The Leasehold and Freehold Reform Act 2024 (LFRA 24) will jeopardize the financial stability and operational capacity of a handful of charities that depend on property assets for funding. The implementation of the Act will have a particularly devastating impact on one of London’s leading grant-giving charity, John Lyon’s Charity, which has been transforming the lives of children and young people in London for 35 years. It will mean that countless children will be left without support, critical organisations will face severe underfunding, and numerous jobs will be lost. Consequently, the Charity was the first to formally issue proceedings on the current Government last week for a Judicial Review.
A significant amount of the Charity’s income is derived from enfranchisement claims and lease extensions from its permanent endowment of property in and around St John’s Wood in London, dating back to the 16th century. John Lyon’s Charity has been able to use the income from this historical endowment for good, by reinvesting property income back into the community. Since 1991, the Charity has awarded over £208 million in grants, supporting over 1,700 organisations that provide vital services for young people across North and West London; many of these organisations rely on the Charity as their primary or sole source of funding.
However, the Charity’s future grantmaking capacity of giving £16 million a year will be compromised, as the former Tory government failed to acknowledge the significant adverse impact the LFRA 24 has on charities who rely on income from leasehold estates. Nor did they put any compensatory safeguards in place to protect the property interests of freeholders. The Charity is devastated that it could lose around £1.4 million annually and it is subsequently imploring exemption from critical parts of the Act and challenging for a Judicial Review.
The irony is that the Charity’s estate in St John’s Wood is filled with already affluent leaseholders, many of which are non-Doms or overseas companies. This legislation will take funds away from small charitable organisations, to wealthy, well-advised lessees. Between 2018/19 and 2023/24, the Charity invested £32.5 million in core costs and salaries, representing a remarkable 41% of its total grant-making. This funding has undeniably been a lifeline for the grantee organisations – without it, many would not have survived.
Dr Lynne Guyton, CEO of John Lyon’s Charity, comments: “Since 2010/11, the CYP sector has faced a 69% funding cut, losing over 4,500 youth work jobs and closing 750 youth clubs. It is a sad reality that the CYP 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 Charity’s commitment to using its endowment to respond to community needs was evident in its response to the Grenfell Tower tragedy in 2017 and again following the impact of Covid-19. To support the CYP sector’s recovery and sustainability, the Charity allocated an additional £22 million from its endowment to its six-year Home-School-Community strategy, on top of its regular funding. The stark reality is that without this extra funding, driven by the previous Government’s inadequate support, thousands of vital organisations dedicated to transforming young lives would have been forced to shut down, leaving children and staff abandoned.
The critical need for sustainable funding in the CYP sector cannot be overstated. As it stands, these reforms would severely undermine the financial stability of charities, funneling wealth to affluent individuals at the expense of essential services. The resulting cuts to funding would devastate the CYP sector, leading to irreparable harm which we must fight with every resource to avoid.
