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What You Need to Know About Shared Ownership

04 Aug 2022

What You Need to Know About Shared Ownership


There are more ways than ever to get onto the property ladder. These various ways are designed to suit different people with different circumstances. One such method of buying a property is via shared ownership, but what does this entail, and is it worth it?

Read on to find out…


What Does Shared Ownership Mean?

With a shared ownership property, instead of buying and owning the entire property, you buy a percentage (or a share) of it. You pay off the mortgage of your share and pay rent on the rest.


How Much of the Home Do I Own?

The percentage of the share you can buy and own is usually somewhere between 25% and 75%. A new shared ownership scheme introduced in 2021 has allowed the purchase of a 10% share on some homes.


How Does The Deposit Work?

Saving up for a deposit can be difficult, especially if you’re a first-time buyer, so shared ownership could be an option that helps to get you on the property ladder.

The deposit you’ll have to pay is usually between a minimum of 5% and 10%, just like with buying an entire property.

However, deposit wise, this means you won’t have to save as much as with outright buying because you’ll only have to pay a deposit on the percentage of the property you’ll own, instead of the entire thing.

So whilst you’d need to save £20,000 on a property worth £200,000 to fully own the property (or at least get the mortgage for it), if you are buying a share of 50% of a £200,000 home, you’ll only need £10,000 to make a 10% deposit.


Who is Eligible for Shared Ownership?

Shared ownership is available to people who live permanently in the UK, some of the eligibility criteria may differ between England, Wales, Scotland and Northern Ireland, but generally it is available to the following:

  • Those aged 18 and over
  • Those who have an annual household income of less than £80,000 (or £90,000 if you live in London)
  • First time buyers
  • People who already live in a shared ownership property and are looking to move
  • You must not already own a home (besides existing shared ownership)


Just like with any other mortgage, you’ll need to be able to prove that you can afford both the monthly rent and mortgage payments. You will also need to have a good credit score.


How Does Paying Rent Work?

At first, it might sound daunting that you’ll need to pay both a mortgage and rent at the same time, but it won’t be as expensive as it usually is.

The rent on a shared ownership home is usually around 3% or 2.75% of the property’s value per year, this is based on the value of the other share not owned by you.

For example, if we take that £200,000 home, with 50% share, you will have a value of £100,000 on the unowned share. You then take this £100,000 (or however much the shared property you are looking at is worth), divide it by 100 and multiply by 3 (or 2.75) to get the yearly rent amount and then divide by 12 to get the monthly rent.

Using the above example of the rent on the £100,000 shared property we get a yearly rent of £3000 and a monthly rent of £250.

Again, that formula for working out your rent is the value of the unowned share divided by 100, multiplied by 3 and then divided by 12.


Paying the Mortgage

Whilst it’s fairly straightforward to work out the rent you’ll pay, the mortgage will depend on a few factors including:

  • How much you put down for deposit
  • The value of your share
  • Length of your mortgage term
  • The interest rate


How Shares Work

You don’t have to buy the maximum percentage, you can choose somewhere between the minimum and maximum, so think about what’s right for you in terms of current affordability and so on as the higher the percentage, the higher the deposit required.

Later on, once living in the house, you can choose to buy more of the property – this is known as “staircasing”. You can do this in gradual increments of at least 1%. Some choose to do this until they eventually own the property completely, but you don’t have to staircase at all.


Things to be Aware of

The downside to staircasing is that it costs money in fees every time you do it, as opposed to these fees only needing to be paid once when you buy a house outright in the usual way.

In certain circumstances and areas, staircasing is restricted or capped to stop buyers from making the property a second home. This cap is usually at 80%.

Shared ownerships are always leasehold, so ground rent may apply and you’ll have to pay this in full no matter the percentage of the property you own. If you do staircase up to 100% ownership, then you may be able to buy the freehold. For more information on leaseholds and freeholds, click here.


Is Shared Ownership Right For You?

Shared ownership may be right for you and your current circumstances, but it’s just one option among many. Speak to one of our mortgage advisors and we can help find what’s right for you. You can get in touch with a member of the team by calling 03300 58 60 58 or emailing us at



Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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