A charity for children and young people in London has brought a legal challenge to the Leaseholder and Freehold Reform Act legislation brought in early this year by the Conservative government.
The legislation is intended make it easier for leaseholders to buy their leases from freeholders and also abolishes so-called “marriage values”, an additional amount payable by the leaseholder once the lease has less than 80 years remaining.
The legal challenge is being brought by John Lyon’s Charity, which gives grants to children and young people across nine London boroughs. Its legal team claims the act will jeopardise the work of charities that depend on property assets for funding. The charity says it will have a “potentially devastating impact” on its own operations.
A significant amount of the charity’s income comes from enfranchisement claims and lease extensions from its portfolio in St John’s Wood, NW8. The charity reinvests the income generated back into the community through grants, supporting more than 1,700 organisations that provide services for young people.
The charity has calculated that the legislation could cost it around £1.4m a year.
“The former Tory government failed to acknowledge the significant adverse impact the [Act] has on charities that rely on income from leasehold estates,” the charity said in a statement.
“Nor did it put any compensatory safeguards in place to protect the property interests of freeholders. The charity is devastated that it could lose around £1.4m annually and it is subsequently imploring exemption from critical parts of the Act and challenging for a judicial review.”
The charity points out that many of its leaseholders are non-domiciled and overseas companies.
“This legislation will take funds away from small charitable organisations to wealthy, well-advised lessees.”
The case is being brought by law firm Howard Kennedy.
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