What Is Shared Ownership?
Shared ownership is a government-backed scheme that lets you buy a share of a property — usually between 25% and 75% — and pay rent on the remaining share to a housing association. You take out a mortgage on the share you own, rather than on the full property value.
It's designed to help people who can't afford to buy a home outright on the open market, including first-time buyers, previous homeowners who can't afford to buy now, and existing shared owners looking to move.
How Does the Mortgage Work?
Your mortgage covers only the share you're purchasing. So if the property is worth £300,000 and you're buying a 40% share, your mortgage would be based on £120,000 — not the full £300,000.
This means you need a much smaller deposit. A 5% deposit on a £120,000 share is £6,000, compared to £15,000 for a 5% deposit on the full property price. Your monthly costs are the mortgage payment on your share, plus rent on the portion you don't own, plus any service charges.
Staircasing: Buying More Over Time
One of the key features of shared ownership is the ability to staircase — buying additional shares in your property over time. You can usually buy more in chunks of 10% or more, and each time you do, your rent reduces because you own more of the property.
Eventually, you can staircase to 100% ownership, at which point you own the property outright and pay no rent. When you staircase, your additional share is valued at the current market price, so if the property has gone up in value, you'll pay more per share. If it's gone down, you'll pay less.
Things to Watch Out For
Shared ownership can be a great stepping stone, but it's important to understand the full picture:
- Not all lenders offer shared ownership mortgages — the choice is more limited than standard mortgages
- Monthly costs can add up — mortgage plus rent plus service charges can sometimes be higher than you'd expect
- Selling can be more complex — the housing association usually has the right to find a buyer before you can sell on the open market
- Staircasing costs money — you'll need a valuation and potentially legal fees each time you buy more
Despite these considerations, shared ownership has helped hundreds of thousands of people onto the property ladder who wouldn't otherwise have been able to buy.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.