[2025] EWHC 2751 (Admin)

Whether the non-exclusion of charities from the measures violates A1P1?

This challenge to the LFRA 2024 was principally advanced by John Lyon’s Charity, and focussed on the appreciable effect which the abolition of marriage value would have on its income derived from enfranchisements of its freehold property portfolio largely concentrated in the St Johns Wood area of London, and a consequential reduction in its ability to support a range of worthwhile causes, which have a particular emphasis on the provision of support in the child and young people sector.

The argument was supported by the Portal Trust, a leading educational grant provider. It is the freeholder of a large estate in Hackney in London, and some 13% of its income derives from rents received from SHA, which leases a substantial volume of residential property from the Portal Trust on the Hackney Estate pursuant to the terms of two leases. We address the specific circumstances of the Portal Trust in more detail below. For present purposes, it is sufficient to note its submission that the effect of the LFRA 2024 will be to reduce its income and the amounts available for its charitable purposes.

John Lyon’s Charity has a diverse asset base, valued in total at £385,633,000. The majority of its assets are said to be permanently endowed. On its evidence, it operates on a “total returns” policy which involves spending 3.5% (an assumed sustainable return on assets over time) of the value of its assets each year. Assets in the form of freehold interest in property comprised 10% of total assets in 2023/2024. Of this amount, £10.5m represents assumed marriage value, and 25% assumed enfranchisement premiums. Income from enfranchisement, in 2023/2024 was nearly a quarter of total annual income, and income from marriage value 10%. The charity has estimated (it says conservatively) a reduction in its annual grant-making ability of £1.37m would follow from the abolition of marriage value. It holds some 99 freeholds which were expected, prior to the LFRA 2024, to generate marriage value over the next 30 years.

The Secretary of State rightly acknowledged the excellent work John Lyon’s Charity did but did not admit the extent of any impact on the charity’s grant-making capacity of the removal of marriage value. While we are unable to reach any conclusions as to the precise impact, we accept that the removal of marriage value is likely to have an appreciable effect on the income of John Lyon’s Charity, and its grant-making capacity. The process of making enfranchisement cheaper for tenants – one of the stated objects of this legislation – will inevitably impact the amount received by the holder of a significant number of freeholds in PCL like John Lyon’s Charity.