Shared ownership schemes—how they work and who is eligible

Click on the links below to jump to each section.

• • Buying a home through a shared ownership scheme
  • How does shared ownership work?
  • Who can buy through a shared ownership scheme?
  • What share can I buy?
  • Buying more shares – staircasing
  • Are shared ownership mortgages available? How do I get one?
  • Can I buy a shared ownership home with cash?
  • Can I remortgage my shared ownership home?
  • What’s the process for buying a home through a shared ownership scheme?
  • Can I buy through shared ownership if I already own a house?
  • Can I sell my shared ownership property and buy another?
  • Can I buy the freehold of my shared ownership property?
  • Can I make repairs and home improvements to my shared ownership home?
  • Will I pay stamp duty on a shared ownership property?
  • Can older people buy a property through a shared ownership scheme?
  • Can disabled people buy a property through a shared ownership scheme?
  • What other government help is available to help buy a home?
  • What will Grayson’s fees be?

Buying a home through a shared ownership scheme

The shared ownership scheme is a government scheme that allows you to buy a home if you can’t afford to buy 100% of it.  You can buy a share of a home and you pay rent on the percentage you have not bought. You then have the option of buying a bigger share (this is called staircasing)—or buying the property outright—later.

The scheme is aimed mainly at first-time buyers, although it is available to other people.

• Who can buy through a shared ownership scheme?

Many shared ownership homes are on new-build estates, where the developer was obliged to provide a certain number of these properties in return for a government subsidy.

The schemes tend to be run by local housing associations or local authorities, known as the housing provider.

How does shared ownership work?

When you buy a home under a shared ownership scheme, you:

• • • buy a share of between 10% and 75%. This is part of the amended model of shared ownership that was introduced in 2021 under the Affordable Homes Programme.  Under the old model, the minimum share you could buy 25%.  However, you are still required to buy the maximum that you can afford
    • pay a deposit of between 5% and 10% of the share you buy – if you are not buying it with cash
    • get a mortgage on the percentage you buy (less the deposit)
    • pay rent to the provider on the amount of the home you don’t own – this is usually lower than rent paid on the open market and is usually 2.75% of the value of the property per annum.
    • get a solicitor to carry out the conveyancing for you
    • arrange insurance
    • you may need to pay some of the following:
      • service charge
      • estate charge
      • management fee
      • pairs reserve fund

You can ask the provider for further information on what charges will be relevant and how much they will be.

The amended model of shared ownership that was introduced in 2021 also changed the minimum share you can buy when staircasing (buying more shares) from 10% to 5%. As both new model and old model shared ownership schemes are available, you should check which model is applicable when considering a property.

Because you’re buying the property in part, you’re considered an owner-occupier—not a tenant—with all the legal rights that brings. You sign a lease that shows you own a share in the property, making you the leaseholder. The housing provider is the landlord. You are shown as the legal owner on the leasehold title deeds.

Who can buy through a shared ownership scheme?

Only certain people can buy homes under a shared ownership scheme. You’re eligible as long as you:

• • • are 18 or over
    • have a yearly household income of less than:
      • £80,000—outside London
      • £90,000—within London
    • cannot afford the deposit and mortgage on a home that meets your needs
    • are not in mortgage or rent arrears
    • have a good, demonstrable credit history (no bad debts or County Court judgements) and can afford the regular payments and costs involved in buying a home
    • Should have savings or be able to easily access at least £4,000 (guideline figure) to cover thecosts of buying a home
    • need access to the deposit amount required

And one of the following applies:

• • • you are a first-time buyer
    • you used to own a home but can no longer afford to buy one
    • you already own a home under a shared ownership scheme and want to move
    • you already own a home and want to move but cannot afford a home that fits your needs
    • you are forming a new household, for example after a separation

If you already own a home, you must already have accepted an offer to buy it – sold subject to contract (STC) – and have written confirmation of the sale and the amount you are selling it for (this is called a memorandum of sale).

These are general criteria that can vary between housing providers.  For example, some insist that you live in, work in or have a connection with the area in which you wish to buy the property.  It is best to check with the housing provider before you go ahead.

If several offers are made on the same home, priority will usually be given to someone who works in the armed forces and may also be given to someone who used to work in the armed forces.

What share can I buy?

The shared ownership scheme was updated in 2021, so there are two versions available.  Ask the housing provider which version the property is being sold through.

If the property you are buying is part of the amended (2021) scheme, the minimum share you can buy is 10%.  If it is part of the old shared ownership scheme, the minimum you can buy is 25%.  The maximum share you can buy on both the old and the amended scheme is 75%. Housing providers will assess your financial situation to determine what you can afford to buy. Over time, however, you may be able to staircase to own 100% of the property.

If you’re buying a resale property—a property that someone has already lived in on the shared ownership scheme – you must buy at least the share that the previous owners had. So, if they owned a 60% share, you’ll have to buy at least 60%

Buying more shares – staircasing

Once you’re living in your property, you can increase the size of your ownership by buying a bigger share. This is known as staircasing.

It’s a useful way to work up to fully owning your home, as it allows you to put money aside gradually or wait until your financial circumstances improve.

In some areas called ‘designated protected areas’ you may only be able to own up to 80% of your property and if you have bought your home using an older people’s shared ownership, the maximum share you can own is 75%.

When you buy more shares:

• • • your rent payments will fall to reflect the increase in the amount of the property you own
    • the share cost will be based on the current value of the property—so if prices have risen, you’ll pay more for each share than you did originally (however, see below regarding buying 1% shares)
    • you’ll need to have been in the property for 12 months or more

The usual minimum extra share you can buy is 10%, although this can be 5% on some newer leases and can be 25% on some older leases.

However, under the amended scheme (since 2021), you may be able to buy shares of 1% each year for the first 15 years of your ownership.  Ask your housing provider for further information about this before you make a decision on which home to buy.

In most cases, you’ll be able to increase your share until you own 100% of the property, but it is better to check before you buy the property if this is likely to be your intention.

Remember that staircasing involves some costs, so factor these in when you’re deciding whether to buy a larger share of your home.

If you buy shares of 5% or more, you will need to pay:

• • • a valuation fee—by a surveyor who is registered with the Royal Institution of Chartered Surveyors (RICS)
    • legal expenses—your conveyancer will need to deal with the legal aspects relating to the purchase of extra shares (your landlord must pay their own legal fees)
    • an administration fee of between £150 and £500, charged by the landlord
    • mortgage fees—these apply if you’re changing mortgage lenders or increasing your existing mortgage to buy the new share

If you are buying shares of 1%, the valuation of a share will be based on the cost of the property when you bought it plus or minus the rate at which the House Price Index (HPI) stands.

You will get a valuation based on the HPI each year from your landlord.

You or your landlord can request a valuation to be made by an RICS-registered surveyor.  Whoever requests the valuation must pay for it. Future HPI valuations will be based on this. There is no landlord administration fee when buying shares of 1% but you may still incur mortgage fees as above.

How much will the rent be?

You will need to pay rent to the landlord for the share of the house that you do not own.  There are limits on the amount of rent you will pay.  For a new-build home, the limit is 3% of the value of the share owned by the landlord.  Most landlords charge 2.75%.

If you are buying a resale home, the rent will be set at the same level as the previous owner was paying.

Landlords usually review the rent each year and your rent is likely to increase.  The maximum increase is based on the Retail Price Index (RPI) for the last 12 months plus 0.5%.

When you buy more shares, your rent will decrease.

Are shared ownership mortgages available? How do I get one?

Yes, there are mortgages for people who buy homes through shared ownership schemes.

You can contact an independent financial advisor who will be able to recommend a shared ownership mortgage or contact a lender who offers these mortgages directly.

How the mortgage works depends on which type you’re offered—is it repayment, for example, or is it interest-only? These mortgages are explained in more detail on this page.

You won’t need to arrange a mortgage until you’ve found the home you want to buy. The housing provider may be able to put you in contact with a financial advisor.

Can I buy a shared ownership home with cash?

Yes, if you have enough money available to buy your share.

However, if you have plenty saved, you might want to consider using it as a deposit to buy a house on the open market.

Can I remortgage my shared ownership home?

Yes, in the same way as you would remortgage any other property, you may be able to remortgage your shared ownership property.

This is something you would need to discuss with your mortgage lender.

What’s the process for buying a home through a shared ownership scheme?

Step 1: Find an organisation that sells shared ownership homes

You can find out which organisations sell shared ownership homes here.

Step 2: Find a property you are interested in

Find a home that you are interested in and contact the landlord.  Arrange a viewing.

Step 3:  Arrange your finances

Find your mortgage lender and get a ‘mortgage in principle’ offer if you can.

Step 4: Reserve the property

When you’ve decided which home you want to buy, you can pay a fee to reserve it. This is typically around £200 but can be up to £500.  The landlord will reserve the property for you for a period of time.  The fee will be taken off the final amount you pay if you buy the property but is not usually refunded if you do not.

Step 5: Appoint a conveyancer

This is your property solicitor. You need to hire one to carry out the legal work for your house purchase to go through. Graysons Solicitors can help with shared ownership scheme purchases.

The housing provider will give your conveyancer what’s known as a ‘memorandum of sale’. This sets out all the details of your purchase. Read more about conveyancing and what it involves here.

Step 6: Exchange contracts

If there are no legal issues, the time will come for you and the housing provider to exchange contracts. This is the point at which you become legally bound to buy the home, and the housing provider legally bound to sell it to you. You’ll also find out the date on which the purchase will complete.

Step 7: Completion and collecting the keys

On the completion date, your mortgage lender will transfer the money for the purchase of your share of the property to your conveyancer, who will then pass it on to the housing provider’s conveyancer.

When this has gone through, you’re officially the owner of a new home. You can collect the keys from the housing provider and move in.

Can I buy through shared ownership if I already own a house?

Only if you’re in the process of selling your home as you apply for shared ownership. You must have accepted an offer to buy your existing property – sold subject to contract (STC) – and have written confirmation of this by way of a memorandum of sale.  You cannot complete the purchase of your new shared ownership property until you have completed the sale of your existing property.

Can I sell my shared ownership property and buy another?

Yes, as long as you own 100% of it.  If you do not own 100% of the home, you will need to notify your landlord that you wish to sell it and the landlord will then have a nominated period of time (depending on the terms of the lease) to find a buyer – or they can buy back the share that you own. If this does not happen within the nominated period, you can go ahead and put your house on the market. Those on the amended (2021) shared ownership scheme can take control of the resale process earlier than those on the old scheme.

If the landlord does find a buyer, the price of your shares will be based upon the valuation provided by an RICS surveyor.

You can buy another shared ownership home as long as you still meet the eligibility conditions for shared ownership.

Can I buy the freehold of my shared ownership property?

Yes, but only in the following circumstances:

• • • You have ‘staircased’ to 100%—i.e. bought all the shares in the property.
    • The housing provider has made it a condition of your lease that the freehold transfers to you as soon as you’ve increased your share to 100%.

Be aware that not all housing providers allow leaseholders to staircase to 100%, so in those instances, there would be no route for you to have full ownership of the home.

Can I make repairs and home improvements to my shared ownership home?

Yes, you can decorate and make home improvements such as a new bathroom or kitchen, although you will have to pay for these yourself, no matter what percentage of the home you own.  If you want to make structural changes, you are likely to need permission from your landlord. You should be aware that if you make improvements that increase the value of your home, you will pay more per share if you buy more shares in the future.

If your home needs external or structural repairs, your building warranty on new homes will usually cover this for a set period – usually 10 or 12 years.

If you own a share of a flat, your landlord will arrange the external or structural repairs, and if the reserve fund does not cover the cost, it will be shared between the flat owners.  Check the details of your lease to find out about this.

If you bought your shared ownership property under the new scheme (since 2021) and you own less than 100% of your home, you will be covered by an ‘initial repair period’.  This is usually for a period of 10 years and means that your landlord must contribute towards the cost of any essential repairs and cannot use the reserve fund if the repairs are the landlord’s responsibility or use the service charge for any external or structural repairs. After the initial repair period, repairs become your responsibility.  Find out more here.

When buying a home through a shared ownership resale, any remaining period on the building warranty will transfer to you.

Will I pay stamp duty on a shared ownership property?

Yes—shared ownership homes are no different to other properties when it comes to stamp duty.

You’ll pay the normal rates of stamp duty on properties above £250,000. Below that there is no stamp duty to pay. However, you have two ways to pay if you bought your shared ownership home from an approved qualifying body, such as a local authority, housing association or other public sector body.

• • • Lump sum—pay a one-off lump sum based on the total market value of the property you’re buying.
    • In stages—paying the stamp duty due in stages, paying the amount due on the share you are currently buying on completion.

If you decide to make a one-off payment upfront, this is making a ‘market value election’ for stamp duty, and this means that you will not need to make any more stamp duty payments, even if you purchase further shares in the future.

If you choose to pay stamp duty in stages, then you will pay anything due on the first purchase amount, and then you don’t make any further payments until you own more than an 80% share of the property.

You can choose which option is best for you, depending on your circumstances, and whether you intend to purchase 100% of the property in the future.  If you do intend to purchase 100% of the property in the future, it may make better financial sense to pay stamp duty on the market value as at the date of purchase, as the market value is likely to increase over time. Or, if you are unlikely to purchase further shares, then you may prefer to pay stamp duty on the value of the share you are purchasing in the first instance.

If you’re a first-time buyer, you can claim relief from stamp duty, but only if you pay a one-off lump sum based on the total market value of the property.

Find out more about stamp duty land tax and shared ownership.

Can older people buy a property through a shared ownership scheme?

Yes.  Older people’s shared ownership schemes are intended for homebuyers over the age of 55. They are generally the same as other shared ownership schemes, but you can only buy up to 75% of the property and once you get to 75% you don’t pay any rent on the additional 25%.

Can disabled people buy a property through a shared ownership scheme?

The scheme ‘Home ownership for people with long-term disabilities’ (HOLD) allows disabled people aged 18 or over to buy a share of a property that suits their needs in an area in which they wish to live.  Find out more about HOLD.

What other government help is available to help buy a home?

The shared ownership scheme is one part of the government’s programme of help to buy a home. Other help includes:

First Home Scheme

This is a scheme that helps first-time buyers to buy new build homes at a discount of at least 30%.  Find out more.

Lifetime ISA (LISA)

A savings scheme that allows first-time buyers aged 18-39 to get a contribution of 25% on savings of up to £4,000 made in each year. Find out more.

Mortgage Guarantee Scheme

A government backed guarantee to lenders on new 95% mortgages until June 2025. Find out more.

Help to Build Equity Loan

A government equity loan of between 5% to 20% (up to 40% in London) of the total estimated cost of building your own home – valid until 2026. Find out more.

What will Grayson’s fees be?

The process is similar to buying a home in the normal way.  However, there are various other obligations on us with regards to the lender’s and housing provider’s requirements so these matters can take longer as they are more complex. Fees that are additional to buying a property in the standard manner will apply and these will be included in the quote you will receive, as long as you advise us that you are buying a shared ownership.

You can get an instant quotation by clicking here

Our property team has lots of experience in dealing with shared ownership properties, and Graysons is an accredited member of the Law Society Conveyancing Quality Scheme, so you can rest assured that our expertise and quality of service are second to none.  Contact us now for further information or to make an appointment.

Read the government’s information on shared ownership.