At Brady Solicitors, we have been keeping a close eye on Leasehold and Freehold Reform Act developments. Recent news from Matthew Pennycook, Housing Minister, has brought renewed attention to the 2 year rule, a longstanding requirement that has often caused frustration for leaseholders looking to extend their leases or purchase their freehold.
In his latest announcement, Pennycook has reaffirmed the Government’s commitment to reforming leasehold laws in England and Wales, including the removal of the 2 year rule from the 1st February 2025. This development marks a step forward in addressing one of the barriers faced by leaseholders.
What is the 2 Year Rule?
Under current legislation, leaseholders must own their property for at least two years before they are eligible to initiate a statutory lease extension or collective enfranchisement process. While this rule may seem straightforward, it has created challenges for those who need to act quickly to secure the value of their lease or make arrangements to purchase the freehold.
The requirement can particularly impact leaseholders with shorter leases, as the value of a lease diminishes over time, potentially making extensions more expensive the longer the process is delayed. It also adds unnecessary complexity for those buying leasehold houses who want to begin the enfranchisement process immediately after completing their purchase.
Why Does Removing the 2 Year Rule Matter?
Abolishing the two-year ownership rule would empower leaseholders to take control of their property rights from day one of ownership. This change would remove an artificial delay that can hinder leaseholders from protecting their investment and securing a more straightforward ownership structure.
In addition to removing delays, this reform would contribute to a more transparent and equitable leasehold system. By allowing leaseholders to act immediately, the process becomes more accessible and better aligned with the goal of promoting fairness in housing.
What is Next for the Leasehold and Freehold Reform Act?
Whilst it is positive to see the first action from the Leasehold Reform coming into effect at the end of the month, any further introductions from the reform appear to be some way off being introduced, with the consultation process regarding further amendments only beginning in the summer, which is very unlikely to be a swift process in itself. We are therefore waiting on further announcements on the Leasehold Reform to inform us on when proposed changes are likely to come into effect, if indeed they do come into effect.
