The largest investment is commercial property 29%, followed by global equities 21%
The 2024 grant for the Somali Youth Development Resource Centre – who supposedly said leasehold reform is ‘stealing from kids’ – was £50,000 of the £15 million, so about 0.33%
The largest grants go toward bursaries for children to attend various private schools – £1.7 million of the £15 million spent in 2024
The charity will still receive about two thirds of its current leasehold income even after the removal of marriage value
LKP has urged the John Lyon’s Charity to drop its involvement in the freeholders’ judicial review on Tuesday challenging the abolition of marriage value under the Leasehold and Freehold Reform Act 2024 following dialogue with its chief executive.
Dr Lynne Guyton has expressed her pain that the end of marriage value will reduce revenues by £1.37 million that would otherwise be spent on good cause. The charity’s public statement and her comment on our report can be read here:
But Dr Guyton has made no attempt to explain why – or even, whether – the charity thinks the loss of marriage value is a breach of its human rights, which is the sole concern of the judicial review.
Instead, she has stated repeatedly that an ancient benevolent entity such as the John Lyon’s Charity, founded in the 16th century, should be exempt from the leasehold reforms in entirety like the Crown Estate and the National Trust.
This is not an issue under discussion in the judicial review.
LKP provided a highly professional intervention application involving 600pp detailing abuses in the enfranchisement process that cost our solicitors Velitor Law the equivalent of £86,000 to prepare. Nonetheless, we were rejected as the judge felt the abuses that we referenced were covered in the Law Commission reports that are the basis of the reforms.
Judge Holgate has made clear that the judicial review will rule solely on 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.
Freeholders are arguing against the ending of marriage value – whereby they get half of any notional increase in value that leaseholders of sub-80 year leases 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.
The John Lyon’s Charity case that it should be exempt from the 2024 Act is unlikely to be heard at all.
Meanwhile, we have been taking a look at the charity’s accounts, which are made up to 31 March 2024:
The John Lyon’s Charity’s assets amount to £380 million, of which the residential reversionary estate in St John’s Wood was around 8%. The largest investment is commercial property (29%), followed by global equities (21%) (see page 30).
The St John’s Wood estate comprises 91 units. The 2024 accounts estimate a loss of £10 million if marriage value is lost (page 25), so about 2% of the total assets.
Income from the reversionary estate is not broken down between enfranchisement and lease extension, but was £3.5 million in 2024 (page 29). The charity’s public statement estimates a loss of around £1.37 million a year from the removal of marriage value, so they will continue receiving about two-thirds of their current income from the reversionary estate.
Annual income for 2024 was just under £11 million (page 30), and the bulk of the income (c. £6 million) is from commercial rents (page 45).
On any view, John Lyons is a significant commercial organisation. It has assets greater than two of the other freeholder claimants in the judicial review combined (ARC Time Freehold Income Fund and Ground Rents Income Fund).
John Lyon’s legal argument is:
“Thus, the reforms, on tenuous justification, create significant windfalls for leaseholders, and terrible losses for freeholders. A significant proportion of leaseholders who will benefit are private landlords who have invested in leasehold property for financial gain. Those freeholders effected [sic] will included charities, such as the Claimant. Freeholders with a number of leases of 80 years or less will suffer particularly significant losses.”
Notably, the charity’s legal argument reserves the right to sue the government for compensation regardless of whether a declaration of incompatibility is granted.
Some headline points from the John Lyon’s Charity Annual Report are:
The largest grants go toward bursaries for children to attend various private schools (£1.7 million of the £15 million spent in 2024, page 42).
It appears the 2024 grant for the Somali youth charity was £50,000 of the £15 million, so about 0.33% (page 40).
As above, more than £3.5 million was earned in 2024 from lease extensions and enfranchisement on the reversionary estate versus the £50,000 spent on the Somali grant, so about 1.4% of the reversionary estate income went to the Somali charity.
Related posts:
Freehold owning charity in judicial review says ‘disastrous’ leasehold reforms will benefit millionaires and deprive poor children
Freeholders on course for judicial review showdown against leasehold reforms in January
Freeholds aren’t worth £27.3bn. They are worth what someone might pay for them today
Leasehold reform: So, was it worth it?
BBC told Charity Commission should stop dawdling over recognition of LKP
Freehold owning charity in judicial review says ‘disastrous’ leasehold reforms will benefit millionaires and deprive poor children
Prior to the 1993 Act, leaseholder of flats did not have a statutory right to claim a lease extension. As a consequence, leaseholders paid less for flats and the freeholder got less but could recover the lost ground in the negotiations to extend the lease if so minded
The 1993 Act made short leases more valuable, as the buyer had certainty they could extend their lease. The freeholder lost out. Therefore, back in 1993 to address that issue it was agreed that the marriage value should be split 50:50
Therefore, having agreed compensation in the past to address human rights it is somewhat provocative to take that agreed compensation away
However, for lease granted POST 1993 I do believe that the claim for marriage value is weak but for lease granted prior to 1993 then marriage value should remain
It is my belief that marriage value is a by product of not using the correct capitalization and deferment rate. If the deferment rate was lowered to reflect the collapse in the risk-free rate since 2005 when Sportelli was settled then marriage value more or less disappears when a deferment rate of 3.75% to 4% is used
There is no reason why a deferment rate for short leases should not be different from longer leases and this may address the fear that if the deferment rate was lowered to say 3.5% to 3.75% as has been discussed but kept at 5% for plus 80 year leases then those with 82 years leases would not be adversely effected
Today I read a Judicial Appointment Commission article about Lord Justice David Holgate, Court of Appeal Judge. The final paragraph quoted him: “Most importantly, I find fulfilment in delivering justice fairly and efficiently”.