A Legal Milestone in Leasehold Reform
The Leasehold and Freehold Reform Act 2024 marks one of the most substantial changes to property law in England and Wales in recent memory. For decades, leasehold reform has been a slow-moving but highly contested topic, with leaseholders often at a disadvantage when it comes to extending leases or acquiring freeholds. With the introduction of LAFRA, long-awaited adjustments are beginning to take shape, with the first major changes coming into force on 31 January 2025.
Abolition of the Two-Year Ownership Rule
Historically, leaseholders could not extend their lease or purchase the freehold of a house unless they had owned the property for at least two years. This waiting period often created unnecessary delays and disadvantaged recent buyers, especially those who discovered they had acquired a short lease.
With the Leasehold and Freehold Reform Act 2024, this two-year ownership rule has been abolished. From 31 January 2025:
- Leaseholders of houses and flats can immediately extend their lease upon purchase
- Leaseholders of houses can immediately apply to acquire the freehold
This reform empowers new property owners to act swiftly to secure the long-term value of their investment without facing arbitrary delays.
The Registration Gap: A Practical Obstacle
Despite this positive legal change, the registration gap presents a real-world challenge. This is the period between a property’s purchase and the completion of its registration with HM Land Registry. Due to significant backlogs at the Land Registry, many new owners may find themselves unable to act on their rights under LAFRA until their registration is complete.
The government has acknowledged this issue and committed to working with the Land Registry to streamline the process. Until improvements are realised, however, many leaseholders may face frustrating delays in exercising their new rights.
Judicial Review of Key Provisions
Not all provisions of the Act have been welcomed without challenge. On 30 January 2025, just a day before the main reforms took effect, the High Court granted permission for a judicial review of several elements of LAFRA. This includes a challenge to the removal of marriage value from enfranchisement valuations.
Marriage value, the additional value created when a leaseholder purchases their freehold or extends their lease, has historically been a significant factor in calculating premiums. Its removal is seen by some as unfair to freeholders.
Following a two-day hearing, Mr. Justice Chamberlain ruled that six claims would proceed to a full hearing scheduled for July 2025. Depending on the outcome, some of the Act’s provisions may face legal amendments or reinterpretation.
What to Expect in 2025 and Beyond
The Leasehold and Freehold Reform Act 2024 is only the beginning. In addition to the changes already implemented, the government has committed to further action in 2025, including:
- Consultations to restrict the sale of new leasehold flats
- A white paper on commonhold reform
- A Leasehold and Commonhold Reform Bill, expected in the latter half of the year
One area set for reform is the valuation methodology used for lease extensions and freehold purchases. Current methods often lead to disputes due to lack of transparency. More standardised and fairer approaches are likely to emerge through consultations.
Practical Implications for Leaseholders and Professionals
For Leaseholders:
- Positive Impact: No more waiting periods to take action.
- Caution: Registration delays may temporarily limit access to new rights.
For Legal Practitioners:
- Awareness: Keep abreast of potential changes arising from the judicial review.
- Advisory Role: Prepare to guide clients through both the current rules and those likely to change.
- Preparation: Stay ready for consultations on valuation reform and commonhold structure.
Final Thoughts from a Legal Perspective
The Leasehold and Freehold Reform Act 2024 represents a long-awaited move toward equity in leasehold law. The removal of the two-year wait rule will have an immediate and positive effect for new homeowners. However, administrative delays and legal uncertainty—especially regarding valuation and human rights considerations—mean the journey toward true reform is not yet complete.
As an expert observing this transformation, I can say that 2025 will be a pivotal year for leasehold reform. Now is the time for leaseholders, landlords, and professionals alike to stay informed, engaged, and legally prepared.
Need legal advice on lease extensions, enfranchisement, or how LAFRA affects you? Contact our specialist property lawyers today.
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