Mortgages

What if I can't afford to buy a whole home?

Shared Ownership Explained: Buying a Share of a Home in England

By
Pirashanth
Published
Last reviewed
Reading time
2 min read

This guide provides general information only. It is not financial advice or a personal recommendation and does not take account of your individual circumstances.

Quick answer

Shared ownership in England lets you buy a share of a home, usually 25% to 75% and sometimes as little as 10%, and pay rent to the landlord on the rest. You need a deposit and mortgage only for your share. Household income must be £80,000 or less, or £90,000 in London. All shared ownership homes are leasehold, and you can usually buy more shares later.

Key figures

is the share of the home you can buy at the start
10% to 75%
household income limit (£90,000 in London)
£80,000
of your share is the usual deposit
5% to 10%

How shared ownership works

You buy a share of the home's full market value, usually between 25% and 75%, and some homes offer a 10% share. You pay:

  • a mortgage (and deposit) on your share;
  • rent to the landlord, usually a housing association, on the share you don't own;
  • usually a service charge and ground rent, because all shared ownership homes are leasehold.

Example: on a £300,000 home, a 25% share is £75,000. A 10% deposit on that share would be £7,500, with a £67,500 mortgage, plus rent on the remaining £225,000 share.

Who can apply

GOV.UK says you can apply if both of these are true:

  • your household income is £80,000 a year or less, or £90,000 or less in London;
  • you can't afford all of the deposit and mortgage payments for a home that meets your needs.

And at least one of these applies:

  • you are a first-time buyer;
  • you used to own a home but can't afford to buy one now;
  • you are forming a new household, for example after a relationship breakdown;
  • you are an existing shared owner and want to move;
  • you own a home and want to move but can't afford a suitable home.

Some homes also require a local connection. There are separate schemes for people aged 55 and over and for disabled people.

Buying more shares (staircasing)

You can usually buy more shares later, which reduces the rent because it is charged on the landlord's remaining share. Each purchase is based on the home's market value at the time, so if values rise, more shares cost more.

Costs to weigh up

  • Mortgage payments and rent, and both can rise.
  • Service charges and ground rent.
  • Legal and valuation costs, again if you staircase.
  • Stamp Duty, depending on the price and how you choose to pay it. See Stamp Duty explained.

Not every lender offers shared ownership mortgages, so the choice of deals can be narrower. How much deposit do I need? covers deposits more generally.

Questions worth asking

  • What will the rent be, and how is it reviewed?
  • What are the service charges, and what do they cover?
  • How long is the lease?
  • What are the rules for staircasing and for selling?
  • How does the total monthly cost compare with renting or buying a cheaper home outright?

Frequently asked questions

Sources

Related questions

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