Shared ownership

What is shared ownership? 

Shared ownership is a scheme offered by some housing providers that allows you to buy a share of a property, and then pay rent on the remaining part. It can be a more affordable route – compared to buying a home outright – for first time buyers, or those that don’t currently own a home, to get onto the property ladder. 

What type of property can I buy through shared ownership? 

Shared ownership homes are usually offered by housing associations, housing developers, the local council and other organisations. They are called ‘providers’, or ‘landlords’. 

Properties purchased through shared ownership can either be new builds, or resales of existing shared ownership properties.  

 All shared ownership homes (houses and flats) are leasehold properties. 

How does shared ownership work? 

Different providers will offer differing shares in their properties, but you’ll usually have the opportunity to buy a share between 10% and 75% of the home’s full market value. 

You can take out a mortgage to buy your share, or pay for it with savings. You’ll need to pay a deposit if you’re buying with a mortgage: this will usually be between 5% and 10% of the share you’re buying (not the full market value of the property), meaning your deposit will be significantly less than if you were to buy the home outright. 

The rest of the property would be owned by a landlord, and you would pay rent to them for the share that they own.  

In addition to your mortgage and rent payments, ground rent and service charges may be applicable, for example, for maintaining communal areas.  

What are the benefits of buying through shared ownership? 

By buying a share of the property, the mortgage you pay, and the deposit you require, can be more affordable than if you bought your home outright.

You’ll usually start off paying the mortgage that you can afford, and then over time, you can choose to buy more shares of the property, as and when your finances allow. This process is called ‘staircasing’, and it can be a more manageable way of buying property for some. As you staircase and buy more shares, the amount of rent you pay will reduce. If the value of the property increases over the course of your ownership, so will the value of the share you own.  

How much can the rental amount increase by? 

You’ll need to pay rent on the portion of the property you don’t own, and the amount you pay will usually be reviewed annually by your landlord. But there are restrictions on how much this can rise by each year. It can either rise by: 

• the Retail Prices Index (RPI) plus up to 0.5% 
• the Consumer Prices Index (CPI) plus 1% (this figure doesn’t apply if you bought your home before October 2023) 

For instance, if your rent is £550 when it was reviewed by your landlord, and the CPI increase for the previous 12 months is 2.1%, the most your rent could increase by is 3.1%. As such, the maximum amount your rent could rise to is £567.05. 

Things to consider when buying a home with shared ownership 

While the amount your rent can increase by is controlled, the same isn’t true of repairs and maintenance bills. And you could be liable for full repairs costs, even though you don’t own the property outright.  

There are also certain rules and restrictions around the kinds of renovations and alterations you can make to the property, and around subletting.  

And if you do decide to ‘staircase’, and increase your share of the property, there will be costs to consider – such as appointing a solicitor to act on your behalf.

Am I eligible to buy through shared ownership? 

To qualify for the scheme, there are some general eligibility criteria you’ll be required to meet:  

• You need to have a household income of less than £80,000 and less than £90,000 if you live in London 
• You cannot own another property (you cannot be a homeowner, or be named on the deeds of another property) 
• You should not be able to afford all of the deposit and mortgage payments for a home that meets your needs in the wider market 
• You must have no outstanding credit issues 

Different Housing Associations will have their own eligibility criteria, so it’s important to check any additional requirements.  

Other shared ownership schemes 

There are other schemes that offer routes to shared ownership, and are focused on particular groups. 

HOLD (Home Ownership for people with Long-Term Disabilities) 

This scheme helps people with long-term disabilities to purchase a home and live independently. As with other shared ownership schemes, you buy an initial share and then more shares as you can afford it from the housing association or registered provider. The difference, however, is that if the properties available are not suitable to accommodate your needs, you may be able to buy a property from the open market. This requires a referral to a specialist provider and your local authority to validate the application. It is a voluntary scheme and as a result not necessarily available throughout the UK. 

OPSO – Older People’s Shared Ownership 

Supporting people over 55 to home ownership, it follows the same principles as other shared ownership schemes but the properties available are exclusively for those over the age of 55. The maximum you can own however is 75% of the property and if you do so, you will not have to pay rent on the remaining 25%. 

‘Extra Care’ is an extension provided by some OPSO schemes and is a sheltered shared ownership scheme, which provides the added benefit of on-site care. This allows residents to live independently in self-contained, modern homes, with access to a tailored care package and support programme. 

Rent to Buy (available in England, excluding London) 

Rent to Buy is another route to shared ownership for those who haven’t been able to save the 5% deposit that is required. Housing associations and registered providers offer homes to rent at typically 20% less than the open market rent, with the idea being this may give you the opportunity to set aside more savings towards a deposit. You will also be given the option to purchase a share of your rented home in the future, and staircase up, should your finances allow.