Leasehold Reform 2026: High Court Rules on Human Rights Challenges – Latest Update & Appeal

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Short Answer – Human Rights Act challenges to the 2024 statute and the 2025 draft bill are delaying commonhold reforms to leasehold residential properties

Updated 08 July 2026

Leasehold Reform 2026 Photo of the Council of Europe - the original body that created the ECHR and consequently the Human Rights Act 1998
Leasehold Reform 2026
Photo of the Council of Europe – the original body that created the ECHR and consequently the Human Rights Act 1998

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Update on Leasehold Reform 2026 and Human Rights Act claims

Question – What is the update on the ARC Time case against the Government.

Essentially, are the governments leasehold reforms in the 2024 Act and the proposed reforms in the 2025 Bill so severe that they are not compliant with the Human Rights Act 1998 ?

I’ve looked at this also in another article – link here, however….

In October 2025 the High Court said ‘No’ – the reforms are compliant with the HRA / ECHR. However, on application to the Court of Appeal, ARC Time were given permission to challenge the proposed legislation on all grounds. i.e – it may be that the governments reforms actually amount to a breach of landlord’s human rights – specifically, it may breach their right to own property without the state disenfranchising them.

Example calculation for landlord compensation and marriage value

PROMPT:- Find the latest update on Arc Time Human Rights Act claim on leasehold enfranchisement – when is judgement due?

REPLY:- The case in question is the judicial review brought by a consortium of freeholders, including ARC Time Freehold Income Authorised Fund (often referred to in shorthand as involving “Arc” or ARC-related entities/funds, with some references to trustees or similar structures in the group of claimants). It challenged key provisions of the Leasehold and Freehold Reform Act 2024 (LAFRA) on grounds that they breached freeholders’ property rights under Article 1 of Protocol 1 (A1P1) to the European Convention on Human Rights (as incorporated via the Human Rights Act 1998).

The challenged measures related to leasehold enfranchisement (and lease extensions) included:

  • Abolition/removal of marriage value in premium calculations.
  • A cap on ground rents (e.g., at a low percentage of freehold value).
  • Restrictions on freeholders’ ability to recover their legal and valuation costs from leaseholders.

High Court Outcome (October 2025)

The High Court (Divisional Court, Lord Justice Holgate and Mr Justice Foxton) heard the case in July 2025 and handed down judgment on 24 October 2025 in R (ARC Time Freehold Income Authorised Fund and others) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin). The court dismissed all claims, ruling that the reforms—individually and cumulatively—were compatible with A1P1. It accepted there was an interference with property rights but found it justified in the public interest (addressing unfairness in the leasehold system and making enfranchisement cheaper/easier for leaseholders), without imposing an excessive burden on landlords.

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Current Status: Appeal to the Court of Appeal

The High Court refused permission to appeal, but at least one major claimant (including ARC-related interests) applied directly to the Court of Appeal. Recent reports (as of early April 2026) confirm that the Court of Appeal has granted permission to appeal on all grounds. This is a setback for the government’s reform timetable and has introduced further delay/uncertainty around implementing the remaining LAFRA provisions.

The government has stated it will robustly defend the appeal. No specific date has been publicly confirmed yet for the full appeal hearing or for when judgment is due. Appeals of this nature in the Court of Appeal typically take several months from permission being granted to hearing (and then further time for judgment), but timelines can vary based on court scheduling. As of now (mid-April 2026), the appeal remains pending, with no fixed judgment date announced in available sources.

This ongoing litigation continues to delay full rollout of LAFRA’s enfranchisement reforms. Leaseholders and freeholders should monitor official court listings or updates from the Ministry of Housing, Communities and Local Government for the next developments. The full High Court judgment is available on the judiciary.uk website for detailed reading.

PROMPT:- Does the ARC Judgment/Appeal Affect the Commonhold and Leasehold Reform Bill 2025 (and its £250 ground rent cap)?

Indirectly yes, but not directly on the core £250 cap itself. Here’s the breakdown:

  • The draft Commonhold and Leasehold Reform Bill (published 27 January 2026 for pre-legislative scrutiny) is a separate piece of primary legislation. It includes:
    • Capping actual contractual ground rents on existing long leases at £250 per year (reducing to a peppercorn/zero after 40 years), with implementation targeted for around late 2028 (subject to parliamentary approval and any regulations).
    • Reinvigorating commonhold as the default tenure for flats (including banning most new long leasehold flats).
    • Other measures like abolishing forfeiture and improving commonhold conversion.
    This £250 cap goes further than the LFRA 2024’s notional 0.1% ground rent cap (which only affects enfranchisement/lease extension calculations, not the rent actually payable under the lease). The new Bill directly interferes with existing lease contracts by imposing a statutory cap on what leaseholders must pay.
  • Link to the ARC case: The ARC challenge does not directly test the new £250 cap (which wasn’t in the 2024 Act). However:
    • The Court of Appeal’s reasoning on whether similar ground rent restrictions breach freeholders’ human rights (A1P1 / peaceful enjoyment of possessions) under the Human Rights Act could influence how courts view the new cap.
    • Freeholders (including ground rent investors) are expected to scrutinise the ARC outcome closely. A successful appeal could embolden further legal challenges (via judicial review) to the Commonhold Bill once enacted, arguing disproportionate interference with property rights. Commentators have noted that the government’s wider leasehold reform programme has elements that resemble “a house of cards,” with LFRA at the base — a major upset in the appeal could ripple into delays or adjustments for the new Bill.
  • Current status and timing impact:
    • The ARC appeal is already contributing to delays in fully implementing the enfranchisement reforms in the 2024 Act (e.g., cheaper extensions, 990-year terms, marriage value abolition). The government has said it will “press ahead” with other parts of LFRA where possible, but enfranchisement elements are likely postponed pending the appeal outcome.
    • The Commonhold Bill is still at the draft/pre-legislative scrutiny stage (expected to involve the Housing, Communities and Local Government Select Committee). It will then need full parliamentary passage. The £250 cap is not imminent — late 2028 is the current indicative target.
    • Even without the ARC case, the new Bill would likely face its own human rights scrutiny during passage and potential post-enactment challenges. The High Court’s robust rejection in ARC (a detailed, multi-judge judgment) suggests the government has strong arguments that such reforms serve a legitimate public interest (rebalancing an “unfair” leasehold system), but appeals or new claims remain possible.

In short: The ARC appeal won’t block the Commonhold Bill from progressing through Parliament, but its outcome could create legal uncertainty, potential further litigation, and knock-on delays to the overall reform timetable — including implementation of the £250 ground rent cap and related measures. Leaseholders hoping for quicker relief on ground rents or enfranchisement should monitor court listings and government announcements closely. Freeholders may use any favourable ARC ruling to argue against the new cap.

For the latest official details, check the draft Bill and explanatory notes on gov.uk, or the judiciary website for court updates. Professional legal advice is recommended for individual circumstances, as this area remains fluid.

Related articles and other links

Rent charges explained

CLRA 2026 DRAFT Bill link

Click here for the contact page

The difference between a lease and a licence – Street v Mountford

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David Buchanan is a consultant solicitor specialising in contentious and non contentious law and trust law.

Changes under the Leasehold and Freehold Reform Act 2024 (LFRA)

Key Changes to the Calculation Method (once in force, if ever):

  • Marriage Value abolished — The entire 50% uplift (the biggest cost for leases with <80 years remaining) is removed.
    → Premium becomes much lower for short leases.
  • Premium simplified to:
    Mainly just the diminution in the landlord’s interest
    = Term Value (capitalised ground rent) + Reversion Value
    (No more 50% marriage value added.)
  • Ground rent treatment capped — Ground rent used in calculations will be limited (e.g. often at 0.1% of freehold value), reducing the Term Value.
  • Prescribed rates — Government will set fixed deferment and capitalisation rates (via secondary legislation) to make valuations more consistent and less open to dispute.
  • Other changes:
    • New lease term = 990 years (instead of +90 years)
    • Peppercorn rent on the extended lease

Leasehold Reform 2026 & Human Rights Act FAQ (Short Version)

1. What is happening with leasehold reform?

The government is reforming leasehold via the 2024 Act (cheaper extensions, marriage value abolition) and a new draft 2026 Commonhold Bill (including £250 ground rent cap). Full rollout is delayed by legal challenges.

2. What is the ARC Time Human Rights case?

Freeholders (led by ARC Time) claim the 2024 reforms breach their property rights under the Human Rights Act 1998 (Article 1 Protocol 1).

3. What was the High Court decision?

In October 2025, the High Court ruled the reforms are compliant with human rights law.

4. What is the current status?

The Court of Appeal granted permission to appeal on all grounds (as of 2026). The appeal is ongoing, causing delays to key reforms.

5. Does it affect the £250 ground rent cap?

Indirectly. The cap is in the new draft Bill (not yet law), but the appeal outcome could influence future challenges and timelines.

6. Key changes (when in force)

  • Marriage value abolished
  • 990-year lease extensions
  • Capped ground rent in calculations
  • Simpler, cheaper enfranchisement

7. What should I do?

Monitor court and government updates. Seek specialist legal advice for your lease.

Last updated: July 2026. This is general information only — not legal advice.