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Shared Ownership Mortgages

What is shared ownership?

published: 05 May 2021
Read time: 5 minutes

Shared ownership allows you to take out a mortgage on a share of a property and pay rent on the rest. Our guide explains how shared ownership works and how to apply...

What is shared ownership?

Shared ownership, also known as ‘part buy part rent’, is a type of mortgage that gives first-time buyers the chance to buy a share in a new build property. You can take out a mortgage for the share you own (usually between 25% and 75%), while paying rent on the rest to a housing association. As you’ll only be paying a mortgage on the share you’re buying, the amount needed for a deposit is usually much less than if you were to buy a property outright.

Shared ownership gives lower income households the opportunity to get on the property ladder at a more affordable cost.

Couple moving house

Who qualifies for the shared ownership scheme?

You’ll be eligible to buy a home through a shared ownership scheme if your household income is less than £80,000. 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, that you have a good credit history and you can afford the costs of buying a shared ownership home.

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

Shared ownership schemes, which are offered by housing associations, allow you to part-buy and part-rent your home.

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).

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

Changes to shared ownership schemes

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

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

  • 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 for buyers in London. Previously the cap was £90,000 in London

  • Instead of you being responsible for maintenance and repair costs, the landlord will pay these costs for the first 10 years of ownership

  • Fees for buying additional shares have now been reduced

How does shared ownership work?

Shared ownership schemes can be seen as a middle ground between owning and renting, with the option to buy a bigger share of your home at a later date.

If you’re looking to take out a shared ownership mortgage, you’ll need to consider the following:

  • Make sure the scheme is available in your area and then, if eligible, you can speak to your local council’s housing team/association to apply

  • Make sure you check if you can get a mortgage first – not all lenders will advance a mortgage for shared ownership and you'll still need to apply for a mortgage to pay for your share of the property

  • Make sure you can afford the costs of shared ownership including stamp duty, moving costs, mortgage fees and insurance


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 so 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 housing association). For example, if your property is valued at £250,000 and you want to buy an additional 25% share, the cost of the extra share would be 25% of the valuation which would be £62,500.

Can I sell my shared ownership home?

Whether you can sell your shared ownership home will depend on how much ownership you have. If you end up with 100% ownership of your home, you can choose to sell your shared ownership property privately through an estate agent and may need to pay to have your property valued. But bear in mind that the housing association has the right to ‘first refusal’ for 21 years after you first bought your home.

If you don’t own 100% of the property, the buyer will have to buy it as part of a shared ownership scheme, by buying a share greater than or equal to what you currently own.

Advantages of shared ownership

Shared ownership can come with advantages depending on your financial situation, including:

  • A way to get on the property ladder: You’ll get on the property ladder without over-stretching your finances. You may find yourself buying a bigger home than you’d otherwise be able to afford

  • Saving money: As you’re saving on rent, you may find you can afford to put money away each month to use later to increase your share in the property

  • Staircasing: You’ll have the option to buy more shares of your home through a process known as ‘staircasing’ so you’ll no longer need to pay rent, just your mortgage

  • You can choose to sell: You can choose to sell whenever you want and could benefit from the property value increasing

Disadvantages of shared ownership

There are potential disadvantages that come with shared ownership including:

  • Limits on selling: If you later want to sell your home you could find your options limited due to restrictions on who can buy your home. This could make a quick sale difficult

  • Asking permission: If you don’t own your property outright you may need permission from the housing association if you want to make home improvements

  • Service charges: You may need to pay service charges for maintenance of communal areas of your building (if you buy a flat in a block for example)

  • Pets and tenants: You may find there are rules to shared ownership like no tenants or pets Stamp Duty: You’ll need to pay stamp duty on the whole value of the property when your share of the property is greater than or equal to 80%

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, instead of buying it and renting it back to you at a low-cost rent. Shared equity schemes are also offered under the government’s Help to Buy scheme.

How do I apply for a shared ownership scheme?

The government offers a shared ownership scheme under its Help to Buy mortgage scheme, so if you’re looking to apply, a good place to start is your local Help to Buy agent. You can find your nearest agent on the Help to Buy website and they will be able to run through your options.

If you live in a council or housing association home, you can apply for Social HomeBuy. This is a scheme that helps you buy a share of the home you already live in and pay rent on the rest.

You’ll need to buy at least 25% of your home but you will get a discount of between £9,000 and £16,000 on the value of your property – depending on where you live and the size of the share you're buying. If you choose to increase your stake in your home later, again, you will get a discount. If you want to apply, ask your landlord for an application form.

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 and you’ll typically need a 5% deposit.

Not all lenders offer shared ownership mortgages, but many do, including Kent Reliance, Nationwide, Barclays, Leeds Building Society and Halifax. It’s a good idea to use a mortgage broker with experience of shared ownership mortgages as they will know the best lenders to approach.

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

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