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Wednesday, 3 October 2023

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Home and community

Shared ownership - how it works

If you want to buy a home but can’t quite afford to, the shared ownership scheme can help. With the scheme, you buy a share of the home and pay rent on the remaining share. Find out how shared ownership works and if you qualify.

How does shared ownership work?

With shared ownership you buy a share of the property – between 25 per cent and 75 per cent of the full value.

The housing association owns the remaining share and you pay rent on that share. The rent is up to three per cent of the share’s value.

Shared ownership properties are always leasehold homes. This means you own them for a fixed period of time, usually 99 years.

When you buy your home, you become the owner of the lease. The housing association will grant you a lease for the fixed period, which also sets out your rights and responsibilities, and those of the landlord.

Shared ownership costs example

Example of shared ownership	Cost	Share of home
Property purchase price	£100,000
Your share of the value	£50,000	50 per cent
Housing association share	£50,000	50 per cent

The table below shows how much this could cost you per month in mortgage payments and rent.

Example of shared ownership costs	Monthly cost
Mortgage payments at 6 per cent interest over 25 years	£322
Rent at 3 per cent of £50,000 (£1,500 over 12 months)	£125
Total monthly payment	£447

You may also pay a service charge if your home is a flat.

Calculate the likely cost of your mortgage repayments Opens new window

Your rights and responsibilities

As the owner of the lease, you have rights and responsibilities just like any other owner.

This usually means you’re responsible for repairs inside the property while the housing association takes care of the outside (eg the roof if you own a flat).

To cover the costs for any outside work that might be necessary, you pay a service charge each year. This could be charged on a monthly basis.

Buying more of your home – 'staircasing'

After you’ve bought your first share, you can usually buy more shares until you own the whole value of the property. This is known as staircasing.

You can buy more shares in your home any time after you become the owner. To do this, you’ll have to write to your housing association. For example, you may own 50 per cent and want to buy another 25 per cent.

The cost of your new share will depend on how much your home is worth when you want to buy the share. If property prices in your area have gone up, you will pay more than for your first share. If your home has dropped in value, your new share will be cheaper.

The housing association will get the property valued and let you know the cost of the new share. You’ll have to pay the valuer’s fee.

Usually you’ll have three months to arrange a mortgage and complete buying the new share. Your lease document will have full details on how to buy new shares.

Selling your shared ownership home

You can sell your home at any time, but you must tell the housing association in writing.

If you own a share of your home, the housing association has the right to find a buyer for it.

If you own 100 per cent of your home, you can sell it yourself. When you put your home up for sale, the housing association has the right to buy the property back first. This is known as the ‘right of first refusal’. The housing association has this right for 21 years after you fully own the home.

How to apply for the shared ownership scheme

If you'd like to buy a home through the shared ownership scheme, contact the HomeBuy agent in the area where you want to live. Each HomeBuy agent has an application form for the scheme, which you will need to complete.