[2025] EWHC 2751 (Admin)

A considerable part of Ms Wakefield’s submissions involved references to the materials produced in the period between the Law Commission’s identification of leasehold reform as a project in 2017 through to the Bill receiving the Royal Assent. We have sought to summarise that material above, and to highlight those parts which both sides place reliance upon, or which bear more generally on the objects of the LFRA 2024. It will be apparent from that summary, that while we accept that there have been some references which support Ms Wakefield’s submissions, read as a whole the material does not support the distinction between owner-occupiers and other tenants which the claimants seek to draw. That is not expressed in the LFRA 2024 itself, nor is there anything like adequate material to support the proposition that the aim of the legislation was much more limited than its obviously broad effect. Rather we accept that, particularly as the Law Commission’s exercise drew to a close and the process moved to the formulation and passage of legislation, the material shows that the reforms, in particular the measures under challenge, were intended to benefit leaseholders generally.

Rather than repeat our rehearsal of that material, we will pull out some of the key points which we believe emerge from that material, when the documents are read fairly and as a whole.

First, there is a clear and consistent theme within the materials of an inherent unfairness in long leaseholds of dwellings as a form of property ownership with several elements: the “wasting” nature of the tenant’s asset requiring the tenant to embark on and pay for enfranchisement in order to reverse the decline in value (at a potentially increasing cost); the associated point of the tenant having already made a substantial payment for the property; and the separation of aspects of control of the asset from the principal stakeholder and costs payer. After being (relatively) neutral on those issues in the Consultation Paper and Valuation Report, the Law Commission moved more explicitly to the “inherently unfair” view in the Enfranchisement Report. The Government took the same approach.

Second, we accept that there are many references to “homes” and “home owners”, in the documents, often in prefaces or summaries. Whilst there are undoubtedly occasions when Government and the Law Commission used that language to indicate owner-occupiers, that is not surprising given some of the acute, socio-political problems being addressed, such as non-mortgageability. On the other hand, there are many uses which are far more open-textured. It is perfectly normal to use the word “home” to embrace a dwelling or residential accommodation (rather than, for example, business premises) whether house or flat. Phrases such as “second home” and “holiday home” reflect that elasticity of use. In addition, someone who bought a home, and became a home owner, might legitimately regard one of the bundle of rights they had thereby acquired as being the ability to benefit from that asset by letting it to someone else when it suited them to do so. For that reason, we are not persuaded that the use of the word “home” or derivatives of that word, without more, supports the view that the objects of the measures were focused upon or limited to owner-occupiers.

Third, we do not accept that the expression “leaseholder as consumer” necessarily excludes tenants using their property as an income-generating asset. Such tenants are capable of being treated as consumers. It depends on the context, including the legal measure in question. We accept that in some contexts the expression “leaseholder as consumer” could be taken to refer to a tenant who uses leasehold premises for domestic rather than for business purposes. For example, the Law Commission expressly stated that they were using “leaseholder as consumer” in parts of their Consultation Paper and Valuation Report to refer to “individual owners” (another term which itself is not limited to owner-occupiers). But, as we have seen, its approach had changed by the time of its Enfranchisement Report. The Commission had arrived at firm conclusions about the inherent unfairness of long leaseholds of dwellings because of the wasting asset problem. It treated the expression “leaseholders as consumers” as referring to all leaseholders and “homes” similarly (see [247]-[248] above). There are also a number of references to “all leaseholders”, or which use statistics consistent with that being the object in mind.

Further there are contexts – in particular liability to pay service charges and insurance premiums, issues about a lack of transparency as to how service charges are calculated, tenants as the victims of unfairness in ground rents, and uncertainty as to the identity of the landlord from time-to-time – in which the concerns expressed are obviously applicable to all tenants, however they use their property. The references to “leaseholders as consumers” in this context are consistent with the aim of tackling such issues for the benefit of all leaseholders and from 2020 onwards it is plain that that phrase is being used in the same way when tackling the inherent unfairness in the relationship between landlords and long leaseholders of dwellings.

Fourth, the Law Commission did discuss the possible exclusion of non-owner occupiers from rights of enfranchisement, or as a class of leaseholders who could be required to pay more than owner-occupier leaseholders to enfranchise. They expressed reservations about doing so on “mechanistic” grounds, to use Ms Wakefield’s phrase, albeit not exclusively so. As we have noted, however, this was a very nuanced discussion: nuanced, because it was linked to the extent of any reform which the Government and, ultimately, Parliament might chose to make (i.e. how far the premium would depart from full market value) and nuanced because it was recognised that desirability of such a course would depend on what object the Government or Parliament was seeking to achieve through the reforming legislation.

Fifth, from October 2020 onwards, when the Government began the move from consultation and reports to legislation, a greater emphasis was placed on what was said to be the unfair imbalance between the tenant and the landlord inherent in the leasehold model of property ownership:

The claimants argued that the concept of an “imbalance” in the leasehold market “connotes a situation in which there is a perceived difference in the power held by the two-affected parties and thus naturally catches the position of owner-occupiers” (and implicitly, not private landlords or commercial investors). We do not accept this contention: