Change to leasehold rules – What does it mean?

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Change to leasehold rules – What does it mean?

A major shake-up in leasehold law has come into effect, giving property owners the right to extend their lease immediately after purchase.

Until now, leaseholders had to wait two years after purchasing a property before having the right to extend their lease. This often left new owners in limbo, forced to either wait or pay extra legal fees to navigate the system.

The government’s leasehold reform means buyers of leasehold flats and houses can extend their lease or purchase the freehold immediately upon completion—no more frustrating delays, no more bureaucratic roadblocks.

Why This Matters

For buyers, this change removes a major sticking point. Many were previously put off by the two-year rule, especially if they were purchasing a property with a shorter lease. Now, they can take action from day one, securing their long-term property value without added complexity.

For sellers, it’s an equally big win. Leasehold properties with fewer years remaining on the lease should now be far more attractive to prospective buyers who previously steered clear due to extension restrictions.

This change should inject some fluidity into a market where previously the rigid system has often been to the detriment of homeowners.

The Catch

While this reform is a step in the right direction, leaseholders should be aware of registration delays at the Land Registry.

Even though the two-year rule is gone, buyers must be officially registered as legal owners before they can start the lease extension process—and that’s where things can get stuck.

With backlog issues still causing months-long delays, some new owners might find themselves unable to act immediately despite the rule change.

More Reforms Ahead

This is just the first in a wave of leasehold reforms expected this year. The government is set to introduce the Leasehold and Commonhold Reform Bill, which could further shake up the system, including a push towards commonhold as an alternative to leasehold ownership.

Further consultation on enfranchisement valuation rates is also in the pipeline, potentially making it more affordable to extend leases or buy the freehold.

What Should Leaseholders Do Now?

If you own a leasehold property, now is the time to act and seek professional advice.

At Horton and Garton, we’re already working with buyers, sellers, and leaseholders to navigate these changes. Whether you need guidance on lease extensions, freehold purchases, or how the upcoming reforms might affect you, our team is here to help.

Get in touch with Horton and Garton.

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February 21, 2025