What is Shared Ownership?

Shared Ownership gives first time buyers and those that do not currently own a home the opportunity to purchase a share in a new build or resales property - the purchaser pays a mortgage on the share they own, and pays rent to a housing association on the remaining share.

Since the purchaser only needs a mortgage for the share that they are purchasing, the amount of money required for a deposit is significantly lower than the amount that would be required if purchasing outright. Equally, the purchaser has the option to increase their share during their time in the property via a process known as ‘staircasing’. In the majority of most cases, one is able to ‘staircase’ all the way to 100%, and therefore own the property outright. It should be noted that Shared Ownership properties are always leasehold.

Why buy a Shared Ownership home?

Shared Ownership is essentially for people who would like to own their own home but cannot afford to buy on the open market. The cost of ownership is reduced by:

  • The rent is less than the rate charged on the open market and usually charged at 2.75% of the property value per annum,
  • You can start with a little as 25% share in some cases,
  • Your deposit can be 5% of the price of the share, not of the whole property.
  • Stamp duty land tax (SDLT or simply ‘stamp duty’) can generally be deferred until your share reaches 80%.

Shared Ownership properties can often be found in private developments as the provision of a certain number of Shared Ownership units will often be required as a part of the planning permission for a development.

When I part-buy/part-rent my home, what am I buying?

You are essentially buying a leasehold house or flat that may be either new or a resale. It has been established to help those that are unable to afford to purchase outright, and thus rent is being paid on the portion of the property not purchased at outset.

You have the option to buy further shares, up to and including 100% ownership when you are able to do so. The price of buying further shares will be based on an independent valuation at the time the further share is purchased.

What are the eligibility rules for Shared Ownership?

There are some general eligibility requirements that anyone wishing to buy a Shared Ownership home must meet which are:

  • You must be at least 18 years old
  • Outside of London your annual household income must be less than £80,000; in London your annual household income must be less than £90,000
  • You should generally be a first time buyer, i.e. you don’t already own a home. If you do already own, you must be in the process of selling it
  • You should not be able to afford to buy a home suitable for your housing needs on the open market
  • You must show you are not in mortgage or rent arrears
  • You must be able to demonstrate that you have a good credit history (no bad debts or County Court Judgements) and can afford the regular payments and costs involved in buying a home

You should have savings or to be able to easily access savings of at least £4,000 in order to cover the costs of buying a home. This is a guideline figure – the actual amount you need will depend on the Help to Buy option you choose.

In most cases you will also need to have enough savings or be able to easily access a minimum 5-10% of the equity share you are buying, by way of a deposit.

Please note: You should always check the eligibility required with the housing association selling the property, as they may have specific criteria.