Shared ownership in the UK: shares, rent and who can apply

How it works in England

GOV.UK describes the scheme this way:

• you buy a share of the property and pay rent on the rest to the landlord, which is usually a housing association;
• you can fund your share with a mortgage, savings, or both;
• you need a deposit, usually 5% to 10% of your share;
• you usually also pay monthly ground rent and service charges, such as for maintaining communal areas;
• all shared ownership homes, houses and flats, are leasehold;
• rent is charged on the share the landlord owns, so it falls as you buy more shares.

Buying more shares later is called staircasing. GOV.UK says that if you buy more shares you pay less rent. The page I read does not give the minimum share you can buy, the fees or the valuation method, so ask the landlord for these in writing.

Who can apply in England

Your household income must be £80,000 a year or less, or £90,000 or less in London, and you must be unable to afford the deposit and mortgage for a home that meets your needs. You must also fit at least one of these situations:

• you are a first-time buyer;
• you used to own a home but cannot afford one now;
• you are forming a new household, such as after a relationship breakdown;
• you are an existing shared owner who wants to move;
• you own a home, want to move, and cannot afford a suitable new one.

For some homes you may have to show you live in, work in or have a connection to the area. If you are selling a home, you need an accepted offer, “sold subject to contract”, and you must complete that sale on or before the date you complete the shared ownership purchase.

There are variants. Buyers aged 55 or over can buy up to 75% through Older Persons Shared Ownership and pay no rent on the rest once they own 75%. Disabled buyers whose needs are not met by other homes can apply for the HOLD scheme. Serving members of the armed forces, and sometimes former members, may be prioritised when several households bid on the same home.

The other nations

Do not assume the English income cap, the share range or the staircasing rules apply outside England. The GOV.UK page itself notes that Northern Ireland, Scotland and Wales have different rules.

Things to weigh up

• Costs beyond the mortgage. You pay rent, ground rent and service charges on top of your mortgage payment. Ask for the current figures in writing, and how they can change.
• Leasehold. Read the lease with your conveyancer; see leasehold and freehold.
• Mortgage. Lenders assess shared ownership under the same affordability rules as other mortgages; see mortgage affordability rules.
• Deposit. If you hold a Lifetime ISA, check its first-home conditions against a shared ownership purchase with your provider; see the Lifetime ISA guide.
• Selling. GOV.UK lists “Selling your home” as a separate section I did not read, so ask the landlord what the process is.

Which professional to consult

A conveyancer with experience of shared ownership leases can explain the lease terms and the costs; see the conveyancer page. A mortgage adviser can check which lenders accept shared ownership; see the mortgage adviser page.