As of January 31, 2025, a key change to leasehold property laws in the UK has removed the requirement for leaseholders to have owned their property for at least two years before being eligible to make a statutory lease extension claim or purchase the freehold. This reform, introduced by Housing Minister Matthew Pennycook, allows leaseholders to take action immediately upon acquiring a leasehold property, offering greater flexibility and potentially reducing costs associated with the process.

Previously, under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders needed to have been the registered owner of their property for at least two years or face additional costs in taking a formal assignment of their lease extension rights from the seller. The removal of this two-year waiting period significantly streamlines the process, making it easier for homeowners to secure more secure ownership of their properties sooner.

Katie Cohen, a residential property partner at Keystone Law, explained that the reform would particularly benefit new homeowners who previously faced the challenge of extending a lease shortly after purchasing a property. By eliminating the two-year rule, this change offers greater flexibility and allows leaseholders to act more quickly to extend their leases or buy their freeholds.

However, there may be challenges due to the “registration gap,” which refers to the time between completing a property purchase and having it registered with the Land Registry. During this gap, the buyer holds the property only in equity, which can complicate processes like serving notices or exercising rights. Delays and backlogs at the Land Registry may hinder leaseholders from benefiting fully from this reform until their ownership is officially recorded.

This is just the first step in a series of leasehold reforms, with the government planning further changes, including a draft Commonhold and Leasehold Reform Bill expected later this year. This bill aims to introduce commonhold ownership as an alternative to leasehold and will include consultations on enfranchisement valuation rates.

Despite the removal of the two-year rule, Cohen cautioned that the registration gap could still cause difficulties for new owners who need to act quickly, particularly if they are under pressure due to mortgage conditions or other time-sensitive issues.

In summary, while the reform offers a more accessible route for leaseholders to extend their leases or purchase their freeholds, the lingering issue of Land Registry backlogs could still pose significant challenges. How quickly these backlogs are addressed will determine how effective the new rules will be for homeowners.