Please note that this News item is not maintained, and reflects the law as at the date of publication or update.
The Housing Minister, Matthew Pennycook, has enacted one of the key provisions of the Leasehold and Freehold Reform Act 2024 (‘LAFRA 2024’). The two-year ownership rule has been abolished.
In a post on ‘X’ on 23 January 2025, Mr Pennycook said, “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.”
What does this mean for leaseholders?
Leaseholders will no longer be required to own their property for a minimum period of two years before being able to extend their lease or purchase the freehold.
This change will come into force on Friday, 31 January 2025.
This change will also place leaseholders of houses in a favourable position as they will now be able to buy their freehold or extend their lease without having to wait the two-year period.
What about the ‘registration gap’?
The enactment of this part of the Act does not come without its own obstacles.
You may ask: What about those leaseholders who have purchased their property but are waiting for registration of the legal title at HM Land Registry?
As we know, the current delays at HM Land Registry mean that in some instances leaseholders are forced to wait for two years or longer before the legal title to their property is updated.
We hope that Section 27 of LAFRA 2024 will be enforced in full, so that people purchasing properties that are currently entitled to extend their lease under the Leasehold Reform, Housing and Urban Development Act 1993 (‘LRHUDA 1993’) will be able to serve a notice to extend the lease without having to have been registered at HM Land Registry as owner for two years.
Anyone purchasing a property may not wish to wait until they are registered as legal owners at HM Land Registry, in which case they will need the seller to serve a notice and have the benefit of it assigned to them.
How can we overcome the issue of the ‘registration gap’?
Purchasers who want to extend their lease can make a request to HM Land Registry to expedite registration. If the application is approved, the title should be updated within 10 working days.
Again, this solution is not always appropriate as priority periods and requisitions issued by HM Land Registry may mean that purchasers will be forced to wait in some circumstances.
We continue to await all details of the regulations and their effect.
If you are interested in extending your lease or purchasing the freehold of your building, please get in touch with one of our experts.