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What is this blog about?
In this week’s blog, we take a look at a key change introduced by the Leasehold & Freehold Reform Act 2024. This relates to the ‘two year rule’.
This is just one small element of wider reform by the Government – we will look more comprehensively at the wider reform and other changes in future blog articles.
The bigger picture…
The Leasehold & Freehold Reform Act 2024 came into force in May 2024. However, the key changes were scheduled to apply in the future, from January 2025 and then Spring 2025.
We will discuss the January 2025 change in this article. The Spring 2025 changes relate to the Right to Manage for mixed-use buildings, cost reforms and amendments to voting rights.
The 2024 Act will be followed by the implementation of the draft Leasehold & Commonhold Bill later in 2025. This incorporates much wider changes and reform, than the 2024 Act alone.
What did the Housing Minister, Matthew Pennycook say about the reform?
‘Millions of homeowners across the country will remember with fondness the sense of satisfaction, pride and security they felt when purchasing their own home. Yet, for far too many leaseholders, the reality of home ownership has fallen woefully short of the dream. The government is determined to honour the commitments made in our manifesto, and I am pleased today to set out the steps we will take to provide relief to those currently subject to unfair and unreasonable practices and to progress the wider set of reforms necessary to end the feudal leasehold system for good’.
What has changed in January 2025?
The first key change, and the subject of this article, took effect from 31 January 2025.
This initial change abolished the ‘two year rule’.
Simply put, this means that if you purchase a leasehold property, you do not need to wait two years until you can extend the lease or purchase the freehold (enfranchisement).
Previously, a leaseholder would have needed to wait for two years post-purchase to do either.
How will this benefit leaseholders?
The benefit to leaseholders is that this provides stronger rights and security, from the first day of ownership of a leasehold property. This also means that lease extensions or enfranchisement are not ‘forgotten about’ in the intervening two year period of waiting.
Why do I need to know about this?
Residential surveyors involved with this area of practice should be aware of the abolition of the two year rule and wider reform.
This is because prudent and early advice to clients is essential in maintaining the value of properties and providing security of ownership.
Wider general knowledge about the market and key changes are also relevant to surveyors more widely. It is also a topic that could potentially affect you as the owner of a leasehold property.
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Stay tuned for our next blog post to help build a better you.
N.b. Nothing in this article constitutes legal, professional or financial advice.