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Lease and lease extensions

What is a lease?

When you purchase your property, you will be required to sign a lease. This is a legally binding contract that states your rights and responsibilities as the leaseholder, and the rights and responsibilities of your landlord.

A lease is a contract giving you the right to occupy and use your property for a set period of time, referred to as the ‘term’ of the lease. The lease is a legally binding contract between yourself as a leaseholder, and the landlord. Everything you and your landlord do in relation to your property and the wider development is governed by the conditions of your lease.

Download our guide: We can help with lease extensions

Your lease with Family Mosaic

Your lease with Family Mosaic

Lease Extensions – what to do when your lease is short

If the number of years on your Shared Ownership lease has decreased significantly, this is known as a “short” lease, and when this happens the value of the lease reduces. A lease is generally considered short when the remaining term falls below 80 years. A short lease may create difficulties for a leaseholder if they wish to sell or remortgage.

A leaseholder who satisfies certain conditions has a right to be granted a new lease for an additional term of 90 years at a peppercorn rent. A Shared Ownership leaseholder can also extend their lease. Extending the lease does not affect the amount of rent paid on the share of the property not owned by the leaseholder.

There are two routes by which you can extend your lease and you should speak with your legal advisor regarding the best option for you before proceeding:

  • Informal Route
    • For Outright and Shared Ownership Leaseholders - This is offered by Family Mosaic; it may be quicker and less costly in terms of legal fees.
  • Formal Route
    • For Outright Leaseholders only - This is prescribed by law; to proceed by this route you will need to serve a statutory notice under section 42 of the Leasehold Reform Act 1993.

Whether or not a leaseholder satisfies the conditions for the formal procedure does not prevent a leaseholder from agreeing terms informally with their landlord.

There are advantages and disadvantages of proceeding informally or formally, which should be discussed in all cases with your legal advisors.

What are the costs involved?

The upfront costs involved in a lease extension will depend on the lease you currently hold and the procedure you wish to follow.

Informal procedure:

  • Family Mosaic administration fee: £167 plus VAT
  • Valuation on fee: £300 – £375 plus VAT
  • Family Mosaic solicitors costs for a standard lease extension: £450 – £550 plus VAT
  • Family Mosaic solicitors costs for a property with a headlease: £700 – £950 plus VAT

Formal procedure:

  • Family Mosaic administration fee: £167 plus VAT
  • Your lease extension valuation: This will depend on the valuer you appoint.
  • Family Mosaic valuation fee: £300 – £625 plus VAT
  • Deposit to Family Mosaic of £250 or 10% of the lease extension value, whichever is greater
  • Family Mosaic solicitor's costs for a standard lease extension: £450 – £550 plus VAT
  • Family Mosaic solicitor's costs for a property with a headlease: £700 – £950 plus VAT

All figures are approximate and based on a standard lease. If matters are protracted further legal costs may be incurred.

What to be mindful of

Leaseholders should be mindful of the following when considering a lease extension:

1. Am I eligible to serve a formal notice?

You cannot serve a notice unless you have been an owner or at last two years and are a 100% owner. If you are in a property where other leaseholders can apply to buy the freehold this will suspend a formal application for a lease extension.

2. Instructing professional advisors

It is vital to instruct professional advisors at the earliest possible stage. Your advisors will generally be a solicitor who will deal with the preparation of the notices, handling of the procedure and completion of the lease extension documents, and a RICS qualified valuer so that you can obtain details of the cost of extending the lease (though this is not required if you go down the informal route).

3. Establishing the finance and assessing the cost

If you are extending your lease under the formal procedure you are required to pay for the valuation and cover Family Mosaic's legal fees. However, if you are proceeding informally you are required to pay Family Mosaic's administration, legal and surveyor fees.

In addition to these costs, for both processes, you will have to pay a premium i.e. the price of extension. The premium will be based on the difference between the market value of the new lease you are applying for and your existing lease.

4. Leases are usually cheaper to extend when the lease term exceeds 80 years

It is generally accepted that a lease extension is more valuable to a leaseholder than a landlord. The increase in the leaseholder's value is greater than the decrease of the landlord's interest. It is this difference that is known as "marriage value".

The longer the existing lease, the lower the marriage will be. If the lease is less than 80 years at the time of a leaseholder's notice then the landlord is paid one half of the marriage value. If the lease is more than 80 years, no marriage value is payable.

5. A lease extension does not change any of the fundamental clauses within a Shared Ownership lease

A lease extension is not deemed a variation of the lease for rent purposes, which means that the original fundamental clause in the lease in respect of rent remains unchanged.

6. Values

A lease extension may initially increase the value of the lease, which in turn may affect the price of any future shares you may wish to purchase if you are a shared owner.



Qualification for extending a lease

In order for you to be able to claim the right to a leasehold extension, you must satisfy certain conditions:

  • The existing lease must be for a term exceeding 21 years. There is no requirement that any particular period remains unexpired. A tenancy with a covenant providing for perpetual renewal is deemed a qualifying lease for these purposes.
  • Leaseholders must have owned the property for two years. Any leaseholder who has been an owner for less than two years does not have an automatic right to extend their lease.


A lease extension is a statutory right for 100% owned flats, provided you meet the qualifying criteria stated within this guide.

Please be aware that it is not a statutory right for a shared owner to have a lease extension granted (until their share is 100%). However, Family Mosaic recognise the benefits of lease extensions for our leaseholders and offer an informal process where appropriate.

Applying for a lease extension

To begin applying for a lease extension, you will need to contact our resident sales team by email to

Following inital enquiry we will check:

  • No arrears are outstanding on the leaseholder's account
  • Ensure the leaseholder has lived in the property over 2 years
  • Check the percentage the leaseholder owns in the property
  • Check the lease

Once these checks have been made, the resident sales team will send out an application pack to you with further information within 48 hours of your initial enquiry.

Understanding your Shared Ownership Lease

We asked one of Family Mosaic’s panel solicitors to help take a look at understanding your Shared Ownership lease as a first time buyer.

Why Is It Important to Extend Your Lease

Hillcrest Property Solutions help us explain the ins and outs of lease extensions for Shared Ownership properties.

Repairs and Alterations to Shared Ownership Homes

In this article we provide guidance on how repairs and alterations should be carried out and who is responsible for them in your Shared Ownership home.