[2025] EWHC 2751 (Admin)

On 23 October 2020, officials advised the Minister as to the “importance of establishing the overarching aim for policies on enfranchisement valuation, and the relevance of that aim to defending a potential legal challenge from freeholders”, and recommended agreeing to:

“The overarching aim, which is consistent with previous Government messaging on the purpose of reforming enfranchisement and states that whilst freeholder interests are taken into account, the Government is addressing historic imbalance to ensure fairness for leaseholders.”

This aim was reiterated at para.10 and was said to be consistent with statements made by Government since 2017. It included the reduction of the price payable by a leaseholder to buy a freehold or extend his lease (para.12) and “ensuring that a leaseholder can own and use their property without fearing that it will become unsellable without payment of a large premium” (para.13). The submission noted that the Law Commission’s valuation report “contains options that can be put together in different ways to form a package”. The briefing made it plain that a fair balance had to be struck between the interests of landlords and tenants for the purposes of A1P1 (para. 7) and that Ministers had a spectrum of options for striking that balance between landlords and tenants differently (para.14). The recommended aim reduced premiums where possible while resulting in a premium for landlords representing a market value (para.14). Ministers approved the recommendation.

Also on 23 October 2020, officials provided a further submission to Ministers “to consider options for reforming valuation methodology”:

On 28 October 2020 the Secretary of State approved the Law Commission’s Scheme 1, and so the three reform measures came to be included in the Bill which resulted in the LFRA 2024.

While these materials would not have been available to Parliament when the LFRA 2024 was passed, they formed the basis of a press release published by the Government on 7 January 2021, announcing that it would be giving effect to reforms identified by the Law Commission in its Valuation Report, including “abolishing prohibitive costs such as ‘marriage value’” and setting rates used to calculate the enfranchisement premium “to ensure this is fairer, cheaper and more transparent”. The statement said that “millions of leaseholders” would be given the right to extend their leases by 990 years. The statement referred to “fundamentally making home ownership fairer and more secure” and quoted the Secretary of State, the Rt Hon Robert Jenrick MP, as saying “these reforms provide fairness for 4.5 million leaseholders and chart a course to a new system” (i.e. the entire pool of leasehold owners, including 1.8 million private landlords in the private rental sector). The statement included passages about leasehold generally (e.g. “under the current law, many people face high ground rents, which combined with a mortgage, can make it feel like they are paying rent on a property they own”). It also referred to leaseholders’ “homes” (e.g. “those who dream of fully owning their own home”) without suggesting that the object of the reforms was limited to owner-occupiers. The Government also announced that it was “establishing a Commonhold Council - a partnership of leasehold groups, industry and Government - that will prepare homeowners and the market for the widespread take-up of commonhold.”

On 11 January 2021, the Secretary of State introduced the Government’s proposed reforms in a Written Statement. This referred to “reforms to how we hold property … and the beginning of an even more fundamental change to English property law, through the widespread introduction of the Commonhold tenure.” The Secretary of State said:

“The Law Commission have now completed this work and their findings are clear. Under the current system, too many leaseholders find the process for extending their lease or buying their freehold prohibitively expensive, too complex and lacking transparency. I am addressing this, addressing historic imbalance to ensure fairness for leaseholders, whilst taking account of the legitimate rights of freeholders. I will continue to ensure we meet this objective as we bring forward reforms.”

The Government committed to a number of reforms, including the removal of marriage value, capping the treatment of ground rents at 0.1% of the freehold value and prescribing rates. The programme of reform was intended to “fundamentally enhance the fairness of English property rights.”

Work on the IA began in October 2021. In her witness statement at paras. 104 –122, Ms Crowther describes the lengthy and detailed work undertaken to collect and analyse data and to build and develop an evidence base and model for carrying out the IA and sensitivity analysis. The preparation and carrying out of the assessment was a long and iterative process.

In January 2022, the Government published a consultation paper “Reforming the Leasehold and Commonhold Systems in England and Wales” (“DLUHC Consultation January 2022”), which consulted on the Law Commission’s reports published in July 2020 concerning the non-residential limit for collective enfranchisement, right to manage claims and individual freehold acquisitions, the introduction of mandatory leasebacks, commonhold voting rights and the provision of information during the sale of a commonhold property. The Ministerial foreword referred to “homes” and “home ownership”, to the fact that “we do not have a leasehold system fit for the future, that works for leaseholders as well as freeholders”, and to “the historic imbalance” on which that system was built. Both themes are also evident in section 2 (“Introduction and background”). On the aims of the reform the statement said at [15] that:

“Government’s aims in this area are to address the historic imbalance as between the rights of freeholders and of leaseholders, ensuring fairness for leaseholders, whilst taking into account the legitimate rights of freeholders ... ”

The Law Commission’s recommendations and rationale in respect of non-litigation costs were put to the then Housing Minister in a ministerial submission dated 13 December 2022 (which would not have been before Parliament when the LFRA 2024 was enacted). The submission recommended making it “cheaper and easier for leaseholders to enfranchise” or to exercise “their RTM” (right to manage) by a general rule that leaseholders exercising those rights would not pay their landlord’s non-litigation costs, subject to the three exceptions which were included in the LFRA 2024. The basis for the recommendation was that (i) landlords were unfairly compensated in enfranchisement transactions when compared with “other” open market transactions (it being the Government’s position that the reformed enfranchisement process would be a form of “open market” transaction) and (ii) making tenants pay the landlords’ costs was a significant barrier to enfranchisement, with such costs being difficult to predict. The Annex contained a table of the Law Commission’s recommendations, the advice and the “rationale” for each recommendation. The rationale for the proposed reform to non-litigation costs was “the LC’s recommendation would meet our objectives for the leasehold reform regime by reducing the cost of enfranchisement for leaseholders and removing one of the barriers currently deterring leaseholders from bringing ENF claims.” The Minister agreed to the recommendation on 19 December 2022.

The Leasehold and Freehold Bill was announced in the King’s Speech on 7 November 2023, in which His Majesty confirmed that “My Ministers will bring forward a bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges.”

The notes published together with the speech explained further that “The Bill will make the long-term and necessary changes to improve home ownership for millions of leaseholders in England and Wales, by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and take over management of their building”. Under the heading “What does the Bill do?” the notes stated “Empowering leaseholders: Making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold - so that leaseholders pay less to gain security over the future of their home”.

On 10 October 2023, a pre-submission meeting took place with officials from the Regulatory Policy Committee (“RPC”). On 23 October 2023, Ministerial approval was given for the IA to be formally submitted to the RPC. Further approval was obtained a week later following a change to the headline figures in the previous version of the IA.