Shared ownership explained
Shared ownership is a great way on to the property ladder. You buy an initial share of a home ranging from 25% to 75% of its value – and have the option to own your home outright in the future.
Buying through shared ownership means you need a smaller mortgage and, therefore, a smaller deposit than if you were buying on the open market.
In addition to your mortgage, you pay a subsidised rent on the share of your home you don’t own. This rent is usually capped at 2.75% of the property value.
And, whenever you want, you can buy bigger shares in your home until you own 100% – this is known as staircasing.
If you’re looking for a shared ownership home, you’ll find our available homes on the Share to Buy website.
How shared ownership works
If you buy a home outright for £400,000, you need a minimum 5% deposit of £20,000. The remaining 95% would be your mortgage – £380,000.
If you buy a 25% share through shared ownership, the “total” price is £100,000 instead of £400,000. So, you need a 5% deposit of £5,000 and a mortgage of £95,000.
Eligibility for shared ownership
Shared ownership is designed to help people who can’t afford to buy on the open market, so there are some eligibility criteria.
- You must earn less than £80,000 per year (£90,000 in London).
- You must be 18 or older.
- You can’t be a homeowner.
- You can’t have enough money to buy a home outright.
Shared ownership homes are only available from authorised providers, such as housing associations or local councils. Priority may be given to households with specific needs: eg wheelchair access or families with children.
To find out more about becoming a shared owner, contact us.
Staircasing: buying a bigger share
One of the benefits of shared ownership is that you can buy what you can afford first and then, when the time suits, you can buy bigger shares until you own your home outright. This is a process known as staircasing.
You can staircase as many times as you like to reach 100%, though each additional share must be at least 10%. For some older homes, it’s not possible to buy a full 100% share: your lease will say if this is the case.
Each time you staircase you need to pay some associated costs, such as a property valuation, solicitor fees and mortgage fees.
Before you can buy a shared ownership home, we’ll check you can afford the property. An independent financial adviser will review your income, as well as your future mortgage, rent, service charges and costs like council tax, utility bills, insurance and any regular loan or credit cards payments. They’ll also look at your credit history.
Deposit and purchase costs
You need to have enough money to cover the minimum deposit for your property, as well as mortgage fees, legal fees and our £500 reservation fee. Your deposit will depend on the value of the property and the share you buy – the minimum deposit is normally 5%.
“I didn’t know anything about shared ownership. When I looked into it, it became clear it would be perfect.”
Meet Natalie – shared owner
“After deciding it was time to move out of the home I shared with my family, I looked into how I could achieve getting my own place. As someone who is single, I couldn’t cover a mortgage solely on just my income, so I decided to look into other options.
“I considered Help to Buy, but the properties in my local area were really expensive and not terribly big.
“As soon as I looked into shared ownership, however, it became obvious this was the best solution for me.
“I’m very happy with my flat. The block I’m in is really open, spacious and has a big hallway. I’m also in a lovely rural location and look out on to fields.
“I would definitely recommend shared ownership.”
As soon as I looked into shared ownership, it became obvious this was the best solution for me.
Selling your home
You can sell your home whenever you want. If its value has increased you get to keep any profit on your share.
There are some restrictions if you want to sell, but haven’t staircased to 100%. Your lease will detail the procedure for selling your home. Typically, you have to sell your home through us. This ensures homes are offered to people needing affordable housing.