Under the new provisions of the Leasehold and Freehold Reform Act 2024 (LAFRA), the two-year ownership rule is abolished, allowing leaseholders to extend their leases of their flats or houses or purchase the freehold of their houses immediately upon acquiring the property.

This reform aims to provide leaseholders with greater flexibility and reduce the barriers to securing more secure ownership of their homes.

The practical effect of this reform will be immediate as of 31 January 2025.

This is particularly beneficial for new homeowners who may have purchased a leasehold property only to face the challenges of securing a lease extension in a short amount of time. By eliminating the two-year waiting period, LAFRA facilitates the ability to engage in these transactions at an earlier stage of ownership.

But this change introduces potential pitfalls due to the land registration gap.

This is the period between the completion of a property purchase and the registration of the buyer as the legal owner at the Land Registry.

During this time, the buyer holds the property in equity only, which can complicate matters such as serving notices or dealing with the property.  The significant backlogs and delays being experienced by the Land Registry must be addressed to enable leaseholders to benefit from this reform.

Despite the removal of the two-year rule, leaseholders who have purchased but are awaiting registration may face challenges in exercising their rights during this gap. This issue is particularly relevant for leaseholders who need to extend their leases due to mortgage conditions or other time-sensitive matters.

Katie Cohen is a residential property partner at Keystone Law