Leasehold Reform: What You Need to Know
There has been much discussion about reforming leasehold legislation over the last few years. This culminated in the Leasehold and Freehold Reform Act 2024. Despite this legislation being passed, much of it requires secondary legislation to come into effect. There is no specific timescale and still some uncertainty as to the detail.
Making Lease Extensions Easier
The reforms aim to make it easier for leaseholders to extend their lease. Current legislation allows leaseholders to extend their leases under certain conditions. However, if the freeholder does not agree voluntarily, leaseholders had to own the property for at least two years. This ownership period was a barrier for many leaseholders.
The process of extending a lease could also be challenging. A leaseholder could apply for an extension but could not transfer the benefit to the buyer. This process was time-consuming and cumbersome. It often caused delays and frustrations for buyers and sellers.
Immediate Changes to the 2-Year Ownership Rule
On 31st January 2024, the government announced a significant change: they scrapped the two-year ownership rule. This change took effect immediately. As a result, leaseholders can now apply for a lease extension as soon as they purchase the property. This will make the process easier for new buyers.
The government's decision to remove the two-year rule is a significant win for leaseholders. It eliminates a frustrating barrier that many faced when trying to extend their lease.
What Happens Next for Leaseholders?
While this is a major step forward, there are still many unknowns. We are awaiting further reforms under the Leasehold and Freehold Reform Act 2024. Much of the reform depends on secondary legislation. The exact details and timing of this are still to be confirmed.
These reforms are expected to bring greater fairness to the leasehold system. They will also help leaseholders protect their property values.
Need Help with Leasehold Issues?
If you are a leaseholder and need advice on lease extensions, our Residential Property Team can help. Get in touch with us today to discuss your options. Call 01256 320555 or email mail@clarkeandson.co.uk.
