On 31st January 2025 the Government announced their first steps in implementing the Leasehold and Freehold Reform Act 2024 ("LAFRA"). Section 27 of the LAFRA has come into force abolishing the 2-year ownership rule which previously required leaseholders to own their leasehold property for at least two years to qualify for a statutory lease extension.
Leaseholders will now be able to exercise the right to extend their lease following registration of ownership at the Land Registry. If a leaseholder has purchased a leasehold property within the last two years and is the registered proprietor at the Land Registry, they will also now be able to immediately take action to extend the lease using the statutory process.
Whilst this is a welcomed change to the legislation, proposed purchasers should still consider whether the lease term will be sufficient for any potential lender and should factor in the current delays at the Land Registry. This can be particularly important where a lease is approaching 80 years whereby, under current legislation, this could materially affect the premium payable for the lease extension. In such circumstances, purchasers may wish for existing owners to give notice with the benefit of the claim to be assigned on completion in the usual way.
It is important to note that other awaited changes, in particular the “990” year lease extensions and valuation methods have not yet come into force.
We will continue to monitor the changes and provide necessary updates as and when the Government takes action.
If you have any queries or would like to discuss the changes, please contact Laura.Poulloura@lbmw.com.