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Following a hearing on 17 October 2024, Chamberlain J has dismissed the Government’s application to stay a number of claims challenging the new Leasehold and Freehold Reform Act 2024 (“LAFRA 2024”) on Article 1 Protocol 1 ECHR grounds. The Court’s reasoned decision is to follow.
LAFRA 2024 received Royal Assent on 24 May 2024. It provides, amongst other things, for a new method of calculating enfranchisement and lease extension premiums. Its provisions include: (a) para. 17 of Sched. 4, which requires “marriage value” (broadly, a sum reflecting the value of uniting a leasehold and freehold interest) to be disregarded when calculating premiums; and (b) para. 26(4) of Sched. 4, which caps ground rent at 0.1% of the market value of the premises being valued when calculating the premium. If brought into effect, the new methodology will have significant implications for the approach to enfranchisement and lease extensions in the UK.
Seven claims were issued in August 2024, challenging these and other provisions. The Secretary of State’s position was that the claims should be stayed pending secondary legislation commencing the relevant provisions, and providing for the full legislative package including the setting of deferment and capitalisation rates to be used in the new methodology. This position was supported by four of the claimant groups. The Court dismissed the stay applications, deciding that the claims should now proceed to the permission stage. A permission hearing is likely to take place in January 2025.
James Maurici KC and Natasha Jackson, instructed by Herbert Smith Freehills, and Tim Buley KC and Julia Smyth, instructed by Hogan Lovells, act for two discrete claimant groups of investors, and Galina Ward KC and Katharine Elliot act for the Secretary of State.
