The property landscape in the UK is undergoing its most significant transformation in decades, and here at Levels, we’ve always championed the voice and position of the leaseholder. The Leasehold and Freehold Reform Act 2024 marks a monumental shift towards a fairer system, and the High Court’s recent decision on 24th October 2025, has reinforced this trajectory, dismissing a major legal challenge against the new legislation.

This ruling is a powerful affirmation of the Government’s intent to rebalance the scales of power within the residential property sector, making homeownership more secure and affordable for millions. While we maintain strong, professional relationships with all our clients, including freeholders, we view this as a necessary and justified step towards addressing long-standing structural unfairness in the leasehold model.

Let’s dive into the details of this landmark decision, what it means for the future of property management, and why this is great news for leaseholders across the UK.

Background on the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 (LFRA 2024) was introduced to deliver on promises to reform the residential leasehold system in England and Wales. It was designed to make it cheaper and easier for leaseholders to extend their lease or buy their freehold.

Key measures within the Act include:

• Increasing the standard lease extension term for houses and flats to 990 years with ground rent reduced to a peppercorn (zero financial value).
• Scrapping the requirement for a new leaseholder to have owned their property for two years before they can exercise their rights.
• Expanding access to the Right to Manage (RTM).
• Introducing greater transparency over service charges and banning excessive building insurance commissions.

Crucially, the Act introduced new valuation methods for calculating the cost of a lease extension or freehold purchase, which is where the recent High Court challenge was focused.

What Was the Case About and What Reforms Were Challenged?

A group of property owners, including institutional investors and charitable trusts, brought a judicial review against the Government, challenging the legality of key aspects of the new valuation model under the LFRA 2024.

The claimants argued that the amendments were incompatible with the European Convention on Human Rights (ECHR), specifically Article 1 of the First Protocol (A1P1), which protects the right to the peaceful enjoyment of possessions. Essentially, they argued the reforms amounted to an unjust interference with their property rights, significantly devaluing their investments.

The three main reforms that formed the core of the challenge were:

• Abolition of ‘Marriage Value’: This is the uplift in the value of a property when the lease is extended beyond 80 years. Under the old rules, the leaseholder had to pay the freeholder 50% of this increase. The Act removes this requirement entirely.
• Capping Ground Rent in Lease Extension Calculations: Under the Act, the ground rent used in the premium calculation for a lease extension will be capped at 0.1% of the property’s vacant possession value, making it much cheaper to ‘buy out’ future ground rent liabilities, especially for those with escalating or high ground rents.
• Costs Recovery Reform: The new rules abolish the freeholder’s automatic right to recover their non-litigation legal and valuation costs from the leaseholder during the enfranchisement process. The system will now operate on an ‘each side pays their own costs’ basis.

What Was the Freeholders’ Argument?

The core of the freeholders’ argument was that the cumulative effect of these three measures – especially the removal of marriage value and the ground rent cap – would significantly reduce the compensation they receive when a leaseholder extends their lease or buys the freehold. They contended that this reduction in value constituted an unlawful interference with their property rights under the ECHR, arguing that they were not receiving fair compensation for their assets.

Some claimants, including charities who rely on income from their leasehold estates, argued that the changes would have a severe adverse impact on their ability to generate income for their charitable purposes.

What Was the Court’s Decision?

The High Court dismissed all six applications for judicial review, ruling unanimously in favour of the Government.

The Court acknowledged that the measures do interfere with property rights but found them to be justified and proportionate. It concluded that the legislation pursues a legitimate public purpose – addressing the structural unfairness of the leasehold system – and that it strikes a fair balance between the rights of property owners and leaseholders.

The judges confirmed that the changes to the ground rent cap, the abolition of marriage value, and the costs recovery reform were not incompatible with human rights legislation, whether considered individually or cumulatively. The Court emphasised that Parliament is entitled to reform property law to correct long-standing inequities in the system.

What is the Significance of the Ruling?

For the estimated 4.5 million leaseholders in the UK, this ruling represents a significant victory and a clearing of the path for the Act’s full implementation.

• Abolition of Marriage Value is Upheld: This is arguably the biggest win, especially for leaseholders whose leases are approaching or below 80 years, as the premium for a lease extension will be significantly lower.
• Cheaper and More Accessible Enfranchisement: The combination of the reforms means that extending a lease or buying the freehold will be financially more accessible for many, removing historical, often opaque, barriers.
• Judicial Endorsement of Reform: The High Court’s decision gives a strong legal endorsement to the entire leasehold reform agenda, reinforcing the principle that Parliament can legislate to rebalance the property market in favour of the long-term occupier.

At Levels Property Management, we believe this is an essential step towards providing leaseholders with greater security and control over their homes – a principle we have always supported. For our freeholder clients, while we acknowledge the impact, our commitment remains to provide a transparent and professional service that navigates the evolving legal framework, protecting their legitimate interests within the bounds of the new law.

What Happens Next?

While the High Court decision is a decisive step, it is not the very last word.

1. Likely Appeal: The claimants are widely expected to appeal this decision, which could take the case to a higher court. This process, however, is not a guarantee of a different outcome.
2. Secondary Legislation: The full implementation of the valuation reforms depends on the Government passing a programme of approximately 25-30 pieces of secondary legislation. This includes setting the specific rates and percentages (known as ‘prescribed rates’) that will be used in the new calculation formula.
3. Further Consultations: The Government still needs to launch a consultation on these prescribed rates. Only once these rates are set will leaseholders know exactly how much their lease extension will cost, although the High Court ruling ensures the framework for the calculation remains more favourable to them.

The focus now shifts to the Government to press ahead with this vital secondary legislation to ensure leaseholders can benefit from the reforms as swiftly as possible.

The High Court’s rejection of the challenge confirms that the path to fairer, more transparent, and more affordable leasehold ownership is clear. Levels Property Management is here to help all our clients, leaseholders and freeholders alike, navigate these new regulations with integrity, information, and innovation.