In a long-awaited move, the Government has abolished the contentious rule that owners of residential leasehold properties have to wait two years before they qualify to extend the length of their lease or purchase the freehold through enfranchisement.
The change, which takes effect from 31 January 2025, will mean leaseholders are no longer constrained by their duration of their ownership.
This will give leaseholders an earlier opportunity to apply to extend their lease terms to enable them to proceed with sales, re-mortgage or ensure their lease doesn’t become ‘short’, which is often recognised as a term of less than 80 years.
Until now, the two-year rule (as set out in the Leasehold Reform, Housing and Urban Development Act 1993) required that to initiate an enfranchisement or lease extension, the leaseholder must have been the registered owner (as per the Land Registry records) of the leasehold interest for at least two years.
Additional measures aimed at reforming leasehold law are due to be implemented during this year, although exact dates have not been set. During 2025 we expect to see implementation of the Right to Manage reforms in the Leasehold and Freehold Reform Act 2024 which would expand access, reform costs and voting rights, and provisions on service charges and landlords’ costs of service charge proceedings; consultations on capitalisation rate and deferment rate, the forthcoming ban on banning leasehold flats, buildings insurance commissions, estate charges, the regulation of managing agents and private estate management arrangements.
The most significant piece of leasehold reform, expected in the autumn, is the publication of a white paper on commonhold and a Draft Leasehold and Commonhold Reform Bill which is anticipated will contain further wide-ranging changes.
How we can help
If you own a leasehold property, or are looking at buying one, we can give you advice regarding leasehold enfranchisement for a lease extension or your rights on acquiring the freehold, as well as right to manage. Our expertise is recognised by our membership of the ALEP (Association of Leasehold Enfranchisement Practitioners).
For more information please contact Frances Watts on Email: frances@thpsolicitors.co.uk or Tel: 0118 920 9499