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Estimates of the impact of the measures The material before the court
Estimates of the impact of the measures
The material before the court
The evidence before the court as to the impact of the measures introduced by the LFRA 2024 came essentially from two sources:
The exercise carried out in the IA and the Addendum IA.
Evidence adduced on behalf of the claimant groups as to the impact the LFRA 2024 has already had and will have on them.
While neither side was able to agree with the other’s estimates, they both recognised that the LFRA 2024 would have a very significant beneficial effect on tenants, achieved through a very significant adverse financial effect on landlords.
After these challenges had been issued, and when doing work to respond to FOIA requests from C&G, the Secretary of State identified a modelling error which had a significant impact on the IA modelling of the Ground Rent Cap. The Secretary of State published the Addendum IA, which addressed the consequences of that error, on 14 April 2025.
We were provided with the following table in Agreed Statement F which summarised the financial effects of the LFRA 2024 as had been set out in the IA and Addendum IA in 2019 prices and at 2025 Present Value (save for the Net Benefit which was given in 2019 prices and at 2020 Present Value):
MEASURE/EFFECT | IA | ADDENDUM IA | |
1 | Impact of 0.1% Ground Rent Cap | £588m | £1.151bn |
2 | Marriage Value Reform | £1.91bn | £1.86bn |
3 | Costs Recovery Reform | £599m | N/A |
4 | Estimated Annual Net Direct Cost to Business (“EANDCB”) of the LFRA 2024 and secondary legislation | £227m | £259m |
5 | EANDCB for the LFRA 2024 on its own | £159m | £191m |
6 | Transfer of wealth from landlords to enfranchising tenants | £3.2bn | £3.7bn |
7 | Asset value impacts of Marriage Value Reform | £7.1bn | £6.9bn |
8 | Estimated Net Benefit | £90.9m 2020 PV and £107.3m 2025 PV | £90.9m 2020 PV and £107.3m 2025 PV |
9 | Total costs | £3.5bn | £4.0bn |
The parties agree that the majority of marriage value is realised on enfranchisements in London (the IA estimating 65%, and the Addendum IA 66%, and Mr Roberts, C&G’s expert, estimating 69%). The parties did not regard these differences as significant for the purposes of the claims, and nor do we.
- Heading
- Lord Justice Holgate and Mr Justice Foxton This judgment is set out under the following headings
- The parties
- The issues raised by the parties
- The legislative history
- The LFRA 2024
- Article 1 of the First Protocol – the legal principles The approach of UK courts to the jurisprudence of the European Court of Human Rights
- The structure of A1P1
- James v United Kingdom
- Strasbourg jurisprudence after James
- Are the effects of the wasting asset problem priced into the premia for residential leaseholds?
- Proportionality in domestic law – general principles
- Assessing the aims of a measure and its justification
- The width of the margin of appreciation
- General rules or bright lines
- Less intrusive measures
- The ab ante principle
- Indirect discrimination
- The requirement for compensation to be reasonably related to the value of the property taken
- The concept of market value
- The evolution of the measures under challenge
- The Law Commission embarks on a further leasehold reform project
- Contributions from Government and Parliament
- The Law Commission Consultation Paper No.238
- Further Government and Parliamentary activity
- The Law Commission Valuation Report (No.387)
- CMA involvement
- The Law Commission Enfranchisement Report (No.392)
- The Government moves towards legislation
- The Impact Assessment
- The Bill
- The ECHR Memorandum
- Engagement by the claimants in the reform process
- After the LFRA 2024 was enacted
- Estimates of the impact of the measures The material before the court
- The challenge to the IA and Addendum IA
- The aims of the measures The rival cases as to the objects of the LFRA 2024
- The legislation
- Hansard
- The statutory interventions prior to the LFRA 2024
- The material from 2016 to the enactment of the LFRA 2024
- Conclusions as to objects
- Are the measures rationally connected with the identified objects?
- The Ground Rent Cap
- The background
- Whether the objects which the Ground Rent Cap was intended to achieve could have been achieved by a less intrusive measure
- The “fair balance” assessment
- Conclusion
- The Marriage Value Reform
- Marriage value and the problem of the tenant’s lease as a wasting asset
- Consideration of marriage value in documents leading to the LFRA 2024
- Aims
- The claimants’ arguments on the justification for the Marriage Value Reform
- Whether the objects which the Marriage Value Reform was intended to achieve could have been achieved by a less intrusive measure
- The “fair balance” assessment
- The submissions of John Lyon’s Charity on the Marriage Value Reform
- Conclusion
- The Costs Recovery Reform
- Aims and justification
- Fair balance assessment
- Conclusion
- The cumulative effect of the measures
- Whether the non-exclusion of charities from the measures violates A1P1? Introduction
- Consideration of the effect of enfranchisement reform on charities prior to the enactment of the LFRA 2024
- The effect on landlords with charitable status
- The case for the Portal Trust Introduction
- The pre-legislative and legislative process
- The objects of the LFRA 2024
- Conclusions