Shared ownership is a government-backed scheme that allows buyers — typically first time buyers — to purchase a percentage of a property and pay rent on the remaining share, owned by a housing association. It is designed to make homeownership more accessible for people who cannot afford to buy a property outright, particularly in areas with high property prices.
How does shared ownership work?
Under a shared ownership scheme, you buy a share of a property — typically between 25% and 75% — using a mortgage and deposit in the normal way, but scaled to the value of your share rather than the full property price. You pay rent to the housing association on the remaining share they retain, alongside your mortgage payments.
For example, if you buy a 40% share of a property worth £250,000, you would need a mortgage and deposit covering £100,000 (40% of the property value), while paying rent on the remaining £150,000 share owned by the housing association.
What does it cost?
Your overall monthly outgoings under shared ownership typically include your mortgage payment on the share you own, rent on the share owned by the housing association (usually around 2.75% of the value of their share per year, though this varies), and a service charge if the property is part of a development with shared facilities or maintenance. It is important to add up all these costs when assessing affordability, as they combine to form your total housing cost — not just the mortgage payment.
Who is eligible for shared ownership?
Eligibility generally requires a household income below a certain threshold (commonly £80,000 outside London or £90,000 in London, though check current figures), not currently owning a home (or being in the process of selling one you own), and being unable to afford a home that meets your needs on the open market. Priority is often given to first time buyers, though some schemes also accept existing homeowners looking to downsize who cannot otherwise afford suitable property.
Staircasing — increasing your share
One of the key features of shared ownership is "staircasing" — the ability to buy additional shares in the property over time, increasing your ownership percentage and reducing the rent you pay on the remaining share. Some schemes allow you to staircase all the way to 100% ownership, at which point you own the property outright and stop paying rent.
Each staircasing transaction typically involves a new valuation of the property, legal fees, and potentially a new or extended mortgage to cover the additional share — meaning there are real costs each time you staircase, not just the cost of the additional share itself.
What are the drawbacks of shared ownership?
Shared ownership is not without downsides. You are responsible for 100% of repair and maintenance costs even though you may only own a portion of the property — this is a common misconception. Selling a shared ownership property can be more complex than selling a standard property, as the housing association often has the right of first refusal to find a buyer. Service charges and rent can increase over time, sometimes substantially. And mortgage options for shared ownership properties can be more limited than for standard purchases, with fewer lenders offering shared ownership mortgages.
Is shared ownership right for you?
Shared ownership can be a genuinely useful route into homeownership for people who cannot afford to buy outright in their area, but it is not without complexity and ongoing costs. Before proceeding, it is worth comparing the total monthly cost (mortgage plus rent plus service charge) against renting privately or saving for a larger deposit on a smaller property, and seeking advice from a mortgage adviser familiar with shared ownership products.