Shared Ownership

Struggling to afford a new home? Find out about Shared Ownership - a government scheme that allows you to buy a share of a property and pay rent on the rest.

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Shared Ownership at a glance

Deposit needed

Minimum 5% of the share of the property you're buying.

Ownership

Part-buy, part-rent.

Household income required

Less than £80,000 (£90,000 in London).

Availability

England only. See other schemes in Scotland, Wales and Northern Ireland.

What is Shared Ownership?

Shared Ownership is a government scheme that offers you the chance to buy a share of a property from a housing association, a non-profit-making body that provides homes.

Because you only own a part of the property, you can buy it with a smaller deposit and mortgage. A smaller mortgage means smaller repayments but you’ll also need to pay:

rent on the share of the property you do not yet own
monthly service charges
ground rent.

Shared Ownership homes can be new builds, existing properties, houses or flats. All Shared Ownership properties are leasehold, even houses, which is unusual.

To be eligible for Shared Ownership you need to:

be a first-time buyer, an existing shared ownership homeowner, or a former homeowner who can't afford to buy now
be over 18 years old
have an annual household income of less than £80,000 (£90,000 in London).

Shared Ownership is one of a number of schemes available to help you buy a home. Others include Help to Buy: Equity Loan, where the government loans you up to 20% of the property value (rising to 40% in London).

“If you cannot quite afford the mortgage on 100% of a home, the Shared Ownership scheme gives you the opportunity to ‘part-rent’ and ‘part-buy’ your home. The scheme offers a flexible option to aspiring first-time buyers, supporting them into home ownership.”

How does Shared Ownership work?

When you buy a Shared Ownership home, you decide what stake in the property you can afford to buy from the housing association.

You put down a deposit of at least 5% of your stake and take out a mortgage to cover the rest. You then pay rent on the part you do not own.

You can increase the share you own in the property, through a process known as staircasing, until you own 75% of the property, or in some cases 100%. Not all housing associations let you get to 100%, so be sure to check first.

There’s a legal cost every time you staircase so it may make sense to buy bigger chunks. Plus, some housing associations have a limit on how many times you can do it.

The government announced a new version of Shared Ownership in April 2021, but it won’t be available on homes for sale until 2022 (with a limited number available before then).

The best way to check if a home qualifies for the new version is to ask the provider when you make an enquiry.

Head hurting? Yes, us too.

Shared Ownership pros and cons

The pros

You could buy sooner because of the smaller deposit and mortgage
It’s more affordable for those on a lower income
You can increase your share in the property as and when you can afford it
It’s available on new-build homes and existing properties

The cons

Shared Ownership properties are leasehold, rather than freehold, so you will not own the land the property is on
You have to pay service charge that comes with the property regardless of how big your stake is. You may have to pay ground rent too
When you come to sell, you may have to do it through the Shared Ownership scheme rather than on the open market
Buying more of the property over time comes at a cost

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How the existing Shared Ownership scheme compares with the new version

	Shared Ownership available on homes until 2023	NEW Shared Ownership available on homes from 2022
Minimum deposit	5% of your share in the property	5% of your share in the property
Minimum share of property for sale	25%	10%
Minimum 'staircasing'	10% share each year	1% share each year, with reduced fees
Who covers repairs	You are responsible for carrying out repairs	You receive support from your landlord for essential repairs for 10 years
Exclusivity period for landlord to sell	8 weeks	4 to 8 weeks

How Shared Ownership compares with Help to Buy

Buying scheme	Help to Buy: Equity Loan	Shared Ownership
Overview	Helps first-time buyers in England purchase a new-build home. Regional price caps are in place.	Allows buyers in England to buy part of a property and pay rent on the rest.
Benefits	Allows you to buy a new-build home with a small deposit.	Enables you to buy a share of a property with a small deposit.
Deposit	At least 5% of the property value. The government tops this up with a loan of up to 20% of the property value (40% in London).	At least 5% of your share of the property.
Requirements	You need to provide 80% of the property value (60% in London) in total. For example, with a 5% deposit and a 75% LTV mortgage.	Your annual household income must be less than £80,000 (£90,000 in London).
Ownership	Full ownership once your loan from the government and mortgage have been repaid.	Own up to 75% of the property value once your mortgage has been repaid. You can build this share up gradually.

Your questions answered

If you’re in a Shared Ownership house, you’re likely to be responsible for all repairs. And if you're in a Shared Ownership flat, you'll be responsible for repairs to your own property, while the manager will be responsible for repairs to communal areas.

Under the new version of Shared Ownership launched in April 2021, you'll receive support from the landlord to pay for repairs during the first 10 years.

The main upfront cost of buying a Shared Ownership home is the deposit. This must be at least 5% of the stake in the property you are buying.

On top of this, you’ll also need to pay solicitors’ fees and valuation fees.

Thanks to the stamp duty holiday, you do not need to pay stamp duty on the first £250,000 of property until 30 September 2021. Normal stamp duty rates then apply from 1 October 2021. However, there is a stamp duty exemption available for first-time buyers beyond the current stamp duty holiday.

Alongside the buying costs, you'll need to check that you can afford the monthly mortgage repayments, rent, service charges and ground rent.

When the time comes to sell your Shared Ownership home, you first need to notify the housing association. They’ll have first refusal on the property and will try to find an eligible buyer within a set time period.

If they sell it within this time, you’ll probably have to pay:

marketing fees
valuation fees
legal fees
for an Energy Performance Certificate (EPC).

If the housing association is not able to find a buyer, you can market it yourself. It can take longer to sell a Shared Ownership home because the buyer will have to qualify for the Shared Ownership scheme. The same way you did.

But there are often long waiting lists for Shared Ownership properties, so you may have a ready pool of potential buyers.

The rules may differ depending on whether you own 100% of the property by the time you come to sell it.