Shared ownership lets you buy a share of a property — commonly between 25% and 75% — from a housing association, and pay subsidised rent on the rest. Your mortgage covers only the share you're buying, so both the deposit and the loan are far smaller than for the whole property. Fewer lenders operate in this space than in mainstream lending, and their criteria differ, so it pays to start with one that does.
How the costs stack up
You pay a mortgage on your share, rent on the housing association's share, and usually a service charge on top. Added together these can approach the cost of an ordinary mortgage on the whole property, so compare the total monthly outgoing rather than the mortgage payment alone. The advantage is chiefly in the deposit and the affordability assessment, not always in the monthly cost.
Staircasing
Buying further shares over time is called staircasing, and each step involves a fresh valuation, legal fees and usually a remortgage. Crucially, the price of each new share is based on the property's value at that time — so if prices rise, staircasing costs more. Reaching 100% is possible on most schemes, though some retain a restriction.
What to check before committing
- The lease length — many lenders want a minimum remaining term
- The rent review mechanism and how often it rises
- Service charges, and whether they are capped
- Any restriction on staircasing to full ownership
- Resale conditions — the association usually has first refusal for a set period
Selling a shared ownership home
The housing association normally has a nomination period during which it can find a buyer before you market it openly. That can make selling slower than an ordinary property. It's not a reason to avoid shared ownership, but it is a reason to see it as a medium-term commitment rather than a short one.