The UK government’s leasehold reform programme faces potential delays after the Court of Appeal granted permission for landowners to challenge the legislation underpinning the changes.
The appeal centres on the Leasehold and Freehold Reform Act (LAFRA), which aims to reduce costs for homeowners extending leases or purchasing freeholds. The legislation forms part of government proposals to introduce a £250 cap on ground rents and ultimately abolish leasehold tenure.
Legal grounds for challenge
A consortium of six freeholders, including Cadogan Estates and Grosvenor Group, launched the legal challenge last year, arguing the measures breach their property rights under the European Convention on Human Rights. The High Court initially dismissed the case, but the Court of Appeal has now granted permission to appeal on all grounds.
The landowners claim the reforms would result in significant financial losses and constitute a form of compulsory purchase. The government has estimated the policy could cost landlords approximately £4 billion.
Market implications
The ruling is expected to create uncertainty around the implementation timeline for LAFRA and broader sector reforms, with the case likely taking months to resolve. The outcome could have implications for the wider property market, particularly for buy-to-let landlords and property investors who have been monitoring the reforms closely.
James Carpenter of law firm Forsters told the Telegraph that ground rent investors would scrutinise the appeal outcome closely. He stated: “The Government’s housing policy resembles a house of cards, with LAFRA at its base. If the Court of Appeal ultimately pulls that card out, much of the wider legislative programme risks collapsing with it.”
Carpenter added that if the landlords succeed in overturning LAFRA, the legality of the proposed ground rent cap would also face serious doubt.
Government response
A spokesperson for the Ministry of Housing, Communities and Local Government confirmed the government intends to “robustly defend this appeal.”
The case adds to broader uncertainty in the property sector, where mortgage market conditions and regulatory changes continue to affect market dynamics. The appeal hearing is expected to take place in the coming months, with significant implications for both leaseholders and freeholders across England and Wales.
