How does shared ownership work?
Buy part of a home and pay rent on the rest – how shared ownership works and who can use it.
Shared ownership is a scheme that lets first-time buyers, and people who don't currently own a home, buy a share of a property – either a new build or a resale.
How does it work?
When you buy through shared ownership, you take out a mortgage for your share and pay rent on the rest of the property, which belongs to a housing association, for example. You can usually buy a share of between 25% and 75%.
Because you're only buying part of the property, the mortgage can seem easier to get. But the amount you can borrow is reduced by the rent you'll pay each month on the rest of the home. For example, on a gross salary of £40,000 a year, you might be able to borrow around £180,000 to buy a whole property, but only around £100,000 to buy a share (this is just an example to show the difference).
You also have the right to increase your share by buying more of the property while you live there, known as staircasing. Once you own 100%, you stop paying rent and pay only your mortgage plus any other charges, such as service charge or ground rent.
What are the advantages?
The scheme is for people who would like to buy a home but can't afford to buy one outright.
- Lower rentIt's below market rates and is usually set at 2.75% of the property's value a year.
- Shares from 10%Under the updated shared ownership model, you can buy as little as 10% of the property.
- A smaller depositUsually from 5% of the share you're buying (the deposit needed depends on the lender's criteria and on things like whether the property is a new build or a resale).
- Stamp duty can waitYou can defer stamp duty until you own 80% of the property.
Who can apply?
- people aged 18 or over,
- people outside London with a household income of no more than £80,000,
- people in London with a household income of no more than £90,000,
- first-time buyers, or people in the middle of selling their current home,
- people who can't afford to buy a home on the open market,
- people with no mortgage or rent arrears,
- people with a good credit history who can keep up with the costs of buying a home.
Want to know more? Get in touch and we'll answer any questions you have.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.