Shared Ownership Explained: How It Works, Costs to Consider, and What to Know Before You Buy

In this guide, we explain how shared ownership works, the costs involved, staircasing, and what happens when you want to sell.

What Is Shared Ownership?

Shared ownership is a government-backed scheme in the UK designed to help people buy a home who may not be able to afford one outright.

With shared ownership, you:

• Buy a percentage of a property, usually between 10% and 75%
• Pay rent on the remaining share, which is typically owned by a housing association
• Take out a mortgage on the share you own

This means you will normally make two monthly payments, including:

• Your mortgage payment on the share you own
• A rent payment on the remaining share

In most cases, the property will be leasehold rather than freehold, meaning the land and building are owned by a freeholder, often the housing association.

Costs to Consider with Shared Ownership

Alongside your mortgage and rent payments, there are several other costs associated with shared ownership properties.

These may include:

• Service charges for maintenance of communal areas
• Ground rent, where applicable
• Maintenance and repairs

It is important to understand that even though you may only own a portion of the property, you could still be responsible for 100% of repair and maintenance costs inside the home.

Before committing to a shared ownership property, carefully review the lease terms and costs involved, including how these charges may increase over time.

How Mortgage Lenders Assess Affordability

When applying for a shared ownership mortgage, lenders will assess your affordability based on your total housing costs.

This includes:

• Your mortgage payment
• The rent on the unowned share
• Service charges
• Other committed financial outgoings

The lender’s aim is to ensure the combined costs remain affordable both now and potentially in the future.

What Is Staircasing?

One feature of shared ownership is the ability to increase your share of the property over time, known as staircasing.

For example, you might initially buy 25% of the property, then later purchase additional shares to increase ownership to:

• 50%
• 75%
• 100%

If you reach 100% ownership, you may be able to own the property outright, depending on the scheme and lease terms.

However, it is important to understand that the cost of additional shares is based on the current market value of the property, not the price when you originally purchased it.

Each staircasing transaction typically involves additional costs, such as:

• Property valuation fees
• Legal fees
• Mortgage arrangement fees, if borrowing more

These costs should be considered when deciding whether staircasing is right for you.

Selling a Shared Ownership Property

Selling a shared ownership property can differ from selling a standard home.

Many shared ownership leases include a nomination period. This means:

• When you decide to sell, the housing association usually has the first opportunity to find a buyer
• This period typically lasts around 4 to 8 weeks, although it can vary
• If the housing association cannot find a buyer within that time, you may then be able to market the property more widely through an estate agent

This process can sometimes affect how quickly the property can be sold, so it is important to factor this into your plans if you intend to move.

Is Shared Ownership Right for You?

Shared ownership can be suitable for buyers who:

• Cannot currently afford to purchase a property outright
• Want to get onto the housing ladder sooner
• Are comfortable with the scheme’s structure and ongoing costs

However, it is important to fully understand:

• The combined monthly costs
• Your responsibilities as a leaseholder
• The rules around staircasing and selling

Carefully reviewing the lease and seeking professional guidance can help ensure you make an informed decision.

Download Our Shared Ownership Checklist

If you are considering buying a shared ownership property, our Shared Ownership Buyer Checklist can help you review the key factors before committing.

Complete the form below to access the checklist and help decide whether shared ownership is suitable for your situation.

Important Information

Shared ownership schemes, lease terms and eligibility criteria can vary depending on the housing association and property.

Mortgage advice should be tailored to your individual circumstances.

This content is for informational purposes only and does not replace personalised mortgage or financial advice.