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A landlord consortium is arguing in court that leasehold reforms infringe their human rights.
The group bringing the action at the High Court in London is made up of 54 landowners from across England and Wales who own 390,000 flats and houses.
They are funding a judicial review looking at the impact of the Leasehold and Freehold Reform Act passed by the Tory government with support from the Labour opposition before the 2024 general election. The case started July 15 2025 and is expected to last a week.
Bringing the claim are The ARC Group, which comprises the ARC Time Freehold Income Authorised Fund, the Ground Rents Income Fund and PGIM; The Cadogan and Grosvenor Group; Long Harbour, Albanwise Wallace and charitable trusts John Lyon's Charity and The Portal Trust.
England and Wales have an estimated 4.5 million leasehold properties - about one in five of the total of around 26 million properties. Scotland has none - leaseholds were abolished there more than a decade ago.
The Act aims to save leaseholders money by making the process of extending or buying a lease cheaper and easier. Key to this is removing the marriage value by subtracting the freeholder and leaseholder interest in the property before the lease extension from the overall value after the lease is extended.
The Leasehold and Freehold Reform Act also increases the standard lease extension term to 990 years, with ground rent reduced to a peppercorn, and bans the granting of leaseholds on most new housing.
Lawyers for the freeholders claim the new legislation will breach their right to enjoy private property as enshrined in the European Convention of Human Rights.
The charities claim they support leasehold reform, but argue changing the marriage value will reduce their income and impact their charitable work. The charities also want exemptions granted to other charities, like the National Trust, extended to cover them.
Others in the group bringing the High Court action complain that altering the calculations for the cost of lease extensions could mean they lose hundreds of millions of pounds. Campaign groups for leaseholders say they fear the legal challenge could delay the implementation of the Leasehold and Freehold Reform Act for years.
Meanwhile, a government consultation on allowing leaseholders to challenge the transparency of services and service charges is open until September 26.
Housing Minister Matthew Pennycook said: "Far too many leaseholders in England and Wales, the reality of home ownership has fallen woefully short of the dream -- their lives marked by an intermittent, if not constant, struggle with punitive and escalating ground rents; unjustified permissions and administration fees; unreasonable or extortionate charges; and onerous conditions imposed with little or no consultation. This is not what home ownership should entail.
"The UK government is committed to bringing the feudal leasehold system to an end."