[2025] EWHC 2751 (Admin)

Fecha: 24-Oct-2025

The Marriage Value Reform

11.

The Marriage Value Reform

382.

Mr. Jourdan for the Abacus claimants and Mr. Maurici for C&G led on the claimants’ submissions on marriage value. The other claimants adopted those submissions. Mr. Fitzgerald KC made some additional submissions on the specific position of John Lyon’s Charity.

383.

Prior to the LFRA 2024 the House of Lords had decided in Sportelli that the effect of the statutory assumption that an enfranchising tenant may bid in the hypothetical transaction for determining the value of his landlord’s interest is that:

For claims in relation to houses, marriage value attributable to the merger of the interests of the landlord and tenant is to be taken into account, but not “hope value”, namely the hope that those interests would be merged in future, as that would involve impermissible double-counting;

ii)

The principle in (i) also applies to a tenant’s claim to acquire a lease extension of a flat under Chapter II of Part I of the LRHUDA 1993;

iii)

In a claim for collective enfranchisement the landlord is entitled to a share of marriage value in relation to the flats of participating tenants and of hope value in relation to the flats of non-participating tenants.

For valuations within s.9(1) of the LRA 1967 relating to low value houses, the assumption that the tenant is not and will not be in the market, excludes both marriage value and hope value from the assessment of the price payable. As we have said, the CLRA 2002 provided that where the valuation is to take into account marriage value, that value is to be apportioned 50:50 between the landlord’s interest and the tenant’s interest.

384.

In addition, the CLRA 2002 amended the LRA 1967 and the LRHUDA 1993 so as to require marriage value to be ignored where more than 80 years of the term of the tenant’s lease remained unexpired, because it was judged that the amount of any marriage value would generally be insignificant.

385.

When brought into force, para.17(3) of the LFRA 2024 will exclude marriage value from the enfranchisement price payable, where 80 years or less of the term remain unexpired, by requiring it to be assumed that the claimant, or the nominee purchaser in the case of a collective enfranchisement, is not seeking, and will never seek to acquire, the relevant interest.

386.

Both the submissions on Marriage Value Reform and many of the pre-LFRA 2024 papers describe the Reform as effecting “a transfer of marriage value” from the landlord to the tenant. It is important that this choice of language is not misunderstood. As explained below, it would be wrong to characterise marriage value (or at least the landlord’s “share” of it) as a pre-existing asset of the landlord which, through the enfranchisement process as reformed by the LFRA 2024, is subject to compulsory transfer from the landlord to the tenant without compensation. The asset transferred is the landlord’s reversionary interest or an extended leasehold interest. Marriage value is a valuation concept used by valuers, including under the pre-LFRA 2024 enfranchisement regime, when determining the amount to be paid by the tenant to the landlord in return for enfranchisement. Whether it arises and, if so, the amount, will depend upon the length of the term remaining when a right to enfranchise is exercised. Because the effect of the Marriage Value Reform is that a landlord will no longer be entitled to a 50% share of any marriage value created by the exercise of a right to enfranchise, to that extent the compensation for his interest will be reduced, and the value of the tenant’s interest correspondingly increased. Even before enfranchisement takes place, and the actual extent of any effect on marriage value can be ascertained, the Reform is likely to have increased the value of many leasehold interests and reduced the value of many reversionary interests. The references to a “transfer of marriage value” are a shorthand for these economic effects of the LFRA 2024, whether for an individual leasehold or aggregated for leaseholds generally.