• Purchasing a Share:
  • With a shared ownership mortgage, you buy a share of the property, which is typically between 25% and 75% of the property’s value, although some schemes allow you to start with as little as 10%.
  • You need a mortgage for the share you’re buying, along with a deposit, which is usually lower than for a standard mortgage because you’re buying only part of the property.
• Renting the Remaining Share:
  • You pay rent on the share you don’t own to the housing association or developer that owns the remaining portion.
  • The rent is typically below the market rate (usually about 2.75% of the share’s value per year), which makes shared ownership more affordable compared to private renting or a full mortgage.
• Staircasing (Buying More Shares):
  • Over time, you can increase your share in the property by buying more of it. This process is called “staircasing.”
  • Each time you staircase, the cost of the additional shares is based on the current market value of the property, which may have increased or decreased since your original purchase.
  • In most cases, you can staircase up to 100% ownership, at which point you own the property outright and no longer pay rent.
• Selling the Property:
  • If you decide to sell the property, you can only sell the share you own unless you’ve staircased to 100%.
  • The housing association usually has the first right to buy your share or find a buyer for it. If they can’t find a buyer within a set period, you can sell it on the open market.

• Lower upfront costs: Since you only need a mortgage for the share you’re buying, the deposit is smaller and the mortgage payments are lower than they would be if you were buying the property outright.
• Easier entry to the property market: It allows buyers who can’t afford a full property in their area to get on the housing ladder sooner.
• Reduced rent: Rent on the unowned portion is often lower than market rates, which can make the overall monthly cost (mortgage + rent) more affordable.
• Opportunity to own more: Staircasing lets you gradually increase your ownership share, so you can work towards full ownership as your financial situation improves.

• Ongoing rent payments: Even though you own part of the property, you still have to pay rent on the share you don’t own, which can feel like a hybrid between renting and buying.
• Maintenance and other costs: As a shared owner, you are responsible for 100% of the maintenance costs, even if you only own part of the property.
• Staircasing can be expensive: As the value of the property increases, the cost of buying more shares goes up, which might make it difficult to staircase if house prices rise significantly.
• Restrictions on selling: You might face restrictions when selling your share, and the housing association may have the right to find a buyer before you can sell it on the open market.
• Leasehold properties: Most shared ownership homes are leasehold, meaning you don’t own the land the property is on, and lease extensions or additional charges might apply.

Shared Ownership Example:

• You find a property valued at £200,000.
• You buy a 50% share of the property, so your mortgage is for £100,000.
• If the housing association charges 2.75% rent on the other 50%, your monthly rent would be £229 per month (2.75% of £100,000, divided by 12 months).
• You will pay both your mortgage and rent each month, plus any maintenance fees or service charges.

Staircasing Example:

• If your property’s value rises to £250,000 and you want to buy an additional 25% share:
  • You will need to pay £62,500 for the extra 25% (based on the current market value).
  • You will own 75% of the property and will only pay rent on the remaining 25%.

Shared ownership can be a useful way for people with lower incomes to get into the property market, but it’s important to consider both the benefits and the potential drawbacks.

Would you like more information on how to apply for shared ownership or details on specific schemes?