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Shared ownership is another way to buy a home. You buy a percentage, typically with a mortgage and mortgage deposit, and pay rent on the rest you don't. The housing association owns the part of it you don't buy — but you’re living there, you decorate it, and you decide when to sell. Buying a percentage means a smaller deposit and smaller mortgage. It’s a sooner first step on the ladder for lots of people. Usually, you can also carry on buying shares, to own it 100%, when you can afford to, or if you want to.
Here are some common things people want to know about shared ownership. Make sure to read your T's & C’s and do your research.
With rising house prices and a generation that feels disillusioned with the prospect of buying, shared ownership is more relevant than ever.
It’s another option
If buying on the open market feels impossible, and you’ve had enough of private renting, shared ownership is another avenue for buying a home, starting with a share you can afford.
The deposit’s smaller
Because you’re buying a percentage share of the property, the mortgage deposit is based on this part and is therefore a lot smaller.
It’s an investment
It’s a way of putting your money into property, even if you can’t afford to buy on the open market, potentially building equity with the share you buy if the value of the home increases.
Make it feel like home
Shared ownership properties don’t have a lot of the same restrictions as private renting. You can decorate, buy more shares when you want, and sell when you want.
First you’ll need a deposit, typically between 5% or 10% of the share you’re buying. You'll also need a reservation fee (which varys depending on the housing association you buy from but could be from £99 up to £1,000).
After you’ve put down a mortgage deposit (and paid any legal fees), you’ll be paying your mortgage, rent, and possibly service charge each month. Your mortgage is worked out based on the size of the share you’ve bought, and your rent is paid to the housing association you bought your property from. (It’s good to note that your rent will be reviewed every year based on market fluctuation, so remember to check your lease carefully for details of rent increases.)
So, let’s say you decide to buy a 25% share of a £250,000 shared ownership property, and put down a deposit of 5% (£3,125).
Your monthly payments might look something like this:
Mortgage – £340
Rent – £390
Service charge – around £80, depending on the property
Total: Approximately £810 per month
You'll also have the usual 'home costs' associated, such as council tax, utilities bills and insurance, but this is no different to renting or owning outright.
Yes, pretty much. You’re buying a share of a property, so therefore pay a mortgage on the part you own. You'll need a mortgage deposit, which is often 5 or 10% based on the value of the share you are buying, and how much mortgage you can borrow will be dependent on your individual circumstances. An independent mortgage advisor can help suggest which type of specific shared ownership mortgage might be best for you, based on your situation.
Remember, you need to keep up with your payments, as you would with any other mortgage or rent, or you'll have the same associated risks of not paying which could include additional fees or in the worst case, eviction or repossession.
That’s down to your financial circumstances. An independent mortgage advisor can help you decide what size share of the property is right for you, along with completing a financial assessment that has to be approved.
With shared ownership you are buying a percentage share between 25% and 75% (but could be as low as 10%) of the home’s full market value. You enter into a lease agreement with the landlord from who you are buying from (usually a housing association) and agree to pay rent to the landlord on the remaining share you don't buy.
Over time, you can usually staircase (buy more shares of the property) all the way up to 100%, if and when you want to.
‘Staircasing’ is a term that refers to increasing the share of the property you own. You can do it gradually over time, to eventually own your home 100% if you want to.
The cost of additional shares is calculated by the market value of your home when you decide to start staircasing. When you buy more shares, you will also be reducing how much rent you pay.
Some housing associations (only a few) cap the amount of shares you can buy. Make sure you discuss this with your housing association, so you’re clear on exactly how much you can staircase before you buy a property with them.
It’s usually fine to have a lodger, but no, subletting isn’t allowed. Airbnb included, unfortunately! There might be a few special circumstances, but it’s up to your housing association.
(Subletting means renting out your whole house, lodging is just one room.)
Yes, you own your share so you can sell whenever you want. You’ll essentially be selling your share to another prospective shared ownership buyer, through the housing association and their property listing channels. You’ll need to get its market value determined by an independent surveyor.
If you’ve staircased all the way to 100% and own it fully (& you are therefore no longer a shared owner), you can often sell on the open market – but your housing association has right of first refusal.
Selling back to the housing association means you might make less of a markup, but it’s usually quicker and easier than selling it on the open market. It also means the housing association can carry on using your property to help other people become homeowners. Swings and roundabouts.
You’re a shared owner, so it’s up to you to keep the place in good condition and fix anything you’re not happy with that falls outside of any NHBC (or similar) warranty. For example, replacing worn carpets overtime or getting a new boiler.
If you purchase your share under the new shared ownership model (the housing association or registered provider you buy from will make this clear which), you will benefit from a repair period for ten years from the date of the lease or until you fully 'staircase' to 100% ownership, whichever is the earliest. Repairs to wear and tear are excluded and only external and structural parts are included, and are your responsibility as the shared owner to notify the landlord. Any item which is the responsibility of the shared owner is excluded from the list of covered items. The initial repair period will cover costs up to £500 per annum which can be rolled over for one year.
You may also have service charges to pay to cover buildings maintenance or grounds upkeep.
Within reason! You don’t need anyone’s permission to hang pictures, strip the hallway, or paint every room a different colour. But knocking down walls or any other structural changes will need the housing association’s say so. Of course, any improvements you make to the property will be taken into account when you want to sell – it could increase its value.
It depends If you’re buying a house, it’s usually fine to have your pets! However, it’s not always allowed in apartment blocks. It all depends on your lease (your contract with the housing association) so check it thoroughly and ask questions before you buy.
Sort of... both schemes exist to help people buy a home. But they are different. The Government is using the umbrella term ‘Help to Buy’ to group a few different schemes that are helping people buy a home. (There’s a Help to Buy: ISA, Help to Buy: Equity Loan, and Help to Buy: Shared Ownership). The ‘Help to Buy’ you’ve probably heard about is the equity loan, HOWEVER the Government is ending this scheme and applications to buy with Help to Buy Equity Loan have now closed.
For reference, here were the differences:
Help to Buy: Equity Loan
It’s a loan provided by the Government for up to 20% (40% in London) of the value of a new home, with you needing to be able to buy the other 80 or 60% with a mortgage and deposit.
Help to Buy: Shared Ownership
Shared ownership (what we’re referring to on this website)
On the whole, yes. You’re not allocated a property or put in a random lottery. However, your circumstances do come into consideration, and shared ownership is only available on specific homes. For instance; if you’re a couple, you’re less likely to get a five-bedroom house opposite a school than the family of seven who applied. But it works both ways – you might get priority on a great apartment near your work.
Eligibility requirements apply. It’s best to find a property you like and check with the housing association who is selling the property, to make sure it’s right for you.
Here are a few things your housing association might factor in:
Shared ownership properties are usually leasehold, meaning that shared owners are leaseholders. Your legal contract with the housing association is called a lease, and you rae entering into an assured tenancy. It states how long the lease is for, what you’ll be paying and what your responsibilities are.
Being a leaseholder is one of the main ways to own a home. Most leases are between 99 and 125 years, but if you purchase your share under the new shard ownership model, your lease may be up to 990 years. Shared ownership leases can be extended once you purchase 100% of the home, however some housing associations allow you to extend before this. Your lease will contain all the details and costs for this process and it is important you find out the costs associated with extending the lease; the shorter the lease, the likelihood will be it will cost you more to extend it. This is something to look into especially when buying an older 'resale' shared ownership home.
The lease makes you the 'homeowner' and so you are responsible for all the repairs and maintenance in your home.
Remember, the lease is a legal agreement. Make sure you read it all. A solicitor is best placed to advise you on the detail. The housig association you buy from will also provide you a 'Key Information Document' which details how shared ownership works in greater detail. Make sure you have received and read this document before parting with your reservation fee, as if you change your mind later, you maynot be entitled to your reservation fee back & will lose money.
When purchasing a new shared ownership lease, you can pay Stamp Duty Land Tax (SDLT) on either the full market value or on the share percentage you are buying.
If you pay Stamp Duty on the full market value (100%), you are exempt from paying Stamp Duty on any future staircasing actions. However, if you pay Stamp Duty only the share percentage you are buying, you may have to pay Stamp Duty in the future when you staircase.
The government may change the criteria for who and what Stamp Duty you have to pay. We recommend you check the Goverment website for the latest update on what you may have to pay, depending on the value of the home you intend to buy.
The Government supports shared ownership, and funds lots of shared ownership homes. Otherwise, shared ownership properties are paid for directly by housing associations (this is most common), private investors, or some councils.
There’s a lot of jargon to read through when you’re buying a shared ownership home. Here’s a quick rundown of terms you might come across.
Housing associations are not-for-profit companies set up to provide affordable homes. They offer shared ownership properties, to help those who can’t buy a home on the open market.
An approved landlord or provider selling a shared ownership home. Some may be for-profit organisations, or most arae housing associations.
Shared ownership properties are usually leasehold, meaning that shared owners are leaseholders. Your legal contract with the housing association is called a lease, and it makes you the homeowner. It states how long the lease is for, what you’ll be paying and what your responsibilities are (For more info see the answer to ‘What is a leaseholder?’ above).
A share is the percentage of a property you decide to buy.
Staircasing means increasing the size of your share. You might start off with 25%, but gradually buy more shares to own 50% or even 100%.
A mortgage is a loan taken out to buy a property, or in the case of shared ownership, to buy a share of a home. It’s a fixed amount, and has to be paid back over a certain amount of years.
The sum of money you need to put down associated with your mortgage, and essentially the first instalment towards buying it.
It’s a report by the mortgagee (the bank or building society that’s lending you the money) which values your property and decides how much you can borrow to buy it, or a share.
Service charge is the extra money you’ll need to pay to the housing association for things like communal maintenance and repairs.
Estate charge is the extra money you might need to pay for the upkeep of your development's grounds.
Shared ownership is popular with first-time buyers who are looking to get on the property ladder but can’t afford the deposit and mortgage needed to buy a property outright. It’s also an affordable homeownership option for newly separated couples, or for those in later life looking to downsize. But there are loads of reasons it could work for you. To get started, take our quiz and see if shared ownership could be the right option for you.Take quiz
Shared ownership is a great option for first-time buyers. The smaller deposit makes getting on the ladder easier and sooner for lots of people. A first time buyer is someone who has not owned a home or any time of property before.
Those that may have owned a home before, with someone else, but are now looking to buy a home by themselves. Often, many people in this situation cannot afford nor qualify for a large enough mortgage to buy on the open market with a single salary, therefore shared ownership may be an option for them.
If you’re retired or looking to downsize, but don’t want to reinvest as much of your savings into another property, shared ownership is worth thinking about. The smaller mortgage and deposit frees up money for other things, and you’ll still have the security of owning a share of a home. If you are looking to buy a home specifically for those aged over 55, you'll have to be 55 or over. Funny that.
Housing associations are not-for-profit companies set up to provide affordable homes. You’ll find them in every major town and city across the UK, and their aim is to make housing available and affordable for everyone. The money you pay when buying and renting a shared ownership property goes straight back into funding more projects to help more people. Housing associations have been offering shared ownership for a number of years, to help those who can’t buy a home on the open market. Now, with rising house prices and a generation that feels disillusioned with the prospect of buying yet has a lack of security when privately renting, shared ownership is a more relevant option than ever.
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It could be just 5%, AND that's based on the value of the share you buy, not the full market value. For example, the full market value of a home is £400,000. You buy a 25% share for £100,000. Your 5% deposit based on the share is just £5,000.
A full deposit for the whole property (often at least 10 or 20% of the full market value). For example, the full market value of a home is £400,000. You need at least a 10% which is £40,000.
All over England, in lots of areas otherwise too expensive to consider on the open market. On specific homes only.
Anywhere, but limited to areas within your budget.
Typically new-build – nothing to fix or repair before moving in - but you'll also find older shared ownership homes known as 'resales'.
A wider range of properties; Victorian terraces, houseboats, whatever you like.
You'll typically buy your share with a mortgage and mortgage deposit. For example, the full market value of a home is £300,000. You buy a 40% share for £120,000. Your 5% deposit is £6,000 and your mortgage is for £114,000.
You'll typically buy your home with a mortgage and mortgage deposit. For example, the full market value of a home is £300,000. Your 10% mortgage deposit is £30,000, therefore you need to be able to get a deposit for £270,000.
You’re a shared owner, so every month’s mortgage payment is an investment in your future. if the value of the home goes up, so does your equity.
You won’t see a return on anything you spend while renting.
You can stay in your home for as long as you like (well, from at least 99 years depending on lease term if buying new).
You could be asked to leave at any time.
You’re free to decorate or change things. Sometimes you can even renovate, with permission from the housing association.
You’ll usually have to leave the place exactly as you found it, and will get fined otherwise.
You pay a monthly mortgage, rent, and sometimes a service charge depending on the home. Your rent can increase year to year, but there are regulations on how this is calculated so you'll know what you'll be paying. Your mortgage rate may change when your term ends.
You pay monthly rent, and service charge if you’re in an apartment block. Your landlord’s free to increase the rent however and whenever they see fit.
It helps people get onto the property ladder as shared owners.
The Equity Loan scheme has now ended.
You buy a share of a property, and pay rent on the rest you don't buy to your housing association landlord.
What it involves
You’re taking out a Government loan that needs to be paid back (alongside your mortgage). This Equity Loan scheme has now ended.