What is Shared Ownership, How It Works and What to Watch Out For

What is Shared Ownership?

Shared ownership is a government-backed scheme that allows buyers to purchase a percentage share of a property, typically between 10% and 75%, and pay subsidised rent to a housing association on the remaining share. You take out a mortgage only on the share you own, which reduces the deposit and monthly mortgage costs compared to buying outright.

Who is Eligible?

General qualifying conditions in England:

• Household income below £80,000 per year (£90,000 in London)
• A first-time buyer, or a previous homeowner who no longer owns a property
• Cannot afford to buy on the open market
• Can demonstrate you can afford the combined costs of mortgage, rent, and service charges

How the Purchase Works

You pay a mortgage on your owned share, rent to the housing association on the remaining share (typically around 2.75% of the unsold share's value per year), and service charges for maintenance of communal areas.

Staircasing: Buying More Shares Over Time

Staircasing allows you to purchase additional shares in the property over time, in tranches (often a minimum of 10%), until you potentially own it outright. Each time you staircase, a new valuation is obtained and you pay the current market value for the additional share.

Under the model shared ownership lease introduced in England in 2021, buyers of newly built homes can staircase in increments as small as 1% per year for the first 15 years at a discounted rate.

What Happens When You Want to Sell?

If you have not staircased to 100%, the housing association usually has a right of first refusal for four to eight weeks to find another eligible buyer. When you sell, the proceeds are divided between you and the housing association in proportion to shares held.

Costs Buyers Sometimes Underestimate

Shared Ownership is Always Leasehold

All shared ownership properties are sold leasehold. Under the 2021 model lease, new shared ownership homes must have a minimum lease term of 990 years at peppercorn ground rent. However, older shared ownership properties may have shorter leases and financial ground rent clauses.

Property Passport UK records title and tenure information that can provide a useful overview before you commission a formal legal review.

Is Shared Ownership Right for You?

Shared ownership can be an effective route into homeownership, particularly in expensive areas. However, the combined costs of mortgage, rent, and service charges can exceed equivalent rental costs in some markets. Seek independent financial advice and use a solicitor experienced in shared ownership conveyancing before proceeding.