Removal of the Two Year Ownership Qualification Rule

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Removal of the Two Year Ownership Qualification Rule

The UK government has brought into force a significant provision of the Leasehold and Freehold Reform Act 2024 which will come into effect on 31 January 2025.

Here is what you need to know:

What’s Changing?

The two-year ownership rule, which required leaseholders to own their property for at least two years before extending their lease (of their flat or house) or purchasing the freehold of their house, is being abolished.

Why Is This Important?

Previously, leaseholders faced a frustrating two year wait to make an application to extend their leases or acquire the freehold of their house after acquiring their property.

This rule often delayed important transactions, particularly for those needing lease extensions to meet mortgage requirements or sell their properties if those leaseholders had not taken an assignment of a claim from their seller upon purchase of the property.

With the removal of this requirement:

1. Leaseholders can act immediately to extend their lease or purchase the freehold after becoming the registered owner.
2. It simplifies the process for buyers, who no longer need to rely on complicated legal workarounds like assigning Section 42 notices from a seller to a buyer during the conveyancing process.

The regulations also introduce temporary changes to the prescribed forms used in lease extension and enfranchisement claims. These changes will remain in place until updated forms are rolled out.

What This Means for Leaseholders

This simple but important change for leaseholders means:-

1. Leaseholders will gain greater flexibility and control over when they choose to exercise their property rights.
2. Buyers can now extend leases (of their flat or house) or purchase the freehold of their house without waiting two years, allowing for smoother transactions and reduced stress and a more simplified and streamlined process.
3. For those facing mortgage requirements tied to lease length, the reform offers faster and more certain solutions for increasing the lender’s security over the property.

Looking Ahead

This is the first step in a broader overhaul of the leasehold system. The government aims to simplify and modernise property ownership rules, making it easier for leaseholders to secure their long-term interests.

Housing Minister Matthew Pennycook has confirmed that further measures outlined in the Leasehold and Freehold Reform Act will be implemented in the near future.

If you’re a leaseholder, now is the time to review your options and take advantage of the change which comes into force on the 31^st January 2025.

If you wish to consider your options further, please contact us for a no obligation discussion about your proposed lease extension or acquisition of your freehold.