Buying a home with shared ownership can be a really affordable way to buy your dream home, giving you a flexible, low-deposit way on to the property ladder.
How shared ownership works
With shared ownership (also known as part-buy, part-rent) you buy a share of a property.
Most people typically start by buying 25-75%. Then on the remaining share you pay a subsidised rent. You can then increase your share up to 100% and outright ownership whenever suits you.
Buying a share in a property, rather than buying it outright, means you need a smaller deposit and mortgage. This makes shared ownership a really affordable route into home ownership.
Once you’ve bought, you can increase your share in your home whenever you want – all the way up to owning it 100%. And you can sell at any time making shared ownership a great way to invest in your future.
Advantages of shared ownership
- Start by buying as little as a 25% share.
- Deposits are usually 5-10% of the price of your share.
- You only need a mortgage to cover the price of your share.
- Increase your share bit by bit all the way to owning 100%.
- Stamp duty can generally be deferred until your share reaches 80%.
- Lower running costs of a new-build home with the latest technologies, fixtures and fittings.
- The rent on the share you don’t own is often less market rent (usually 2.75% of the full market value).
Shared ownership is designed to help those who cannot otherwise afford to buy on the open market.
You can buy with shared ownership if your combined household income is £80,000 a year or less (£90,000 in London).
There are some restrictions and eligibility criteria to ensure the scheme benefits those who need it most. To purchase a home with shared ownership you need to be within the household income threshold and also:
- be 18 or older
- not own a property, or part of a property (in the UK or abroad), at the time of completing your purchase
- not have enough money to buy a property outright
- have a good credit history (some lenders accept buyers with adverse credit, but the interest rates are generally higher)
- have a regular income to cover your mortgage and rent
- have enough money to cover the deposit for the share you’re buying.
Staircasing: increasing your share
One of the benefits of shared ownership is that you can buy what you can afford first and then, when the time suits, you can buy bigger shares until you own your home outright. This is a process known as staircasing.
The cost of your new share depends on the market value of your home at the time you increase your share. This means it may cost more than your first share if the value of your home has gone up, or be cheaper if it’s gone down.
You can staircase as many times as you like to reach 100%, though each additional share must be at least 10%. Each time you staircase you need to pay some associated costs, such as a property valuation, solicitor fees and mortgage fees.
Managing your money and mortgage
When you buy with shared ownership an independent mortgage advisor (IMA), specifically selected for each of our developments, will assess the affordability of the home you want to buy. These advisors are also referred to as our 'panel' of advisors or brokers. This assessment does not affect your credit rating.
Details of the advisor for the development that's of interest to you will be shared with you by our sales team. This happens after you've registered your interested in one of our homes.
Our panels are selected because of their experience, service levels and understanding of our developments. Their knowledge saves everyone time. They will:
- check your application and ensure you can afford the purchase
- agree the percentage share you’ll buy based on your income, savings and credit commitments
- provide you with information about choosing the right mortgage for you.
Organising the legal things
Once you’ve found your perfect home with us, you just need to complete a reservation form and pay the reservation fee. This takes the property off the market and allows you to finalise your mortgage.
You then need to get a solicitor to work on the legal conveyancing process. Your solicitor will:
- check the lease and speak to your mortgage lender and our solicitors
- carry out searches and anti-money laundering checks
- check the paperwork and your mortgage are in place to complete your purchase.
Using our recommended solicitors
Our recommended solicitors know our developments and are experts in the legal processes for all our buying options. When you use one of our solicitors we guarantee your exchange will take place within 28 days.
Speak to our sales team to find out more about our recommended solicitors.
Selling your home
You can sell your home whenever you want, whether you own it outright or still pay rent on a share. If its value has increased you keep any profit on your share.
If you own 100% of your home, you can sell it yourself on the open market.
If you haven’t staircased to 100%, there are some restrictions if you want to sell, which will be explained in your lease. Typically, you’ll have to sell through us: this ensures your home is offered to people needing affordable housing. And the landlord you pay rent to has the right to buy it first, this is known as first refusal. Find out more about selling your shared ownership home.