Shared ownership
How does Shared ownership work?
Shared ownership allows you to buy a share of a new house and pay rent on the remaining part. It is a government-backed incentive scheme, primarily aimed at helping first time buyers onto the property ladder. You can also use it to buy a bigger home than you can afford on the open market.
The percentage you can purchase may be different depending on where you buy the home:
- In England, you can buy shares of between 10% and 75% of the full market value
- In Scotland, you can buy a 25%, 50% or 75% share
- In Wales, you can buy shares of between 25 and 75% of what the home is worth
Shared ownership is also known as ‘part-buy, part-rent’.
You will purchase your shared ownership property via a housing association or council. The home will be a new build or a re-sale of an existing shared ownership property, of which you’ll need to purchase the same percentage of shares as the existing owner, or more.
You will need a deposit and a mortgage on your share of the property that you are buying. The remaining share is owned by the housing association or council, and you will pay rent comprising up to 3% of this amount.
Although the housing association may have shares of up to 90% in your home, you will become the owner of the lease. As the leaseholder, you will be responsible for repairs inside the property and the housing association will take care of the outside.
To cover any costs that might be necessary for outside work, you will need to pay a service charge, usually paid monthly. It is a good idea to find out how much the service charge is and factor that into all monthly outgoings before you agree to buy.
What is Staircasing in Shared ownership?
You can buy additional shares of your home, usually in increments of 10%, until you own the majority or all of your home. Some older leases set the minimum amount at 25%, and newer ones may allow you to buy as little as 5% at a time. There are some instances where you may be able to buy 1% shares.
This process is called staircasing and allows you to own more of your home as you earn more money or can afford a bigger mortgage. Each time you wish to purchase more shares, these will be based on the value of the home at the time of buying the shares, and not the value of your home when you first bought it.
You will need to pay for a professional valuation of your property to determine the value of the shares before you can buy them. Buying more shares in your home will also mean paying less rent.
Useful links
Shared ownership providers
The following housing associations and developers have shared ownership properties available throughout the UK which you can enquire via this website: