Shared Ownership
Part purchase with rent on the remainder
Shared ownership is a part-buy, part-rent scheme for households who cannot afford a home outright. The buyer purchases a share and pays rent to a housing provider on the remainder. The home is held on a long lease, not a freehold, so the provider remains the landlord. Each UK nation runs its own scheme on its own terms.
What This Means
You occupy all of this home while owning only a share of it. Your monthly cost is a mortgage, rent and the full service charge. The service charge is not reduced to match your share. Rent rises each year by a formula in the lease, usually inflation plus a fixed margin. Staircasing, buying further shares, is priced at market value on the day, not what you paid. Selling usually runs through the provider first, under a nomination period. This is one of the few things on this report that lenders and insurers price directly: only part of the lender panel offers shared ownership mortgages.
Practical Advice
- Ask the seller or their agent for the exact share on sale and the current monthly rent on the remainder.
- Get your conveyancer to check the lease for the rent review formula and the provider's nomination period on resale.
- Ask the housing provider for its staircasing terms, including the valuation and legal fees you would pay at each step.
- Have your broker confirm which lenders will accept this provider's lease at the share you intend to buy.
- Ask the provider whether this lease is the newer model, which carries 10-year cover for essential repairs.
Key Points
- Leases signed on or after 12 October 2023 typically review rent at CPI plus 1 per cent. Older leases commonly use RPI plus 0.5 per cent.
- The newer model lease runs 990 years, allows 1 per cent staircasing steps for the first 15 years, and permits an initial share as low as 10 per cent.
- Initial rent is capped at 3 per cent of the value of the unsold share, with providers steered to average 2.75 per cent across new homes.
Additional Information
Scotland's shared ownership scheme is run by housing associations, with shares of 25, 50 or 75 per cent. Shared Ownership - Wales offers 25 to 75 per cent and caps household income at £60,000. Northern Ireland's Co-Ownership scheme starts at 50 per cent. The rent caps and lease terms above are England's, as is the link below.