Leasehold Update – The two year ownership rule has been removed

Matthew Pennycook MP has announced on 23 January 2025 that he has 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?

It means that rather than having to wait two years after you have purchased your property, or going through the complicated process of asking a seller to exercise and then assign their right to you on completion, you can exercise your right to purchase or extend from the moment that you own the property.

This is seemingly a fairly small change in leasehold law, but a win for leaseholders who will not have to ask sellers to do this on their behalf at extra expense and complication when they purchase a property.

Nor will a slight change in ownership of their property prevent them from exercising their right – for example, where you own a property for over two years and then perhaps add a partner to it, even though you have owned it for the requisite time, the change in ownership to joint owners would previously have meant you’d have to wait two years again.

This will also aid leaseholders who need a lease extension but can’t exercise their statutory right to obtain one as they haven’t owned it for long enough, so they feel forced to agree to onerous terms because that is all the Landlord will offer them.

Does it disadvantage Landlords though?

Arguably not as the notices which exercise the right of a leaseholder who has owned for two years have always been assignable to the new owner without them having to wait for the two year period to continue. The change just removes the needs for the additional work in doing this, and the trap that a leaseholder could fall into if they decided not to deal with a lease extension during the purchase process.

The change is effective from 31 January 2025.

Further reforms are anticipated this Spring and we await hearing what this might mean for Landlords and Leaseholders alike.

If you have any questions on the above please contact the Enfranchisement team.