A charity has slammed a new law which it says will transfer money away from it to wealthy homeowners.
Earlier this year, the Conservative government introduced The Leasehold and Freehold Reform Act 2024.
This aimed to improve the rights of leaseholders – people who own their homes, but only for a set period.
But John Lyon’s Charity, which is based in St John’s Wood and provides educational grants to children and young people up to the age of 25, has warned it risks losing up to £1.4 million a year as a result.
In the act, ‘marriage value’, which is the premium that a leaseholder has to pay their freeholder if they wished to extend a lease that has less than 80 years remaining, has been abolished.
The value of this premium was dependent on how much the property value increased as a result of the lease having been extended.
John Lyon’s Charity, which derives large amounts of its income from leasehold estates, has now initiated a judicial review to challenge this law in the hope of gaining exemptions from certain clauses.
It claims that the impact the current law has on charities has not been considered, and will only serve to transfer money from charitable freeholders to already affluent leaseholders.
In John Lyon’s case, the principal beneficiaries will be homeowners in St John’s Wood, where house prices average millions of pounds, the charity claims.
Meanwhile, the charity says that its future grant-making capacity of £16 million a year will be compromised as a result.
Since 1991, the charity has awarded more than £208 million in grants, supporting more than 1,700 organisations that provide educational services to young people in north London.
The nine boroughs covered by the charity include Barnet, Brent, Camden, Harrow and the Cities of London and Westminster.
Dr Lynne Guyton, chief executive of John Lyon’s Charity, said: “It is a sad reality that the children and young people sector in London has only survived due to John Lyon’s Charity funding, and to continue bridging the gap left by public funding cuts, long-term sustainable funding is essential.
“Any reduction in the amount of funding we have available will put even more organisations and jobs at risk.”
The Ministry of Housing, Communities and Local Government declined to comment citing the ongoing legal proceedings.
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