What is Shared Ownership?

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Shared Ownership – all you need to know!

Shared Ownership gives first time buyers and those that do not currently own a home the opportunity to purchase a share in a new build or resales property.

The purchaser pays a mortgage on the share they own, and pays a subsidised rent to a housing association on the remaining share. Because the purchaser only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is usually lower when compared to the amount that would be required when purchasing outright.

The purchaser has the option to increase their share during their time in the property via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%. In this instance, the shared owner will no longer pay any rent, just their mortgage along with any relevant service charges and ground rent.

Read on for more information about Shared Ownership or start your property search.


Why buy a Shared Ownership home?

Shared Ownership is an alternative home-buying product for people who would like to purchase a property but can’t afford to buy on the open market. Shared Ownership costs are usually lower than other housing options for a number of reasons:

  • The rent is less than the rate charged on the open market and usually charged at 2.75% of the property value per annum.
  • You can start with a little as a 25% share if buying through the existing scheme, or from as little as 10% if buying through the updated Shared Ownership model.
  • Your deposit will be 5-10% of the price of the share, not of the full market value of the whole property.
  • Stamp Duty Land Tax (SDLT or simply ‘Stamp Duty’) can generally be deferred until your share reaches 80%.

Shared Ownership properties can often be found in private developments as a certain number of Shared Ownership homes will often be required as a part of the planning permission for a development. This can help to put affordable housing in the heart of sought-after areas. You can find out more about the costs of buying a Shared Ownership home on our website.


When I part-buy part-rent my home, what am I buying?

Shared Ownership allows you to buy a percentage of a property, paying a mortgage on the share you own and rent to a housing association on the remainder. You will be buying a leasehold house or apartment, and this will be either a new build or resale home.

You will have the option to buy further shares via a process known as ‘staircasing’ – and in most cases can staircase all the way to 100%, if and when you choose to do so. The price of buying further shares will be based on an independent valuation at the time that you purchase the further share. You can find out more about the process of buying additional shares in our staircasing guide.


What are the eligibility rules for Shared Ownership?

There are some general eligibility requirements that anyone wishing to buy a Shared Ownership home must meet. The general eligibility criteria for Shared Ownership is as follows:

  • You must be at least 18 years old.
  • Outside of London your annual household income must be less than £80,000.
  • In London, your annual household income must be less than £90,000.
  • Shared Ownership purchasers are often first time buyers but if you do already own another home, you must be in the process of selling it.
  • You should not be able to afford to buy a home suitable for your housing needs on the open market.
  • You must show you are not in mortgage or rent arrears.
  • You must be able to demonstrate that you have a good credit history (no bad debts or County Court Judgements) and can afford the regular payments and costs involved in buying a home.

You should have savings or be able to easily access at least £4,000 to cover the costs of buying a home; this is a guideline figure and the actual amount may vary.

You will also need access to the deposit amount required. For Shared Ownership, this will usually be 5-10% of the equity share you are buying but this will depend on the property and your affordability.

Please note: You should always check the eligibility required with the housing association selling the property, as they may have specific criteria.


How is Shared Ownership changing?

The government previously announced their Affordable Homes Programme – a new investment which will see a £12 billion boost into the housing sector, providing up to 180,000 new homes across the country. A new model for the part-buy part-rent scheme will also be implemented on new build Shared Ownership properties delivered through the Affordable Homes Programme for five years from April 2021.

This new model means the following for buyers purchasing a home through Shared Ownership:

  • The minimum initial share buyers are able to purchase will be lowered to 10%, compared to the current 25%.
  • The introduction of a 10-year repairs and maintenance warranty.
  • The introduction of longer leases on new build homes.
  • Shared owners will be able to buy additional shares (also known as ‘staircasing’) in 1% increments, compared to the current 10%.
  • Shorter nomination periods for shared owners who are looking to sell their home.

If you are interested in a specific new build property or development, we would recommend discussing your options with the relevant housing provider as the new model is still in its early stages. You can also visit the government website to find out more about the new Shared Ownership model and register with Share to Buy to keep up to date with the latest announcements.

Some homes available with a minimum 10% share are already listed on Share to Buy, so head to our property portal to start your search!



How to buy a Shared Ownership home

Registering with Share to Buy can help you find a Shared Ownership property.

Getting started with Shared Ownership is not as complicated as people might think and the first step would simply be to check if you’re eligible. Please note that in addition to the general eligibility rules, some housing associations and local boroughs may have their own terms regarding priorities and affordability. These should be outlined on each listing on the Share to Buy property portal, and the housing provider will be able to explain in more detail.

With Share to Buy you can search for suitable Shared Ownership properties, register your interest in properties and contact housing associations for viewings.

When you have chosen a property, you will need to make sure you have the required deposit and are able to get a mortgage. Helpfully, each property available for sale on our website includes a budget calculator which gives you an indication of the monthly costs you may have to pay.

To research the mortgages available across the market you can use the Share to Buy Mortgage Affordability Calculator to determine how much you may be able to borrow, and the Share to Buy Mortgage Comparison Tool gives you an insight into the Shared Ownership mortgages available on the market.



What should I be aware of when buying through Shared Ownership?

The government’s part-buy part-rent product has helped hundreds of thousands of people purchase a home over the last four decades but deciding to buy is a choice which shouldn’t be taken lightly, and requires a lot of research to ensure you’re making the right decision for you.

Shared Ownership homes are sold on a leasehold basis and depending on the property you’re purchasing and how long you’ll be living there, you may need to extend this lease at some point during your occupancy. It’s also important to understand how costs surrounding service charges, rent increases, repairs and so on are calculated. Please visit our page on Shared Ownership terms and conditions to find out more.

What are the pros and cons of Shared Ownership?

Shared Ownership can be fantastic! On the positive side, it allows entry into the property market with a lower deposit and manageable monthly payments. This is particularly advantageous in high-cost housing areas. Additionally, it provides the opportunity to increase ownership over time by purchasing more shares.

However, selling the property might involve certain restrictions and processes. Maintenance costs and potential service charges could also add to the financial commitment. Moreover, you’ll be tied to the property’s market value fluctuations. Before opting for Shared Ownership, carefully weigh these aspects against your financial situation and long-term goals.

Can I have a lodger in my Shared Ownership property?

In Shared Ownership properties, you are generally allowed to take in a lodger. However, having a lodger might be subject to certain conditions outlined in your lease agreement and set by the housing provider.

Generally, it’s advisable to inform the housing provider and seek their permission before taking in a lodger. Some housing providers might have restrictions or guidelines to ensure that the property remains in compliance with Shared Ownership regulations and the terms of the lease. These restrictions are in place to maintain the affordability and eligibility criteria for future buyers.

To be sure, review your lease agreement and consult the housing provider directly to understand whether having a lodger is allowed and what steps you need to take to proceed in a compliant manner.

Can you rent out a bedroom in Shared Ownership?

Renting out a bedroom in a Shared Ownership property might be subject to certain restrictions and guidelines set by your lease agreement and the housing provider. Typically, Shared Ownership properties are meant for owner-occupiers and, while lodgers are typically allowed, there might be limitations on subletting or renting out individual rooms.

The primary goal is to maintain the affordability and eligibility criteria for future buyers. Before considering renting out a bedroom, it’s advisable to review your lease agreement and consult with the housing provider to understand their policies on this matter.

Subletting without proper authorisation could potentially violate the terms of your lease and lead to issues. Always seek permission and clarity from the housing provider before making any decisions regarding renting out a bedroom in a Shared Ownership property.

Can you decorate a Shared Ownership flat?

Yes, you can generally decorate a Shared Ownership property, but there might be certain restrictions and guidelines to follow. You are allowed to personalise the interior of your flat, including painting walls, hanging artwork and adding furniture. However, it’s crucial to review your lease agreement and any rules set by the housing provider. Some restrictions could be in place to maintain the property’s condition and uniform appearance, especially in communal areas.

Before making any significant changes, such as fitting a new kitchen or adding a driveway, seek permission from the housing provider to ensure compliance. It’s advisable to strike a balance between personalising and adhering to the terms to ensure a comfortable living space while safeguarding the property’s resale value and overall aesthetics.

For more information, visit our FAQs page: Responsibilities of a Shared Ownership buyer.

Is it hard to sell Shared Ownership?

Selling a Shared Ownership property differs from traditional sales. While not more difficult, it does involve certain considerations. Shared Ownership properties often have resale restrictions and regulations that vary based on housing providers and lease agreements. These restrictions might include giving the housing provider a right of first refusal, meaning that they can try to sell the property on your behalf first, or limitations on who can purchase the property, such as another buyer needing to purchase a share equal to or higher than your existing share.

Additionally, potential buyers must meet certain criteria to be eligible for Shared Ownership. To navigate this process smoothly, it’s recommended to research the specific terms of your Shared Ownership agreement.