What is a shared-ownership mortgage?

Key takeaways

• Shared ownership lets you buy a share of a property with a mortgage and pay rent on the remaining portion

• It’s available to first-time buyers, low-income households, and some previous homeowners

• It helps you get on the property ladder with a smaller mortgage and deposit

• You can gradually buy more shares in your home, eventually owning it outright

What is a shared-ownership mortgage?

Shared ownership, also known as 'part buy, part rent', is a type of home-buying scheme that gives first-time buyers the chance to purchase a share in a new build property.

A shared ownership mortgage is a specific type of mortgage taken out for a shared ownership purchase.

You take out a mortgage for the share you own (usually between 25% and 75%) while paying rent on the rest to a housing association, local authority or property developer. You can buy a 10% share on some homes.

Shared ownership schemes usually have low deposit requirements (i.e. 5%), making it easier for people, especially lower income households, to get on the housing ladder.

Who qualifies for a shared-ownership mortgage?

You’ll be eligible to buy a home through a shared-ownership scheme if your household income is less than £80,000 (£90,000 if you're buying a property in London).

You’ll also need to be either a first-time buyer or a previous homeowner who cannot afford to buy now. Alternatively, you will need to be renting from a council or housing association. You will need to be able to prove you’re not in mortgage or rent arrears. You will also have to show that you have a good credit history and you can afford the costs associated with buying a shared-ownership home.

Our mortgage eligibility guide covers what mortgage lenders look for when deciding how much you can borrow.

For some homes you may have to show that you live in, work in, or have a connection to the area where you want to buy the home.

Military personnel will be given priority over other groups for government-funded shared-ownership schemes.

If you have a long-term disability, you could also qualify for a shared-ownership scheme under the government’s Home Ownership for People with Long-Term Disabilities (HOLD).

How does shared ownership work?

Shared ownership allows you to buy a share of a property (usually 25%–75%) and pay rent on the remaining share to a housing association, home-builder or local council.

• You take out a mortgage on your share only, so the deposit is smaller

• You pay monthly rent on the part you don’t own

• You can buy more shares over time (called staircasing)

• In many cases, you can eventually own 100% of the property

It’s designed to make homeownership more affordable by reducing upfront and monthly costs.

What do I need to consider with shared ownership?

Changes to shared ownership schemes

As of April 2021, changes to shared ownership schemes were introduced under the government’s 'Affordable Homes Programme'.

These include:

• The minimum amount of share you can have in a property has reduced from 25% to 10% in most cases

• You can buy additional shares in 1% instalments instead of the former 5% or 10% minimum share

• You must be a first-time buyer with an annual household income of less than £80,000 or £90,000 for buyers in London

• The landlord will be responsible for certain repair costs during an ‘initial repair period’, typically 10 years

• Fees for buying additional shares have now been reduced

How much rent will I pay on a shared ownership property?

For a shared ownership home, you need to pay rent to your landlord for the share you do not own.

If you buy a new-build shared ownership home, the rent limit is 3% of the value of the share the landlord owns. Most landlords charge 2.75%.

For example, if you own 50% of a £200,000 property (£100,000), an annual rent of £2,750 would work out to £229 per month.

From 12 October 2023, rent increases for new shared ownership homes have been capped at the Consumer Prices Index (CPI) plus 1% per year, ensuring more predictable costs.

Always check your lease for specific terms, as rent rates and increase policies may vary between providers.

What is staircasing and how does it work?

With shared ownership, you can choose to increase your share of the property overtime through a process known as 'staircasing'.

This means that you can keep buying shares of the rented part of your home from the relevant housing association until you own all of it.

Following changes to the scheme, you can now staircase in 1% increments. In most cases, you can ‘staircase’ all the way to owning 100% of the property. This way, you’ll no longer need to pay any rent, just your mortgage payments.

How much you pay for additional shares will depend on the value of your home at the time. This will be determined by the shared ownership company.

For example, if your property is valued at £250,000 and you want to buy an additional 25% share, this would cost £62,500 (25% of £250,000).

Can I sell my shared ownership home?

Yes, you can sell a shared ownership home.

• You can sell your share at any time

• Usually, the housing association has first refusal (a set period to find a buyer)

• If they don’t find one, you can sell on the open market

• If you don’t own 100% of the property, the buyer will have to buy it as part of a shared-ownership scheme

• The price is based on the current market value, and you sell the share you own

• If you’ve staircased to 100%, you can sell it like a normal property via an estate agent

What happens if the property value changes?

If and when you decide to sell your shared-ownership property, you can find yourself in different scenarios.

If the value of your house has risen, you’ll end up splitting the capital gain with your lender (i.e. the housing association). What both parties will receive depends on how much of the house you each own.

Should the cost of the property decrease, you could be paying more money into a house that’s falling in value or selling at a loss.

However, if you’re planning to keep it and want to make a move to buy a bigger share, a decrease in value could work in your favour.

This is because you’ll be able to gain a higher share of the house and pay less than you would have originally.

Are shared-ownership schemes the same as shared equity schemes?

Shared ownership and shared equity are different types of schemes. Shared-equity schemes offer a low-interest loan on part of the home you can’t afford to buy, while shared ownership involves paying rent on the share you don’t own.

Shared-equity schemes were offered under the government’s Help to Buy scheme. This has now closed to new applicants in England and Scotland, but it is still available in Wales until September 2026.

Which lenders offer mortgages for shared ownership?

If you buy a shared-ownership property, you’ll need a shared-ownership mortgage for the proportion of the property you buy. You’ll typically need a 5% or 10% deposit.

Not all lenders offer shared-ownership mortgages. Those that do include high street banks such as:

• Barclays

• Halifax

• HSBC

• Lloyds Bank

• Nationwide

• Santander

• TSB

And building societies and specialist lenders such as:

• Kent Reliance

• Kensington Mortgages

• Leeds Building Society

• Newbury Building Society

• Skipton Building Society

• Virgin Money

Each lender will have specific eligibility criteria and terms for their shared ownership mortgages.

You should seek advice from a mortgage broker to find the most suitable option for your circumstances.

Your mortgage is secured on your home, which you could lose if you do not keep up your repayments.

Why should I use a shared-ownership mortgage broker?

Using a shared ownership mortgage broker can make the process much easier and improve your chances of getting approved:

• Access to more lenders – some shared ownership deals are only available through brokers

• Expert knowledge – they understand the specific rules around shares, rent, and housing associations

• Better chances of approval – they match you with lenders that fit your income and deposit

• Saves time and hassle – they handle paperwork and liaise with lenders and housing associations

• Tailored advice – they can help with staircasing, affordability, and long-term planning

Advantages and disadvantages of shared ownership

Shared ownership has its advantages and disadvantages:

Pros of shared ownership

Cons of shared ownership

How do I apply for a shared-ownership scheme?

There are four main steps to apply for shared ownership:

1. Check if you’re eligible

Find out who can apply for a shared ownership home and whether you meet the criteria.

The Government website has information about who is eligible for shared ownership.

2. Find a home you want to buy

If you’re eligible, contact an organisation selling shared ownership homes in your area. You can find which organisations operate in your area on the Share to Buy website.

When you contact a shared ownership company, it will:

• Confirm your eligibility

• Provide details of available homes

• Arrange viewings

• Assess whether you can afford the property

You can also search online for shared ownership homes for sale in your area.

3. Reserve the home

If approved, you can pay a reservation fee (usually up to £500) to secure the property. The fee ensures no one else can reserve the home for a set period, and is usually deducted from the final purchase price on completion day.

4. Find a mortgage

When you’ve found the home that you want to buy, you should speak to a mortgage broker. The mortgage broker will assess your income and outgoings to make sure you can afford the payments for your home.

5. Appoint a conveyancer

You’ll need a solicitor or licensed conveyancer to handle the legal transfer of ownership. They will explain the shared ownership lease, review your mortgage conditions, and guide you through the formalities to complete the purchase.

What is Social Homebuy?

Social HomeBuy is a UK government-backed scheme that helps tenants of housing associations or local councils buy their home at a discounted price. It’s similar to shared ownership but specifically for people already renting from a social landlord.

• Eligible tenants can purchase their property outright or a share (usually 25%–75%) of it at a discount, often proportionate to the share being bought.

• The scheme is aimed at making homeownership more affordable for existing social tenants

• Over time, you can often buy additional shares (“staircasing”) to eventually own 100%

• If you want to apply, ask your landlord (i.e. your local authority or housing association) for an application form.

Emma Lunn
Personal finance expert

Our expert says...

Shared ownership can be a great option for first-time buyers struggling with high property prices. It requires a smaller deposit, making homeownership more accessible, and allows you to 'staircase', meaning you can buy more of your home over time. Plus, with capped rent increases, it offers more stability than private renting."

Other helpful guides

For more information about home ownership, have a look at more of our useful guides, including…

• Top 10 tips for getting a mortgage

• How long does the house buying process take?

• What you need to know about first-time buyer mortgages

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Your home may be repossessed if you do not keep up repayments on your mortgage.