Shared Ownership explained: is it worth it?
Shared Ownership is one of the most talked about government schemes for first time buyers, and one of the most misunderstood. The name itself causes confusion. You are not sharing your home with someone else. You are buying a share of it from a housing association, and paying rent on the remainder.
It can be a genuinely useful route into homeownership for buyers who cannot yet afford to buy outright. But it also comes with complexity, costs, and restrictions that are worth understanding clearly before you commit.
Here is an honest assessment of what Shared Ownership is, how it works, and whether it is the right option for you.
How does Shared Ownership work?
Under Shared Ownership, you buy a share of a property, typically between 10% and 75%, from a housing association. You take out a mortgage on the share you own, and you pay rent to the housing association on the share you do not own.
Your total monthly cost is therefore a mortgage payment plus a rent payment. For buyers in high cost areas, the combined figure can still be considerably lower than buying outright, because the mortgage is based on a fraction of the property's value rather than the whole.
Over time, you have the option to buy additional shares in the property, a process called staircasing. Most schemes now allow you to staircase in increments as small as 1%, though some older leases require larger minimum purchases. If you eventually buy 100% of the property, you own it outright and the rent payments stop.
Who is eligible?
To use Shared Ownership, you must meet the following criteria:
- You must be a first time buyer, or a former homeowner who no longer owns a property and cannot afford to buy outright.
- Your annual household income must be below £80,000 (or £90,000 in London).
- You must be able to afford the mortgage on the share you are purchasing, plus the rent payments, plus all the associated costs of buying.
There are also sometimes additional local priority criteria: key workers, local residents, or people with specific connections to an area may be prioritised by some housing associations.
What does it actually cost?
This is where Shared Ownership becomes more complicated than it first appears.
Your deposit is calculated on the share you are buying, not the full property value. On a £300,000 property, if you are buying a 40% share (worth £120,000), a 10% deposit is £12,000 rather than £30,000. This is one of the scheme's genuine advantages, it reduces the deposit barrier significantly.
Your mortgage covers the share you own. Using the same example, you would be borrowing around £108,000 against your 40% share.
Your rent covers the share you do not own. Rent on a Shared Ownership property is typically charged at around 2.75% to 3% of the unsold share value per year. On a £180,000 unsold share, that is approximately £4,950 to £5,400 per year, or £412 to £450 per month. This figure rises annually, usually in line with inflation plus a percentage.
You will also pay a service charge. Shared Ownership properties are almost always leasehold, and monthly service charges, covering maintenance of communal areas, building insurance, and management, can be substantial. These vary enormously and are worth scrutinising carefully before you proceed. Some developments charge £100 per month; others charge £400 or more.
The staircasing process
Staircasing is the mechanism by which you buy more of your home over time. As your income grows, your savings increase, or the property value rises, you can purchase additional shares and gradually reduce your rent payments.
Each time you staircase, you need a new valuation of the property to determine the current share price. This means that if property values have risen since you bought, the additional shares will cost more: you are buying at today's price, not the price you paid originally.
You will also incur costs each time you staircase: a valuation fee, solicitor fees, and potentially a mortgage product change if you are remortgaging to release funds. These costs add up, particularly if you staircase in small increments over many years.
Most buyers find that staircasing is slower and more expensive in practice than it sounds in theory. This is not a reason to avoid the scheme, but it is worth going in with realistic expectations rather than assuming you will own your home outright within a few years.
What happens if you want to sell?
If you own less than 100% of your property, selling is more complicated than a standard sale.
In most cases, the housing association has first refusal, the right to find a buyer for your share before you can sell on the open market. This process typically lasts eight weeks. If they cannot find a buyer, you can then sell to whoever you choose.
The pool of buyers for a Shared Ownership property is smaller than for a freehold home. Buyers need to meet the eligibility criteria, qualify for a mortgage, and be comfortable with the leasehold structure. This can make selling slower and potentially means accepting a lower price than a comparable outright property would achieve.
If you have staircased to 100%, selling is much more straightforward, you own the property outright and can sell it on the open market without restriction.
The lease and its length
Shared Ownership properties are leasehold, meaning you own the right to occupy the property for the length of the lease rather than owning the land or building outright. Leases are typically 99 or 125 years from the original build date.
Lease length matters for two reasons. First, a short lease (under 80 years) makes a property much harder to mortgage and therefore harder to sell. Second, extending a lease costs money.
When you buy a Shared Ownership property, check how many years are left on the lease and understand your rights regarding extension. Many housing associations now offer 990 year leases on new build Shared Ownership properties, which removes this concern. For older Shared Ownership homes, lease length is a serious consideration.
Is Shared Ownership worth it?
The honest answer is: it depends on your circumstances and your priorities.
Shared Ownership is worth considering if you have a reasonable income but cannot save a large enough deposit to buy a suitable home outright in your area. It allows you to get onto the property ladder sooner than you might otherwise manage, and to build equity in a property while living in it.
It is less straightforward if you are drawn to it primarily because of the lower upfront cost without fully understanding the ongoing costs. The combination of a mortgage payment, rent, and service charges can add up to more than a standard mortgage on a comparable property in some cases. Running the numbers carefully, ideally with an adviser, is essential before you commit.
The scheme is also less flexible than outright ownership. Restrictions on selling, the cost and complexity of staircasing, and the leasehold structure mean that Shared Ownership involves trade-offs that standard homeownership does not.
For buyers who understand those trade-offs and still find that Shared Ownership is the best route available to them, it is a legitimate and valuable option. For buyers who are drawn to it without fully understanding the structure, it can lead to disappointment.
Questions to ask before you proceed
What is the monthly service charge, and how has it increased over recent years? What does the rent escalation clause say? How many years are left on the lease? What is the housing association's staircasing policy? Does the housing association have a good track record of managing the development? What restrictions exist on selling, renting out, or making alterations?
The short version
Shared Ownership lets you buy a share of a property and pay rent on the rest, with the option to buy more over time. It lowers the deposit barrier and makes homeownership accessible in areas where buying outright would otherwise be out of reach.
The trade-offs are real: ongoing rent and service charges, complexity around selling, staircasing costs, and leasehold structure all need to be understood clearly.
For the right buyer in the right circumstances, it works well. For buyers who go in without understanding the full picture, it can be frustrating.
Speak to a mortgage adviser before you proceed. They can model the full monthly cost of a Shared Ownership purchase, compare it to alternatives, and help you decide whether it is the right route for you.
This article is for informational purposes only and does not constitute financial advice. Always speak to a qualified mortgage adviser before making decisions about borrowing.