Two-year rule scrapped on leaseholds - what it means for you

Some exciting changes have just come into effect for leasehold property owners and buyers. 

The government has removed the rule that made people wait two years before extending their lease. Here’s what this means for you and why it matters.

What’s actually changed? 

Until January 31st 2025, if you bought a leasehold property, you had to wait two years before you could extend the lease or buy the freehold. This often caused headaches for buyers and sellers alike. 

Now, this waiting period has been completely scrapped, meaning new owners can take action on their lease immediately after purchase.

Good news if you’re buying 

This change makes life much simpler if you’re looking to buy a leasehold property. Before making this decision, it’s worth understanding how it helps you:

The old system meant that if you bought a property with a shorter lease, you’d be stuck waiting two years before you could do anything about it. During that time, the lease would keep getting shorter, potentially making your property less valuable and harder to mortgage. Now you can:

• Start the lease extension process as soon as you buy
• Avoid watching your lease length decrease while waiting
• Make plans with more certainty
• Often secure better mortgage deals

Sellers, this helps you too 

If you’re selling a leasehold property, these changes could make your life easier. The new rules bring several advantages that could help your sale:

We’ve seen how the old two-year wait could put buyers off, especially with shorter leases. Now the situation is much better because:

• Buyers can act immediately on the lease
• Your property becomes more attractive to mortgage lenders
• You can market your property more confidently
• Sales processes should move more smoothly

Why lease length matters 

Understanding lease length is crucial for anyone involved with leasehold property. The most important thing to know is that once a lease drops below 80 years, extending it becomes much more expensive due to something called ‘marriage value’. Think of it this way: a property with a longer lease is worth more than the same property with a shorter lease. The difference between these two values is the ‘marriage value’, and when your lease is below 80 years, you’ll need to share 50% of this value with your freeholder when extending.

This is why being able to extend quickly can save significant money.

What to do next 

Whether you’re buying, selling, or already own a leasehold property, these changes might affect your plans. Here’s what we recommend:

If you’re buying:

• Check the current lease length carefully
• Factor in extension costs if needed
• Get professional advice from an estate agent or solicitor

If you’re selling:

• Know your lease length and terms
• Understand how the changes might help your sale
• Consider if extending before selling could help

How we can help 

At Humphreys, we’ve helped many clients navigate leasehold properties successfully. Our experienced team is here to explain how these changes affect your specific situation, connect you with specialist solicitors when needed, guide you through the lease extension process, and help you understand all the costs involved.

Got questions about leasehold properties? Our team is always happy to help – get in touch for a chat about your situation.