The Government has enacted an important provision of the Leasehold and Freehold Reform Act 2024 (LFRA 2024) which removes the two-year ownership rule for leaseholders. This means that going forward, leaseholders will no longer need to wait for two years after purchasing a property before commencing the enfranchisement or lease extension processes.
The abolition of the two-year rule comes into effect as of 31st January 2025.
Impact of the reform and next steps
Housing Minister Matthew Pennycook signed regulations on 22nd January 2025 and made the announcement on X, formerly Twitter: “I have today signed regulations to remove the two-year ownership rule for leaseholders of flats to extend their lease and leaseholders of houses to extend their lease or buy their freehold.”
This regulatory change also benefits leaseholders of houses, who will now be able to extend their lease or buy their freehold without the two-year waiting period.
Section 27 of LFRA 2024 deals with the abolishment of the two-year ownership rule for leaseholders. Until the regulations are published, it is unclear whether the entirety of Section 27 of LFRA 2024 has been implemented. If so, then a further consequence would be the abolishment of the right of personal representatives to serve a notice seeking a statutory lease extension.
Minister Pennycook has stated that this is the first step in “switch[ing] on the measures in the Leasehold and Freehold Reform Act”. Much speculation remains over the implementation of the comprehensive reforms to the valuation process when extending a lease or purchasing the freehold.
In a statement responding to the announcement, the National Leasehold Campaign (NLC) said: “Today’s news is a significant step forward and follows the ministerial leasehold statement in November, where the government reaffirmed their determination to honour Labour’s manifesto commitments to finally bring the feudal leasehold system to an end.”
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