Article updated on 4th February 2026. Originally published 3 November 2025.
The Government has successfully defended a legal challenge brought by six major freeholders including the Duke of Westminster and the Earl of Cadogan over unimplemented sections of the Leasehold and Freehold Reform Act 2024, arguing their rights under the European Convention on Human Rights would be infringed.
The ruling, in favour of the government and leaseholders, is the next step in a journey to make it less expensive for millions of leaseholders to extend their leases or purchase their freeholds.
The consortium of freeholders specifically contested the following proposed reforms:
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Abolition of marriage value
When you extend your lease or purchase your freehold under the existing legislation your home will increase in value. However, if your lease is below 80 years, the legislation requires that you must share half of the potential increase in property value with your freeholder, which is known as the “marriage value”. The High Court has decided that this should be abolished, as they claim freeholders are fairly compensated for their loss by other parts of the premium calculation.
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Capping ground rent in premium calculations
Most leases have ground rents, ostensibly a rent for the use of the freeholder’s land, with prescribed increases in the rent enshrined in the lease. The lease extension premium includes a payment to the freeholder to compensate for the loss of future ground rent, calculated as a lump sum based on today’s value. The Act will make this cheaper for the leaseholder by capping the ground rent in the premium calculation. The Prime Minister recently announced that ground rents would be capped at £250 per annum. This is not expected to take effect until late 2028.
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Freeholder’s costs
Under existing legislation, the leaseholder must pay their own legal and valuation fees but also those of the freeholder, the concept being the leaseholder is ‘obligating’ the freeholder to relinquish part of his interest in filing a lease extension claim under the 1993 Act. The Court has ruled that each side should pay their own costs, making it a cheaper exercise for leaseholders.
On 24 October 2025, the court dismissed all claims, finding the reforms were a “fair and proportionate” governmental response to systemic leasehold issues. The reforms were held to strike a legitimate balance between freeholders’ rights and leaseholders’ fairness, whether considered individually or cumulatively.
The decision is being hailed as a landmark victory for leaseholders, clearing the path for the implementation of key reforms. While much still depends on secondary legislation and further consultation, the government can now move forward with ground rent caps, abolishment of marriage value, and restrictions on cost recovery, pending additional regulatory approvals.
While this ruling is an important next step in the leasehold reform journey, it is not the end of the battle. It seems likely that this decision will be appealed, therefore the outcome may change. The government has also said that it needs to complete further consultation on the rates and percentages used to calculate the cost of lease extensions but has held off until the outcome of this review. Only once these rates have been set will leaseholders know whether their lease extension will be cheaper, and for some it may well become more expensive.
The consequences will be watched closely across the legal, property and political sectors. For now, the judgment represents an endorsement of the government’s reform agenda, but there are still many uncertain outcomes.
