Shared Ownership Mortgages: Complete Guide

Shared Ownership lets you buy part of a home and rent the rest from a housing association or other landlord. You need a deposit and mortgage only for the share you buy, which can make buying possible years earlier than saving for a whole home.

It is not always the cheapest route, though. Rent, service charges and the cost of buying more shares all add up. This guide shows the full picture so you can compare it properly.

How Shared Ownership works

According to GOV.UK:

• You buy a share of between 10% and 75% of the home’s full market value. Most shares are 25% to 75%, with 10% available on some homes.
• You need a deposit of usually 5% to 10% of the share you are buying.
• You pay rent to the landlord on the share you do not own.
• All Shared Ownership homes are leasehold, so service charges and sometimes ground rent apply.
• You can buy more shares later, called staircasing, which reduces your rent.

Who can apply?

Under the GOV.UK eligibility rules, your household income must be £80,000 or less, or £90,000 or less in London, and you must be unable to afford the deposit and mortgage for a suitable home on the open market. You must also be one of the following:

• A first-time buyer.
• A former homeowner who cannot afford to buy now.
• Forming a new household, for example after a relationship breakdown.
• An existing shared owner who wants to move.
• A homeowner who wants to move but cannot afford a suitable home.

If you already own a home, you must have accepted an offer on it and complete the sale on or before the day you complete your Shared Ownership purchase. Some homes also require a local connection. If you are 55 or over, Older Persons Shared Ownership lets you buy up to 75%, and the HOLD scheme can help disabled buyers whose needs other homes do not meet.

What it costs each month

Your monthly cost has three parts: the mortgage on your share, rent on the rest, and service charges.

The comparison shows why Shared Ownership helps with the upfront cost and monthly budget. But part of your monthly spend is rent, which builds no equity, and rent usually rises every year.

Getting a Shared Ownership mortgage

Fewer lenders offer Shared Ownership mortgages than standard mortgages, and each sets its own rules on:

• Affordability: lenders count the rent and service charges as commitments alongside the mortgage.
• Minimum share: some lenders will not lend on very small shares.
• Deposit: usually 5% to 10% of the share. A small number of lenders have offered higher loan-to-value options.
• Lease terms: the lender checks the lease, rent review clauses and any restrictions.

Housing associations usually require you to speak to a mortgage adviser before they accept your application, to confirm you can afford the home. We can do this for you.

With bad credit

Past missed payments or defaults do not automatically rule you out, but fewer lenders will consider them for Shared Ownership. A larger deposit or a smaller share can help. See our bad credit mortgage guide.

Staircasing: buying more of your home

You can buy more shares as your income or savings allow. Each time:

• The price is based on the home’s current value, not what you paid, so rising prices make each share more expensive.
• You will usually need a valuation and legal work, and possibly a new mortgage or a further advance.
• Your rent falls in proportion to the share you now own.

Minimum staircasing amounts depend on your lease. Many older leases require at least 10% at a time. Newer leases granted under the 2021 model allow smaller purchases, including 1% steps for a period after you buy, at reduced cost. Check your lease or ask your landlord.

Stamp Duty on Shared Ownership

You can usually choose between two approaches:

• Pay on the share you buy now, and potentially pay more Stamp Duty later if you staircase above 80%.
• Pay once on the full market value at the start, through what is called a market value election, with nothing more to pay when you staircase.

First-time buyer relief can apply. The right choice depends on the price and your plans, so ask your conveyancer before you exchange.

Selling a Shared Ownership home

If you sell before owning 100%, your landlord usually has a period to find a buyer from its waiting list first, and the price is based on an independent valuation. If no buyer is found, you can usually sell on the open market. Once you own 100% you can normally sell like any other home. Your lease sets the exact rules.

Is Shared Ownership a good idea?

It can work well if:

• You cannot raise a deposit for a whole home in your area.
• The total monthly cost is affordable and sustainable as rent rises.
• You plan to staircase over time, or value having your own home now.

Think carefully if:

• The service charges are high, as they apply to the whole home even though you own only part.
• You expect to move within a few years, as selling can take longer.
• You want to let the home out. You usually cannot sublet the whole property until you own 100%.

Alternatives to compare

• A 5% deposit on a whole home, if your income supports it. See our first-time buyer deposit guide.
• First Homes, where your council still offers them.
• Family help, such as a gifted deposit or a joint borrower sole proprietor mortgage.
• Right to Buy or Right to Acquire, if you are a social housing tenant.

Already a shared owner? Read our guide to remortgaging a Shared Ownership property.

Shared Ownership FAQs

Speak to us before you reserve

We can check which lenders will lend on the home and share you want, show you the true monthly cost and handle the affordability check your housing association needs. Your initial consultation is free, and our standard fee is £499 in total if you proceed: £299 on application, refundable if the mortgage is declined under your fee agreement, and £200 when your offer is issued.