 Commonhold and Leasehold Reform Act – will doubtless be hoping that by stringing out litigation long enough the government will be dissuaded from pursuing these reforms to their conclusion.
You can read LKP’s written submission here
Related posts:
Freeholders on course for judicial review showdown against leasehold reforms in January
Freeholders win right for a judicial review to challenge 2024 Act
Legal arms race as Canary Riverside freeholder seeks judicial review
Sir Peter Bottomley condemns criminal behaviour, price-fixing, cheating freeholders, exit fee fiddles, opportunist lawyers and feeble judicial intervention
Property tribunal judge chairs sector-driven code of practice review that is boycotted by leaseholders
Freeholders’ development rights stand in the way of leaseholder enfranchisement – and the future of commonhold
What if the original grantee of the lease understood the ground rent terms and regarded it as a form of differed consideration ? (which is what it is) What then is the evidence and justification of a subsequent purchaser of the lease to claim that the original grantee didn’t in fact understand the terms and the bargain reached was unfair.
Again and again I state that if the NPV of the ground rent was shown next to the premium at the time the lease was granted then there could be no challenge to a ground rent – the 10-year doublers would never have seen the light of day
Any ground rent whose rises are greater than the RPI should be modified so that on each review the rent rises by the lower of what is planned in the lease or the RPI – in that way the ground rent never increase in real terms from when the lease was first granted – this would deal with the real problem ground rents, respect our contract law and appease those ground rent investors who relied on contracts and covenants reaffirming the promise to pay the rent
If someone with professional representation agrees to be granted a lease obligating them to pay a ground rent amounting to say 0.15% of the value of the property, what is the justification later on for the government to lower it to 0.1% ?
Stephen, You keep boring on about this, but you are aware of subsidised plc housebuilders introducing 10-year-doubling ground rents into the housing market; you know that the solicitors on their panels were just stooges of the sales force, not ONE raised the issue of impossible ground rents; you know that this is a sector that has played fast and loose with ordinary home purchasers. Sure, if the property sector hadn’t over-cooked things – and introduced lease terms that almost immediately degraded the value of the property – a sleepy, gentle rip-off system could probably have continued. That it has imploded is not fault of the consumers, however inconvenient that is for professionals in the sector, like you in fact.
The vast vast majority of the 5 million leaseholds don’t have 10 year doublers and the govt could interfere with such contracts making any rises that increase the rent in excess of inflation void without fear of a challenge under A1P1
Punishing freehold developers who have sold contracts where part of the consideration is deferred where the rent rises by say the RPi and all parties legally represented would be somewhat harsh to say the least – those types of terms are not the issue – the root of the unhappiness over leasehold is not being in control of service charge expenditure and significant steps have been achieved surrounding the rules over RTM and these need to be improved yet further
The side show over 10 yr doublers can be closed down quite easily I would have thought
Dear Stephen,
In your last paragraph you say “If someone with professional representation”.
How about the dodgy practice of the conveyancing being done by the developers panel solicitors.
The practice is especially shameful in the (mis)selling of retirement apartment’s by developers such as Churchill Living, who push to use their preferred solicitor’s by paying the solicitor’s fees.
As you say “if someone with professional representation”!
It is indeed the case that buyers were let down by the solicitors working in conjunction with some house builders but such failing should not mean that all ground rents are unfair contract terms and should be capped.
The 2024 Act has an exemption ( yet to be implemented) where the 0.1% cap will not apply if it can be shown that the premium paid by the original grantee of the lease reflected the ground rent terms – this will give rise to untold bickering and squabbling – imagine trying to determine years earlier whether a ground rent of £250 pa linked to the RPI every 10 years was reflected in the premium paid – especially if the flat is not on an estate of similar properties. Both sides could find evidence to support their argument and the Tribunal would be inundated with claims. Developers would argue that highish ground rents were used to help lower the asking price, or if in the conveyance there were many emails/letters on the subject of the ground rent that that is evidence that the ground rent terms were reflected in the premium as the leaseholder was thinking about the outgoing and considered in the end that the bargain was fair and signed up.
What if the developer shows that they made a loss on the development, demonstrating prima fascia that the premium was less than should have been charged and the ground rent helped save the day – would that call for copious amounts of evidence to show the developer did indeed make a loss on the construction of the block
It was a rushed attempt to acknowledge the point raised by Catherine Callaghan in her opinion on how to address human rights
Labour may have perceived this problem and talk of regulating rents rather than capping
Has anybody involved, especially the legals, ever referred to the James versus The United Kingdom 1986 judgements by the Court of Human Rights? All the key arguments and answers are there. And since then things have got even worse, Scotland has got rid of its own feudal system, while England is the last country defending a redundant system.
Nobody refers to it!! Do the lawyers?! If not, it’s a stitch up.
https://leasehold.tiddlyhost.com/#%5B%5BHuman%20Rights%5D%5D
Thank you for your analysis and this revealing news item Sebastian. What if the problem was the LAW itself? When every single step in law making, from Bill to Royal Ascent, via amendments, committees etc is dictated by donors and lobbyists what can you expect? Judges will enforce Laws NOT MATTER how unfair these are; Abolish ALL Leasehold laws! Now.
I think it is very corrosive when people believe that government and society have completely failed (although, God knows, it is an understandable view).
With leasehold reform, the freeholders’ lobbying over the 2024 Act was woeful: a (dying) Conservative government passed the law and there was only minimal pro-freeholder efforts in the Lords.
Wider government is fed up with freeholders (and housebuilders), and their ad nauseam cheating. Property donors had no influence on the resulting law at all.
It IS the case that freeholders are now getting their lobbying act together, particularly through the property management trade bodies (about which more later).
The courts are always conservative, and will be nervy about matters relating to private citizens’ property rights.
Prior to 1993 leaseholders of flats did not have the right to extend and therefore the premiums paid on the granting of a lease was less – the freeholder got less when the lease was granted but due to a strong bargaining position got higher premiums if they agreed to extend the lease
As a result of the 1993 Act giving l/holders the right to extend property prices rose and the freeholder got less of a premium
Therefore to address this marriage value was introduced splitting the profit the leaseholder made 50:50 with f/holder
If marriage value is removed from pre 1993 leases then the govt is taking away previous agreed compensation which was necessary at the time to protect human rights
Disappointing, but thank for trying, LKP.
I do not think government lawyers HAVE fully considered facts and key parts of the problem for leaseholders, Written evidence is clear that they had not, a few years ago at least. I hope they have now, but they have not answered correspondence from me about this, and there seems to be a considerable cover-up of civil service errors. This became clear to us, particularly from government lawyer acts and omissions concerning no-notice ground rent sales by local authorities.
Defending Part D of the General Consents 2013, the then Housing Minister informed Amber Rudd that ‘disposal does not affect the lease’. Defending secretive REGISTRATION of non-consensual disposals (without notice), and refusing our application for a restriction, HM Registrars opined that 999-year leaseholders do not have a sufficient interest in the freehold title. Curious, is not, considering the local authority (vendor) lessor bound itself to HOLD the land (all of it) unto each lessee (purchaser) for the term of 999 years?
I was there, in 1965, when my parents visited the solicitor recommended by the estate agent to advise them. I only discovered this year, in 2025, that the solicitor had the same surname as the local authority’s chief lawyer who was struggling (as shown in public records) to achieve freehold-price sales on the council’s new-build housing. No-one was interested. He found they could only be sold with the benefit of enforceable (hence contractual) covenants. This benefit was intended for the customer, not for some eventual ground rent grazer fifty years later.
Very disappointing that the Human Rights Act is being abused again, this time by the establishment but I think your ire should be aimed at politicians and the KCs who enable this nonsense just as much as the freeholders, who are just protecting their centuries-old privileges, greed and origins of their questionable inheritances. The people who drafted the original HRA were either asleep at the wheel or they had no idea how their act would be used against ordinary working and law-abiding taxpayers in defence of the indefensible. The Act has been and continues to be dragged into disrepute in this country by at one end, criminals and the other, the super-powerful. It’s offensive to infer via the Act that leaseholders are trying to impoverish and seize the property and land from institutions for nothing in return.. Should reform be enacted, landowners will still hold their gifted assets and enjoy immense wealth and power, the difference being that a freeholder would have to justify his greed t his paying leaseholders and earn his privilege rather than have it handed to him on a plate and CoE would have to justify it’s political and financial position and good luck with trying to get that camel through the eye of the needle!
As for Labour’s protestations about how the LRA didn’t go far enough and had some deep flaws, blah, blah, blah, the PM have turned gamekeeper and hoping it all goes away, much like the water nationalisation question. What is the point of having all that power if not to change the lives of the millions for the better? If you want to change the situation, change it and stop hiding behind connections and the Conservatives. because along with so much else which isn’t changing, it gives the impression of a very deep corruption at the heart of government and the civil service.
You can go to war at the stroke of a pen and commit hundreds of millions to foreign conflict and opaque government contracts without a vote, so how about doing something socially positive in the same time frame?
Freeholders’ privileges are coming to an end and not even some slippery tactics can stop this tide from turning.