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Shared Ownership Lease Extension

(Last Updated: 29/05/2024)
10 min read

Key Takeaways

  • You can extend the lease on a shared ownership property.
  • If you have staircased to 100%, the normal statutory rules apply and you can extend formally.
  • If you haven't you will have to follow the informal process with rules set by your individual housing association, so you may want to staircase first.
  • You'll need to factor in the costs involved if you are purchasing a shared ownership resale, as the lease term is likely to be approaching 80 years left, or less.

The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published.

Some of the expected changes include:

  • 990 year standard lease extension for houses and flats
  • Standardised format for service charge bills, for greater transparency
  • Leaseholders will no longer have to pay their freeholder’s costs when making a claim
  • Freeholders who manage their building directly must belong to a redress scheme, so leaseholders can challenge them if needed (already applies to managing agents)
  • Ban on sale of leasehold houses, except in specific circumstances and schemes
  • Fair and transparent buildings insurance handling fees
  • Removal of two year requirement before statutory extension

While the existing act abolishes ground rent on lease extension and new leases, the new act does not cap ground rent on pre-existing leases.

Why has shared ownership lease extension become an issue?

Shared ownership leasehold contracts are a comparatively recent invention and the terms were normally originally for either 99 years or 125 years.

Many original shared ownership lease terms have now reduced to 80 years or below, which is the point when many lenders will not consider either remortgaging against them or loaning funds to a prospective buyer to buy the properties involved, making them difficult to sell.

As will be seen below, there are a number of solutions regarding getting a lease extension for your shared ownership property but you have to take a number of your own individual factors into account when choosing the right one for your needs.

This article examines matters relevant to your negotiations and examines some decisions you may choose to make when you take up ownership:

Or, skip ahead to frequently asked questions:

Shared Ownership? Want a Lease Extension?

Our property lawyers specialise both in shared ownership and lease extensions and can guide you to successful completion whether you're taking the formal or informal route. They are on hand throughout your process to give you the appropriate lease extension advice.

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Arrange a free consultation with one of our experienced conveyancing executives on:

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  • Lease extension
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  • Selling a leasehold property with a short lease
  • Extending the lease at the same time as you sell

We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension.

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  • RICS Lease Extension Valuation or L2 Homebuyers Survey
  • Serving of the section 42 notice, or section 13 notice on the freeholder
  • Negotiation with the freeholder (with the support of your RICS valuer)
  • Completion of the legal work, including deed of variation
  • Application to Tribunal to determine the premium
  • Vesting order for absent landlords


    What is the legal basis for a shared ownership lease extension?

As the holder of a shared ownership lease you are specifically excluded from the right to a lease extension under the terms of the Leasehold Reform Housing and Urban Development Act 1993, unless you own 100% of the lease, i.e. you've staircased your shared ownership up to 100%.

However, the statutory or formal lease extension described, which, if you qualify for it and it goes to plan, entitles you to an extra 90 years added to your lease term and a peppercorn (zero) ground rent, isn't the only type of lease extension you can get for your home.

Most housing associations now offer their shared ownership clients an informal way to extend their leases, but you need carefully to examine the exact terms involved because you have no recourse to the First-tier Tribunal (Property Chamber) to rule on any disputes, which you would have under the formal route.


    What are the Pros and Cons of staircasing for a 'formal' lease extension?

Essentially the less you have to pay out to get you to 100% ownership then the easier this path to a lease extension might prove to be. There are always pros and cons regarding informal and formal lease extensions, however with the statutory path:
  • there are fixed time frames;
  • it's that much easier to calculate what your total costs will be;
  • it's highly likely to meet with success so long as you have the money for the process (although there can be no outright guarantee of this)
  • you know that you'll get another 90 years on your lease term and a peppercorn rent; and
  • you can involve the First-tier Tribunal in the event of a dispute.
  • staircasing to 100% might prove more costly than you can afford or get a mortgage for, particularly if you only have a 25% share;
  • you have to satisfy the normal criteria for the formal route so if you haven't owned your 100% share for 2 years, you are disbarred;
  • you might find that an informal lease extension offered by your housing association is cheaper regarding your outlay and quicker in terms of how fast you'll get it (although there are absolutely no guarantees that it will complete; it is, after all, informal)
  • there may well be Stamp Duty Land Tax (SDLT - England) or Land Transaction Tax (LTT - Wales) to pay when you staircase to 100%; and
  • overall you might find that the housing association offer you a far more affordable lease extension, even if you haven't owned your property for that long.

Shared ownership lease extension solicitors with SAM Conveyancing.


    How do housing associations structure their informal lease extensions?

To avoid the difficulties regarding the reselling of shared ownership leases with lease terms of 80 years and less, housing associations generally offer an informal lease extension process.

We looked at a few housing associations' policies and found, not unlike much in the shared ownership world, that there were more similarities than differences among them.

In general, regarding a shared ownership lease example:
  • you have to have owned your property for 6 months to apply for an informal lease extension
  • you are encouraged to use the housing association's appointed lease extension valuer, this will cost you around £500 (and the premium that you'll have to pay for your lease extension is derived from this valuation, although the housing association will decide the exact figure)
  • you have to pay an administration fee (normally around £100 - £300)
  • you have to pay solicitor's costs for the conveyancing (normally around £900)
  • depending on your housing association, you could extend by up to 999 Years
  • if you don't complete once you've started the process, you won't get any of your fees back
  • the premium you'll pay is for a lease extension for the whole property rather than just your portion of it
  • you won't be able to apply if you've any arrears on your account


    What are the Pros and Cons of an informal lease extension?

Please note that even if you have staircased to 100%, you still have the option to pursue the informal path to a lease extension therefore some points made below may not be relevant if you have staircased to 100%.


  • you don't have to have staircased to 100% unlike for the formal process
  • you don't have to wait until 2 years have elapsed after you've staircased to 100% unlike for the formal process (normally 6 months and no need to staircase at all)
  • the informal process is simpler for both parties
  • the informal process regarding the cost of extending shared ownership lease may be cheaper for you - you won't have to pay for two sets of valuation fees for example
  • you may be able to vary your lease terms at the same time, depending on the housing association
  • you may be able to get a shorter or longer lease term than the 90 year formal extension fixed term (bargain for 125 years for example)


  • you'll be paying for a lease extension on the whole property, not just your portion and if you were to sell up without staircasing, you won't get any financial return for this outlay
  • You'll still have to pay ground rent at the old rate until the pre-existing term expires, the peppercorn rent takes over for the extended period only
  • similarly the increase in the whole value of your property means that you'll have increased the cost in the future of buying any further percentages/staircasing
  • while you are a rent payer, you can still get evicted if you default on rent payments and you will get no compensation for any payment you made for extending the lease
  • in the event of a dispute, you can't make use of the First-tier Tribunal (Property Chamber); you either agree and proceed or pull out and lose any money you've spent on the process
  • if you choose not to have your own separate legal representation - which is one of the benefits in cost terms of taking the informal path - the downside is you won't have someone legally acting purely on your behalf to scrutinise the lease and deed of variation; it's possible that there might be less than fair covenants written in


    When should you staircase if at all or should you just staircase instead of extending your lease?

As stated above, you should bear in mind that if you extend your lease, staircasing becomes more expensive because you will have increased the value of the property.

Therefore you need to be clear about your intentions.

Staying put? Consider staircasing first

If you are going to stay for the foreseeable future in your property, paying for staircasing before going for a lease extension has a number of advantages.

The staircasing itself will be cheaper compared to what it would cost if you extended your lease but you should also consider that when you staircase, it'll result in your rent decreasing so there's an immediate return.

It's true to say that you'll put yourself nearer to the 100% figure where you'll have the formal lease extension procedure as an option, which is also an advantage, however you'll have to take any stamp duty liability that might occur into account.

Want to sell up or remortgage? Consider getting a lease extension and not staircasing

If your intentions are to sell up in the near future, then getting a lease extension, particularly if your lease term is approaching or under 80 years, should be your first priority.

You'll most likely be selling to someone with a mortgage and, as said previously, their lender won't lend unless there's more than 80 years on the lease term and the more the better. This is equally the case if you're looking to remortgage (click to find out more).

You'll always have the option to staircase later if you change your plans, although you'll have to pay more for doing so, as explained above.

Staying put? Funds scarce? Consider just staircasing alone

For a shared ownership property, both lease extensions and staircasing are highly likely to cost tens of £1,000s. 

If you can afford one of these and not both and you're staying put, you should always bear in mind that staircasing not only increases your holding - and therefore your saleable equity - in your property but also means that you'll immediately pay less rent.

Shared Ownership? Want a Lease Extension?

Our property lawyers specialise both in shared ownership and lease extensions and can guide you to successful completion whether you're taking the formal or informal route. 

We offer the complete service with our solicitors and RICS lease extension valuers. Click to get a competition quote or call us now on 0333 344 3234 (local call charges apply)

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Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
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Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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