The Two-Year Rule Goes today – 31 January 2025

The Leasehold Reform Act 1993, as amended, grants leaseholders the right to extend their leases of their property under certain conditions. One key qualification for individual leaseholders seeking these rights was the two-year ownership rule, writes Clive Scrivener, Founder Partner at Scrivener Tibbatts Ltd.
Under the Act, an individual leaseholder must have owned the lease for at least two years to be eligible to initiate a lease extension claim. This rule was designed to ensure that only those with a sufficient interest in the property were entitled to exercise these statutory rights, rather than short-term or speculative investors.
The two-year ownership rule applied regardless of whether the leaseholder had occupied the property as their primary residence. Ownership, in this context, is defined by legal title; therefore, the two-year period begins from the date the leaseholder is registered as the owner at HM Land Registry. For properties acquired through inheritance, the two-year period may commence from the date of the deceased’s ownership if the property was transferred directly to the beneficiary.
Notably, the two-year rule never applied to participating tenants in collective enfranchisement claims, provided they are included in a group that meets the overall qualifications for enfranchisement. Similarly, commercial entities, such as companies, can qualify under this rule if they have owned the lease for two years.
Recent amendments under the Leasehold and Freehold Reform Act 2024 mean the two-year rule will go from today – 31 January 2025 – meaning leaseholders who wish to extend their leases soon after purchase can do so without the need to have the vendor serve the Section 42 notice and transfer the benefit to the buyer on completion. This should speed up the conveyancing process.
However, those intending to extend their lease quickly after purchase may still wish to have the seller serve the Section 42 notice of claim prior to completion because:
To serve the Section 42 notice the leaseholder must be the registered owner at the Land Registry.
There are long delays to register ownership with the Land Registry. Some purchasers are reporting delays of 6 months or even 12 months + to get registered.
When going through the conveyancing process the buyer has solicitors instructed and “bolting on” a Section 42 notice of claim might be more cost efficient when done as part of a purchase.
You as the buyer are engaged with the buying process and your mind is focusing on what needs to be done. Doing the lease extension at the same time prevents it from slipping your mind after purchase and being left on the to do list for another time.
Overall, this is a good outcome for Leaseholders simplifying the Lease Extension process when buying a “short” lease flat however, leaseholder should consider our three points above if it is their intention to extend their lease in the short to medium term.
If you would like to discuss something related to a property valuation please contact Clive Scrivener direct via email at Clive@scrivenertibbatts.co.uk or call 020 8971 2983.