Introducing the new Shared Ownership model

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How has the Shared Ownership scheme changed?

Back in September 2021, the government announced their new Affordable Homes Programme (AHP) which would see a £12 billion investment into the housing sector, providing up to 180,000 new homes across the country.

As part of the new programme, some changes to the Shared Ownership scheme were introduced in order to help more people get onto the property ladder. These changes included:

  • The minimum initial share being reduced from 25% to 10%.
  • The introduction of a 10 year repair warranty during which the shared owner will receive support from their housing provider/landlord to pay for essential repairs.
  • The introduction of a new 1% gradual staircasing model enabling shared owners to buy more shares in smaller instalments compare to the previous 10%, with heavily reduced fees.
  • Shared owners will be able to take control of the resales process from the landlord at an earlier point, giving them greater influence over the sale of their home.

How does Shared Ownership work?

Shared Ownership is a government-backed scheme which aims to help budding buyers who can’t quite afford to purchase a home on the open market.

The scheme works by offering eligible buyers the chance to buy a percentage share of a leasehold home, rather than the full market value of the property. As the purchaser only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is usually a lot lower when compared to the amount that would be required when purchasing outright.

As and when the owners financial circumstances change, they have the option to increase their share 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 service charges and ground rent.

Which homes will be affected by the new Shared Ownership model?

The new part-buy part-rent model will be implemented on all new build Shared Ownership homes delivered through the Affordable Homes Programme from April 2021, running for five years up to 2026.

Some homes will be available through the new model from 2022. However, the government will continue to fund the current Shared Ownership scheme through the AHP until 2023, meaning that there will be a transition period in which both the old and new Shared Ownership models will be available.  

The new Shared Ownership model will apply to all Shared Ownership homes delivered through the AHP, including Home Ownership for people with long-term disabilities (HOLD), Older Persons Shared Ownership (OPSO), homes in rural protected areas and homes purchased through the Right to Shared Ownership. The new model also applies to new Shared Ownership homes funded from April 2021 using receipts from the Voluntary Right to Buy programme.

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Eligibility under the new Shared Ownership model

As Shared Ownership aims to help people that can’t afford to buy a home on the open market, there are certain requirements that a buyer would need to meet to be eligible for the scheme:

  • They must have a gross household income of less than £80,000, or less than £90,000 in London.
  • They must be otherwise unable to purchase a suitable property on the open market.
  • They must be a first time buyer, used to own a home but can’t afford to buy one now, or are an existing shared owner looking to move.

Prioritisation under the new Shared Ownership model

In 2016, the government removed all priority groups where there is an under-supply of Shared Ownership homes, with homes becoming available on a first come, first served basis to applicants that met the relevant eligibility and affordability criteria.

However, military personnel will be given priority through government funded Shared Ownership schemes, and in circumstances of under-supply of Shared Ownership homes, priority would be given to serving military personnel and former members of the British Armed Forces discharged within the last two years.

Additionally, councils with their own Shared Ownership building programmes may also have some priority groups that are based on local housing needs.

Staircasing under the new Shared Ownership model

Shared owners can choose to increase the share they own in their property at any time during the term of the Shared Ownership lease, also known as ‘staircasing‘, and subject to any restrictions outlined the the terms of the lease.

There are separate staircasing arrangements depending on which Affordable Homes Programme the property was funded by.

For homes provided through the AHP 2016 to 2021, as well as previous programmes, the minimum staircasing transaction will be 10%. This includes Shared Ownership homes that are completed from April 2021. While for homes funded through the AHP 2021 to 2026, the minimum staircasing transaction has been reduced from 10% to 5%. Additionally, shared owners will have the option of purchasing an additional share of 1% per year for the first 15 years.

For further information regarding the process, please visit our staircasing guide.

Searching and applying for Shared Ownership homes

If you are looking to purchase a Shared Ownership home, you can start your search on Share to Buy. On our property portal, you can filter properties by location, number of bedrooms, deposit amount, monthly cost and more, and also register your interest directly with the relevant housing provider.

The housing provider will direct you to the Help to Buy Agent in the area where you’re looking to buy for registration. Following an initial eligibility assessment by the Help to Buy Agent, providers will conduct their own assessment of individual applicants to ensure they meet all eligibility criteria and that the purchase is affordable to them.

Share to Buy is a one stop shop for affordable homes. On our website, you can search for propertiescompare mortgages and find out all you need to know about alternative home buying schemes such as Shared Ownership and Help to Buy.