How Does Shared Ownership Work?

Shared ownership is a government-backed scheme that makes homeownership more affordable. It allows you to purchase a share of a property, typically between 10% and 75%, and pay rent on the remainder owned by a housing association. Over time, some associations give you the option of buying more shares, meaning you could eventually own up to 100% of your property.

What is Shared Ownership?

Shared ownership lets you buy a percentage of a property and pay rent on the remaining share. It’s a way to make owning a home more accessible, especially for those who might struggle to save for a large deposit. These homes are usually leasehold, meaning you don’t own the land the property is on.

To be eligible, you must:

• Have a household income of £80,000 or less (£90,000 or less in London).
• Be unable to afford the full deposit and mortgage for a property that meets your needs.

Additionally, one of the following must apply:

• You’re a first-time buyer.
• You used to own a home but can’t afford to buy one now.
• You’re forming a new household, such as after a relationship breakdown.
• You’re an existing shared owner looking to move.
• You own a home but need to move and can’t afford a new property that meets your needs.

In some cases, you may need to demonstrate a connection to the area where you wish to buy, such as living or working there.

How Does the Process Work?

Purchasing Your Share:

Decide what share of the property you can afford, put down a deposit (at least 5% of your share), and secure a mortgage for the rest. Shared ownership allows you to start with as little as 10% ownership.

Paying Rent:

You’ll pay rent on the share you don’t own, typically at a below-market rate, and cover service charges and potentially ground rent.

Staircasing:

Over time, some associations give you the option of buying additional shares in the property, potentially up to 100%. Not all housing associations allow full ownership, so it’s crucial to check before buying. Staircasing involves legal fees, and there may be limits on how many times you can do it.

Selling Your Share:

If you sell, the housing association often has the first right to buy your share or find a buyer. Selling under the shared ownership scheme can be more restrictive than on the open market.

Updated Criteria for the Right to Shared Ownership

The government’s latest guidelines state that shared ownership now starts from as low as 10% and includes the "Right to Shared Ownership," giving tenants of rented properties developed with certain government grants the opportunity to purchase a stake in their home. This policy is part of broader efforts to make shared ownership more accessible and flexible.

Pros and Cons of Shared Ownership

Pros

Lower Entry Costs: Easier access to homeownership with a smaller deposit and mortgage.

Flexibility: Option to increase your share over time as your finances improve.

Government Support: Backed by government schemes, providing security and stability.

Cons

Leasehold Properties: You won’t own the land, and service charges apply.

Resale Restrictions: Selling can be more complex due to the shared ownership scheme’s requirements.

Additional Costs: Includes legal fees with staircasing and potential ground rent.

Is Shared Ownership Right for You?

Shared ownership is ideal for those who find it challenging to save for a large deposit or secure a full mortgage. It offers a practical route to homeownership, but it’s essential to understand the costs and responsibilities involved. 

How can GloverPriest help?

If you're considering Shared Ownership and want to discuss your options, or if you've already agreed to purchase a Shared Ownership property and are looking to instruct an experienced solicitor, contact GloverPriest's expert Shared Ownership Conveyancing Solicitors. Get in touch here.