Shared ownership lets you buy part of a home and rent the rest from a housing association or other provider. It’s one of the main ways into ownership now that the Help to Buy equity loan has closed in England. This page covers shared ownership in England; Scotland, Wales and Northern Ireland have their own rules.
How shared ownership works
You buy a share of between 10% and 75% of the home’s full market value (usually at least 25%) and pay rent on the share the landlord keeps. You pay for your share with a mortgage or savings, with a deposit of usually 5% to 10% of the share, not of the whole home. All shared ownership homes are leasehold, so there’s usually ground rent and a service charge too.
You can buy a new-build home, an existing shared ownership home through a resale, or (with a long-term disability) a home adapted to your needs. If you’re 55 or over you can buy up to 75% through Older Persons Shared Ownership, and pay no rent once you own that much.
Who can apply
You can buy a 10% to 75% share of a home and pay rent on the rest if your household income is £80,000 or less (£90,000 in London), you can't afford a suitable home outright, and you're a first-time buyer, a former owner who can't afford to buy now, forming a new household, an existing shared owner moving, or an owner who can't afford a home that meets your needs.- Your household income is £80,000 a year or less (£90,000 in London).
- You can't afford all of the deposit and mortgage payments for a home that meets your needs.
- You're a first-time buyer, used to own a home but can't afford one now, are forming a new household (for example after a relationship breakdown), are an existing shared owner wanting to move, or own a home but can't afford one that meets your needs.
- If you own a home, you must have completed its sale by the day you complete on the shared ownership home.
- Some homes also need you to live in, work in or have a connection to the area.
What it costs
On a new-build home, the rent can’t be more than 3% a year of the value of the landlord’s share, and most landlords charge 2.75%. On a resale home, the rent starts where the previous owner’s was. Rent is usually reviewed every year and can go up.
For example, buying a 40% share of a £200,000 home:
| Amount | |
|---|---|
| Your share (40%) | £80,000 |
| Deposit at 5% of your share | £4,000 |
| Landlord’s share (60%) | £120,000 |
| Rent at 2.75% a year | £3,300 a year (£275 a month) |
On top of that come the mortgage payments on your share, the service charge and ground rent, and buildings insurance. You’ll usually pay a reservation fee of up to £500 to hold a home, taken off what you pay at completion. Stamp duty may be due: see the stamp duty guide.
Buying more shares (staircasing)
You can buy more of your home later, which lowers the rent. Shares of 10% or more can usually be bought at any time (some older leases need 25%, some newer ones allow 5%), at the home’s value then, based on a RICS surveyor’s valuation you pay for; the landlord may charge a fee of about £150 to £500 each time. If you bought on or after 1 April 2021, you may also be able to buy 1% a year for the first 15 years, priced from the original value moved in line with the House Price Index, with no admin fee.
Most homes can be staircased to 100%, after which you own the home outright. In some rural ‘designated protected areas’ the limit is 80%, and Older Persons Shared Ownership homes stop at 75%.
Selling
You can sell at any time. If you own less than 100%, you tell the landlord first: it has a nomination period of 4, 8 or 12 weeks (depending on the lease) to find a buyer, at a price set by a RICS valuation. If it doesn’t, you can sell your share on the open market. Once you own 100% you can usually sell like any other home.
Shared ownership and Help to Buy compared
The Help to Buy equity loan let you buy a home outright with a government loan for part of the price. You can no longer apply for one in England; Wales still has its own equity loan scheme.
| Shared ownership | Help to Buy equity loan | |
|---|---|---|
| Open to new buyers in England | Yes | No (closed) |
| What you own | A share, with rent on the rest | The whole home, with a loan against part of it |
| Ongoing cost besides the mortgage | Rent on the landlord’s share, service charge, ground rent | No interest for 5 years, then interest on the loan and a £1 monthly fee |
| Income limit | £80,000 household (£90,000 in London) | Not applicable (closed) |
If you already have a Help to Buy equity loan: there’s no interest for the first 5 years; in year 6 you pay 1.75% a year on the amount you borrowed, rising each April by CPI plus 2% (RPI plus 1% for loans from the 2013 to 2021 scheme), plus a £1 monthly management fee until it’s repaid. Interest doesn’t reduce the loan. Repayments are the same percentage of the home’s market value (at the time you repay) as the percentage you borrowed. You can repay part of it early, at least 10% of the home’s value at a time, and must repay the rest at the end of the loan term (normally 25 years) or earlier, for example when you sell.
Related guides
- First-time buyers guide: costs, deposits, schemes and stamp duty relief in one place
- Help to Buy alternatives: the schemes that help first-time buyers now, compared
- The First Homes scheme: discounted new homes for first-time buyers
- Buying with a 5% deposit: 95% mortgages and the Mortgage Guarantee Scheme
Your home may be repossessed if you do not keep up repayments on your mortgage. PocketWise provides information and guidance, not financial advice. Seek independent mortgage advice before making decisions about borrowing.