The Leasehold and Freehold Reform Act 2024 (LAFRA) is set to significantly alter residential property law. One key change is the abolition of the two-year ownership rule, which previously required buyers of leasehold properties to wait two years before exercising statutory rights to a lease extension or claiming the freehold of their house. This restriction will be removed in 2025, allowing leaseholders to exercise these rights from the first day of registered ownership.
LAFRA also expands the Right to Manage (RTM), first introduced in 2002. The non-residential threshold for qualifying buildings has been raised to 50%, bringing more mixed-use developments under the RTM regime. Additionally, the costs framework has been reformed, preventing freeholders from routinely recovering legal costs from RTM companies, which aims to remove a barrier to legitimate applications.
Despite these reforms, the full benefits of LAFRA are not yet realised due to implementation lag. Much of the Act requires further consultation and secondary legislation. Consultation is expected to begin soon on the rates for enfranchisement valuations, which will enable the new valuation methodology to progress. The government has also identified "serious flaws" in the legislation that will require primary legislation amendments.
Separately, the draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, is undergoing pre-legislative scrutiny. This bill aims to introduce commonhold, a system where flat owners hold individual units in freehold and share ownership of common areas, eliminating wasting leases, ground rents, and the need for periodic extensions.