The Leasehold and Freehold Reform Act 2024 (LAFRA) was intended to deliver a package of significant reforms for leaseholders seeking either to extend their lease or to purchase the freehold through a process known as enfranchisement. The changes include:
In the case of ARC Time Freehold Income Authorised Fund & Ors, R (on the application of) v The Secretary of State for Housing, Communities and Local Government, a group of major landlords are challenging the legislative reforms on human rights grounds.
In April 2026, six months on from the High Court’s dismissal of the claim in October 2025, the Court of Appeal has now granted the landlords permission to appeal on all grounds, introducing further uncertainty as to when the proposed reforms will come into force.
This article looks at where LAFRA stands, the impact of the appeal, and how the resulting uncertainty affects decisions on lease extensions and enfranchisement.
Not much has changed since LAFRA received Royal Assent on 24 May 2024. Notwithstanding the ongoing legal challenge, its implementation was never going to be a quick process due to the complexity of the existing regime and the significance and impact of the proposed changes. News of this appeal, however, has created further uncertainty for leaseholders and landlords as to “when is the right time” to extend their lease.
LAFRA and the pending appeal are significant for both leaseholders and landlords. Leaseholders face continued uncertainty whilst awaiting reforms intended to make lease extensions and enfranchisement more affordable, whilst landlords may see the value of their assets impacted. The appeal is likely to take several months to resolve and, in any event, the reforms will require secondary legislation to bring them into force; a process that could take several years.
While LAFRA proposes the abolition of marriage value it does empower the secretary of state to introduce new, and potentially lower, deferment and capitalisation rates - both of which are discounts applied in the valuations of the landlord’s freehold reversion and ground rent income respectively. A reduction in these rates could increase lease extension premiums offering some comfort to landlords. However, it could also make lease extensions more expensive for leaseholders, not just for those currently facing the prospect of marriage value.
A government consultation on deferment and capitalisation rates is expected, but this is unlikely to happen until after the appeal is concluded. We will continue to monitor the situation closely but in the meantime, if a lease is nearing an 80 year term, leaseholders should still consider proceeding now in view of the uncertainty.
If you have any questions about the implications of LAFRA or lease extensions more generally, please contact Amy Bennett or Eleanor Lord.
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