Leaseholders can now extend their lease or buy the freehold without waiting two years
An important development for leaseholders came into effect today (31 January 2025), with the removal of the two-year wait to extend a lease or buy the freehold to your home. This post explains the change under the Leasehold and Freehold Reform Act, and consider what it means for you.
How we got here
In UK law, buyers of leasehold properties have always purchased the right to live in their home for the duration of a lease term. This means that, although you own the property, someone else (the freeholder) owns the building and land on which it stands.
As a result, leaseholders have always had to pay a ‘ground rent’ and, when the lease term finishes, ownership of the property returns to the freeholder. It is possible for leaseholders to extend their lease or buy the freehold, though both of these have usually come with significant costs.
The government first announced plans to address concerns around the leasehold system in 2017. Five years later, the Leasehold Reform (Ground Rent) Act took effect. This piece of legislation reduced ground rents to zero on all new leases.
Then, in May 2024, the Leasehold and Freehold Reform Act became law. The legislation contains a variety of updates to existing leasehold regulations that are designed to make it easier for leaseholders to extend their lease or purchase the freehold of their building.
As of 31 January 2025, one of these provisions – scrapping the ‘two-year rule’ – has come into effect.
The two-year delay is no more
Under the old system, leaseholders looking to extend their lease or buy the freehold first had to wait until they had owned the property for two years. Now, leaseholders have the right to extend their lease or purchase the freehold immediately upon acquiring the property.
The move is especially beneficial for homeowners nearing the last 80 years of their lease. If a lease drops below 80 years, it becomes increasingly difficult and expensive to extend. A short lease can also reduce the value of a property or, in the worst case, even make it unsellable.
When extending a lease, the rule is usually: the sooner the better. Every year counts in minimising costs and giving the leaseholder the most favourable terms possible. For new homeowners, therefore, the two-year delay was a costly frustration. Its removal could save some leaseholders significant time and money.
More changes to follow
Although today’s update to the ‘two-year rule’ is a welcome development for leaseholder rights, much of the secondary legislation promised by the Leasehold and Freehold Reform Act remains to be implemented.
Once enforced in full, leaseholders will be able to extend their lease by up to 990 years, compared to the current standard of 90 years for flats and 50 years for houses. The new Act states too that the ground rent will be reduced to a ‘peppercorn’ (a symbolic amount, which means you will not pay any) upon extension of all new leases.
Leaseholders have been promised cheaper costs to extend their lease. For those with a lease under 80 years remaining, the extra costs (known as ‘marriage value’) will no longer be payable when extending a lease.
Moreover, a requirement that leaseholders must pay their freeholder’s legal costs when extending a lease or buying the freehold is also set to be scrapped. Other provisions include greater transparency over service charges and easier routes for leaseholders to take over management of their building.
It is unclear exactly when these changes will come into effect, as the government has said it plans to consult stakeholders and MPs again before introducing some of the provisions. In a speech last November, the Minister for Housing and Planning, Matthew Pennycook, set out his plans for “effectively implementing the Act as quickly as possible”. However, the timeline remains vague.
Specialist help with your leasehold
At Attwaters Jameson Hill, we have been helping leaseholders across Hertfordshire and Essex for many years. Our leasehold specialists are continually monitoring the latest developments with Leasehold and Freehold Reform Act, and we’re always on hand with the expert advice and specialist local knowledge you need to complete a lease extension or freehold acquisition successfully.
To speak with a specialist solicitor about extending your lease or purchasing the freehold of your block, please call us on 0203 871 0039 or email leasehold@attwaters.co.uk.