What is Shared Ownership?

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 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 a lot lower when compared to the amount that would be required when purchasing outright.

The purchaser has the option to increase his share during their time in the property via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%, thereby owning the property outright. snared ownership properties are always leasehold.

Why buy a Shared Ownership home?

Shared Ownership is essentially for people who would like to own their own home but cannot afford to buy on the open market. The cost of ownership is reduced by:

  • 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 25% share in some cases,
  • Your deposit can be 5% of the price of the share, not of the whole property.
  • Stamp duty land tax (SDLT or simply ‘stamp duty’) can generally be deferred until your share reaches 30%.

Shared Ownership properties can often be found in private developments as the provision of a certain number of Shared Ownership units will often be required as a part of the planning permission for a development, This can put affordable housing in the heart of some prestigious postcodes.

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

Effectively you are buying a leasehold house or flat. that may be either new or a resale. However, as you cannot presently afford to purchase outright, you are paying rent on the portion that you cannot afford.

You have the option to buy further shares, up to and including 100% ownership when you are able 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.

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
  • You should generally be a first time buyer, i.e. you don’t already own a home. If you do already own, 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 to be able to easily access at least £4,000 to cover the costs of buying a home. This is a guideline figure – the actual amount you need will depend on the Help to Buy option you choose

In most cases you will also need to have enough savings or be able to easily access a minimum 5-10% of the equity share you are buying, as a deposit.

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

How to buy a Shared Ownership home

Getting started with Shared Ownership is not as complicated as people might think. First of all. you should check if you are eligible. Please note that in addition to the general eligibility rules, some Housing Associations and boroughs have their own terms regarding priorities and affordability. These will be made clear on each property listing.

Through Share to Buy you can find suitable Shared Ownership properties, show your interest for properties and contact Housing Associations for viewings.

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

Share to Buy specialist mortgage team can also help you find a mortgage for your new Shared Ownership home.  Visit our mortgages pages to compare and apply for Shared Ownership mortgages.

Can I purchase any property on a Shared Ownership basis?
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Shared Ownership is only available on properties that have been built for that scheme by a housing association using Government subsidy. Therefore, the option does not exist to make an offer on an outright sale property on a Shared Ownership basis.

Does Shared Ownership mean sharing with another person?
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No. Shared Ownership does not mean you share the ownership of the property, or have to live with another person. It means you own a share of the property and pay rent on the share you don’t own to a housing association. Buying a house with friends, a spouse or a partner is known as joint ownership.

How many bedrooms am I entitled to purchase?
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There is no longer a restriction on the number of bedrooms within the property you wish to buy. Previously Shared Ownership purchasers were eligible to apply for properties with up to one extra bedroom than the household size required. Now, as long as you can afford it, you can apply for properties with as many bedrooms as you wish.

What is a resale Shared Ownership property?
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Resales are Shared Ownership properties where the current owner is selling their share. Unless they are ‘fixed equity’ you purchase the share on offer and may purchase additional shares in the future until you own it outright, if you wish.

What size share can I purchase in a Shared Ownership property?
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Generally speaking, the minimum share is available to purchase in a new build Shared Ownership property is 25%, and the maximum share is 75%. However, this may vary depending on the housing association. Your income and savings will be assessed by an independent financial advisor to determine what size share is affordable for you. So, the minimum share available may be set to 30% by the housing association, but if it is affordable you could purchase a 40%/50% etc share.

With resale properties, however, the minimum share will be whatever the seller has purchased previously. So, if the seller had a 70% share in their Shared Ownership property, the minimum share you can purchase will be 70%.

Who is responsible for repairs of my Shared Ownership home?
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All repairs and maintenance to the home are your responsibility, regardless of the share you own. Most brand new homes come with a 1 year warranty period for defects and a longer warranty to cover any structural problems caused by poor workmanship. The housing provider you buy from can explain the warranties available on the home you want to buy.

When you buy a flat, the housing provider or manager will generally be responsible for any communal parts of the building and grounds and you will be responsible for all repairs and maintenance to your own flat. You pay a service charge to the housing provider which is used to cover the costs of maintenance and decoration to communal areas.

How long does it take to get a property via Shared Ownership?
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The process of purchasing a new-build property depends on a number of factors, such as the length of time required to arrange mortgage financing and the speed at which the solicitors involved can process the sale. Usually it takes around two months from start to finish, however it can take as little as 28 days if everything proceeds quickly. Although, if building work has yet to be completed on the development this may lengthen the process.

Can I increase my share of my Shared Ownership property to 100%?
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Yes. This is called ‘staircasing’. You should check with your housing provider as to the specific terms of staircasing arrangements for the home you intend to buy. Normally, you will be able to staircase as and when you can afford to in a minimum of 10% tranches.

You can staircase to the point that you own outright. The price of the additional share being bought when you staircase will be based on the value of your home at the time you want to staircase.

You should check with your housing provider as to the specific terms of staircasing arrangements for the home you intend to buy. Normally, you will be able to staircase as and when you can afford to in a minimum of 10% tranches. In most cases you will be able to staircase all the way to 100%, but you should check your lease before purchasing, as some agreements cap the share at which you can staircase to.

Can I decorate my Shared Ownership home?
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You are free to decorate your Shared Ownership property. The housing association will not contribute to decorative improvements. Your Shared Ownership lease should have details about major alterations to the property, e.g. new flooring, structural changes, which will have to be authorised by the housing association before work commences.

Can I take a lodger or sub-let when I own a Shared Ownership property?
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Shared Ownership leases do not allow you to sublet your home. This may also be a condition of the mortgage. In some cases, under exceptional circumstances, you may be able to sublet for a specified period. You will be required to obtain written permission from your housing association.

If you intend to take a lodger, you should check with the housing association you are purchasing the property from, but most Shared Ownership leases allow this. Please note, the income you will gain from taking a lodger will not be taken into account when assessing your affordability for a property, you must be able to afford to purchase the property and make the monthly costs independently of the income from a lodger.

Can I make adaptations / alterations to my Shared Ownership property?
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You should check the terms of your lease. You must have the landlord’s permission in writing before you make any alterations to your property. However, they should not be able to withhold permission unreasonably.

What is a Shared Ownership lease?
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The Shared Ownership lease sets out the rights and obligations of both the landlord (i.e. the housing association) and tenant (i.e. the shared owner). The housing association has a contractual right to ensure that the shared owner complies with the terms of the lease. A Shared Ownership lease is where the leaseholder has purchased a share in the equity and pays rent on that share retained by the landlord.

Typically a Shared Ownership leaseholder will own 25%, 50% or 75% of the property and pay rent on that part of the property owned by the landlord. The actual proportion owned by the leaseholder and the landlord can vary from the examples above.

I am over the age of 55, can Shared Ownership help me?
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You can get help from another scheme called ‘Older People’s Shared Ownership’ if you’re aged 55 or over. It works in the same way as the general Shared Ownership scheme, but you can only buy up to 75% of your home. Once you own 75% you won’t have to pay rent on the remaining share. Soon you will be able to search for Older People’s Shared Ownership properties on Share to Buy .