Leasehold reform newsflash: The abolition of the two-year rule

From the 31^st January 2025, leaseholders will no longer be required to have owned their property for a minimum period of two years before being able to make a statutory lease extension claim of a flat.

In a recent update disseminated via the social media platform X, Housing Minister, Matthew Pennycook, indicated that s.27 of the Leasehold and Freehold Reform Act 2024 will come into force at the end of January 2025.  In common with other provisions in the 2024 Act, the change is being implemented by way of secondary legislation, in this case under the Leasehold and Freehold Reform Act 2024 (Commencement No. 2 and Transitional Provision) Regulations 2025.

s.27 is a widely reported key provision in the 2024 Act aiming to simplify the enfranchisement process and give leaseholders greater control over their properties from the point of purchase.

Until now, under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders had to have been the registered owner of their leasehold interest at the Land Registry for at least two years, or spend additional professional fees in taking a formal assignment from a seller of their right to extent their lease.  The abolition of the two-year rule means the process will be greatly simplified.

However, the so called ‘registration gap’ which has arisen due to the backlog in registering changes in ownership at the Land Registry, may hamper this provision as claimants will be unable to evidence their entitlement to make a lease claim until they are registered as owners. Patience may therefore continue to be the watchword.

The government has promised a plethora of other reforms to the leasehold sector including the introduction of the remaining recommendations made by the Law Commission in its 2020 reports on simplifying and reducing the cost of leasehold enfranchisement.  We can expect to see a draft Commonhold and Leasehold Reform Bill later this year, introducing the widely report alternative form of home ownership known as commonhold, and further consultation on the rates applicable to enfranchisement valuations.  An already labyrinthine legal landscape is set to become more complex still.

How we can help

The Cripps Residential Estates team advises landlords and leaseholders on all aspects of residential leasehold and property law.  If you would like further guidance on statutory reforms or any other aspect of this complex area of law, please get in touch.