The two-year rule is gone: what it means for lease extensions and freehold purchases

For many years, one of the more quietly frustrating rules in English leasehold law was the two-year ownership requirement. Before you could ask your freeholder for a formal lease extension or join a collective enfranchisement to buy the freehold, you had to have owned your flat for at least two years. Not two years from the original lease grant, or two years from your mortgage starting — two years from the date your name went on the title register.

The rule caused real harm to real people. Buyers who purchased flats with short leases intending to extend them found themselves locked out of the process during the most expensive months of their ownership. Lenders grew nervous. Sales fell through. Leaseholders who moved into a block mid-way through a collective freehold purchase had to watch from the sidelines while their neighbours took control.

That rule is now gone.

What Section 27 of the LFRA 2024 did

The Leasehold & Freehold Reform Act 2024 received Royal Assent on 24 May 2024, but most of its provisions require further commencement regulations before they take effect — and some need additional primary legislation altogether. The Act is, in places, still a work in progress.

Section 27, however, was different. It came into force on 31 January 2025, making it one of the earliest operative provisions in the whole Act. Its effect is straightforward: it removed the two-year ownership condition from both the individual lease-extension right (under the Leasehold Reform, Housing and Urban Development Act 1993) and the collective enfranchisement right to buy the freehold. From that date, you can exercise either right from day one of owning a qualifying flat.

There is no waiting period. There is no qualifying period tied to your mortgage. If you hold a long lease (one originally granted for more than 21 years) and you have just completed on your purchase, you are, in principle, entitled to act immediately.

Why this matters — and for whom

New buyers of short-lease flats

The most immediate beneficiaries are buyers who purchase flats with short leases — typically below 80 years remaining. These are often flats priced at a discount precisely because the lease is short, and buyers have always planned to extend quickly. Under the old rule, even if your flat had 68 years on the lease when you bought it, you had to wait two full years before you could serve the statutory notice. In that time, the lease got shorter, the premium got higher, and your mortgage options narrowed.

Now, a buyer completing on a short-lease flat in February 2025 can instruct a solicitor and a surveyor, serve the initial notice under the 1993 Act, and begin negotiations with the freeholder within weeks of getting the keys.

Buyers mid-chain or in a sale-linked transaction

One of the more peculiar features of the old rule was the effect it had on property sales. A leaseholder who had already been running a lease-extension process could assign their right to the buyer upon sale — but only if they had already served the initial notice before exchange of contracts. This created a slightly artificial incentive to start processes early, sometimes before the seller was genuinely ready. The removal of the two-year rule means buyers no longer need this procedural workaround; they can start their own process fresh.

Collective enfranchisement and RTM blocks

Where a group of leaseholders in a block is pursuing collective enfranchisement — buying the freehold together — the two-year rule used to mean that recently arrived leaseholders could not join the buying group. That exclusion is now lifted. A new owner who moves in during the process can potentially participate on the same terms as everyone else, subject to the other qualifying conditions being met.

For RTM companies and RMCs (Resident Management Companies), the direct impact is slightly different — RTM is about management control, not lease extension, and has its own qualifying rules. But in blocks where leaseholders are pursuing both tracks simultaneously, the removal of the two-year rule simplifies the picture considerably.

What this does not change

Here is where a note of honest caution is necessary, and it matters because the story has been misreported in places.

The abolition of the two-year rule is a procedural reform. It removes a timing restriction. It does not change the calculation used to arrive at the lease-extension premium — the price you pay for the extension.

Lease-extension valuations under the 1993 Act are governed by a complex methodology that includes the diminishing value of the freeholder's reversionary interest, ground rent capitalisation, and — most controversially — so-called "marriage value" (a share of the value uplift that comes from combining the leaseholder's and freeholder's interests). The LFRA 2024 does intend to reform these valuations substantially. The anticipated reforms include changes to the capitalisation rates used and the abolition or reduction of marriage value.

But those changes are not in force. A government consultation on the relevant rates — originally expected in summer 2025 — was delayed in July 2025. Further primary legislation is needed before the valuation methodology can be changed. Realistically, these reforms are unlikely to be in force before late 2026 at the earliest, and that timeline remains uncertain.

What this means in practice: you can act sooner, but the premium you pay is calculated on the existing rules. For many leaseholders with short leases, especially those under 80 years, the premium can be substantial. The valuation rules have not improved yet.

A practical checklist for today

If you have recently purchased a long-leasehold flat and want to know where you stand:

• Can you extend immediately? Yes, if your lease was originally granted for more than 21 years and you are the registered leaseholder. The two-year wait is gone.
• Is the premium likely to have fallen? Not yet. The valuation methodology has not changed. Obtain a professional valuation from a surveyor specialising in leasehold work.
• Does your lease trigger marriage value? If your lease currently has fewer than 80 years remaining, marriage value is likely to apply under current rules, increasing the premium. Getting below 80 years is still a meaningful cost threshold.
• What about collective enfranchisement? You may now join a buying group regardless of how recently you purchased, provided the other qualifying conditions are met (at least two-thirds of qualifying tenants participating, for example).
• Transfers of benefit? If you are buying a flat where the seller has already served a lease-extension notice, ask your solicitor about whether that benefit can be assigned to you on completion. In many cases it can, and this may be advantageous if the process is already under way.

The bigger picture: a reform in stages

The Leasehold & Freehold Reform Act 2024 is best understood as a platform rather than a complete renovation. It sets out a direction — less restrictive procedural rules, fairer valuations, an eventual shift towards commonhold — but the legislation is arriving in stages, with some of the most significant financial changes still waiting for commencement or further legislation.

Section 27 is the first meaningful stage to have arrived for leaseholders considering extensions or enfranchisement. It removes a genuine barrier. But it is not the whole story, and leaseholders who bought expecting dramatically cheaper premiums should understand that those savings, if they materialise, are still some way off.

The government has also published a draft Commonhold and Leasehold Reform Bill (published 27 January 2026) which is currently undergoing pre-legislative scrutiny. This is intended to go further still, reinforcing commonhold as the default tenure for new flats. But it too is draft legislation — timelines remain uncertain.

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FAQ

My flat has 74 years left. Should I extend now or wait for the valuation reforms?

This is a genuinely difficult call and the right answer depends on your specific figures. Waiting could mean the premium calculation improves, but your lease will be shorter, and if you drop below 80 years you will attract marriage value (under current rules). Speak to a RICS-qualified surveyor and a specialist leasehold solicitor before deciding.

I bought six months ago. Can I serve a notice right now?

Yes — from 31 January 2025, the two-year ownership requirement no longer applies. You can instruct your solicitor to serve an initial notice under the 1993 Act as soon as you are ready.

Does abolishing the two-year rule affect RTM claims?

RTM (Right to Manage) is a separate right with its own qualifying rules. It does not have a two-year ownership requirement in the same way. The changes to RTM from 3 March 2025 — including the raised non-residential limit and the removal of the RTM company's liability for the freeholder's process costs — are distinct from Section 27.

I am buying a flat and my solicitor says the lease has 79 years. How urgent is this?

Very. Once a lease falls below 80 years, the premium calculation typically increases significantly because of how marriage value is currently applied. Even under the new rules (when they arrive), acting before the lease drops further is generally wise. Get a surveyor's estimate before exchange if you can.

Where can I get independent advice?

The Leasehold Advisory Service (LEASE) offers free initial guidance to leaseholders in England and Wales. For formal notices, you will need a solicitor experienced in leasehold enfranchisement — LEASE can provide a panel of accredited advisers.