Can a UK photographer license product photos for catalogue use for only two years?

Under UK law, the photographer holds natural copyright in the images they produce, barring work for hire (that is, you take the photographs in the normal course of your duties as an employee) or an agreement assigning copyright to another party.

As long as you hold copyright, you are free to license the work under just about any terms you desire. A limited-time license (usually with an option to renew for additional fees, either with or without exclusive rights) is both legal and normal -- if the client wants perpetual exclusive rights, they are usually gained by an agreement that assigns copyright to them (often with a limited grant of license to the creator for promotional purposes).

There is a slight kink in the arrangement that you are talking about, though, and that's that while you may hold copyright in the pictures you take, there may be copyright in the subject of the images you create. That means that while it may be lawful for your client to have a derivative work of the subject matter created, you may not be able to do anything else with the images without first obtaining a grant of license from the holders of the copyright or trademarks in the subjects of your photos. It's a bit of a weird position to be in -- your natural copyright can prevent the client from using your images, but may not be sufficient to allow you to use your images. It all depends on what you're taking pictures of for the catalogue -- if you are shooting, say, Disney licensed merchandise, it might be better all-round to assign full copyright in the contract and wash your hands of the whole matter.