Shared ownership mortgages
Can't afford your first home outright? This government-backed scheme could be the answer.
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Why choose shared ownership?
If you're dreaming of owning your own home but feel priced out of the market, you're not alone. With high house prices, rising rent, and the cost of living starting to bite, buying a home can feel like an impossible goal. But there's good news: shared ownership might be a way for you to get there faster, with a much smaller deposit and monthly costs.
Shared ownership is a government-backed scheme that helps you buy a share of a home (usually between 10% and 75%) and pay rent on the part you don't own. Over time, you can buy more shares - known as "staircasing" – until you own the whole property, if you want to.
It's not for everyone, but for many UK residents, the shared ownership scheme can be the ideal stepping stone into homeownership.
How it works: part buy, part rent
Let's break it down. Shared ownership means you buy your share of the property now, and pay rent to the housing association for the rest. If a property is worth £250,000 and you buy a 25% share, that's £62,500. Your mortgage is only based on that 25%, not the whole amount. You'll need a deposit (usually 5-10%) for your share, not the total price - making it a lot more affordable.
Your monthly payments will usually include three things: your monthly mortgage payment, rent on the remaining 75%, and a service charge (especially if it's a flat). It might sound like a lot, but it's often cheaper than renting privately or paying standard mortgage repayments. There's also typically less rent to pay than with a standard rental.
Tip: As well as a lower deposit and mortgage payments, having a smaller mortgage usually means you'll pay less interest overall, even if the interest rate is the same - simply because you're borrowing less.
Who's it for? Eligibility and expectations
Shared ownership isn't just for first-time buyers, although they're the main customer. You could also be eligible if you've previously owned a home but can't afford to buy again, or if you're currently renting through a local authority or housing association.
There are a few key rules:
- Your household income must be under £80,000 a year (or £90,000 in London).
- You must not own another home when you buy through shared ownership.
- You need to show you can afford the ongoing costs.
It's ideal for single buyers, young couples, key workers, or anyone who's been priced out of the traditional housing market. Just be prepared: there may be other costs like legal fees, maintenance, and ground rent, as well as stamp duty, and possible limits on what you can do with the property (like renting it out).
Tip: Home improvements are often allowed, but you'll usually need written permission from the landlord for any structural changes.
The pros and cons of shared ownership
Shared ownership is a great option for many – but it's not perfect. Knowing the pros and cons will help you decide if it's right for you.
Advantages:
- Smaller deposit and mortgage needed
- Lower monthly costs compared to buying outright
- You can increase your share over time
- A way to stop renting and start owning
Disadvantages:
- You still pay rent (and it can go up)
- You don't fully own the home until you buy all the shares
- Staircasing involves extra costs (valuation, legal fees, etc.)
- Selling means involving the landlord if you don't own 100%
Summing up
Shared ownership can be a good way to get on the property ladder if you're struggling with high house prices and hefty deposits. It's not the same as full ownership, but it gives you a chance to build equity and feel more in control of where you live. If you understand the rules and what you need to pay, it can be a smart first step.
Frequently Asked Questions
Do I need a deposit for shared ownership?
Yes – but it's based on the share of the property you're buying, not the full value of the home. So if you're buying a 25% share of a £200,000 home (£50,000), and the lender asks for a 5% deposit, that's just £2,500. This means getting a foot on the ladder is far more achievable, especially if saving a bigger deposit has been holding you back.
Can I buy more of the home later?
Yes, that's called staircasing. You can buy more shares when you can afford to, sometimes all the way up to 100%. You'll need a property valuation and possibly legal fees each time, so it's worth budgeting in advance. Many people increase their share gradually over the years, often as their earnings grow or their finances improve.
Who owns the rest of the home?
Usually a housing association or registered provider owns the rest. You'll pay them rent on the part you don't yet own. They remain the landlord for their share, and will also manage communal areas if the home is a flat or part of a shared development. Always check the terms of your lease if in doubt.
What happens if I want to sell?
Selling your property can be necessary for many reasons - from a changing jobs to relationship breakdown. With shared ownership, the landlord usually has the right to find a buyer first (this is called the "nomination period"). If they don't find one, you can then sell it yourself. You'll benefit from any increase in the market value on your share, just like with a traditional property sale.
Are shared ownership homes always new builds?
Mostly, yes - but some shared ownership properties are resales too. These are homes being sold by existing shared owners. Resale properties can be a good way to get more space for your money or move into a neighbourhood you prefer.
About the author
Lawrence Howlett
Lawrence Howlett brings a results-driven mindset to his writing, shaped by over a decade of experience across finance, legal, and energy sectors. As the founder of Moneysavingadvisors, he’s built a reputation for turning complex financial concepts into clear, actionable insights for consumers. His writing stands out for its clarity, structure, and focus on delivering value.
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