For many people in the UK, buying a home outright can feel like an impossible challenge, particularly with rising house prices and the difficulty of saving for a large deposit.
Shared ownership schemes were introduced to make home ownership more accessible, especially for first-time buyers, by allowing them to purchase a share of a property rather than the whole home from the outset.
A shared ownership mortgage plays a central role in this process, as it enables you to secure financing for the portion of the property you are buying.
How Shared Ownership Works
Under a shared ownership scheme, you buy a percentage of a property, typically between 25% and 75%, with the remaining share owned by a housing association, local authority, or another registered provider.
Because you are not buying the entire property, the deposit and mortgage you need are smaller than if you were purchasing on the open market.
For example, if you buy 40% of a £200,000 property, you would only need to finance £80,000 through a mortgage, plus your deposit contribution.
You will pay a monthly mortgage on the share you own and rent on the portion retained by the housing association. In addition, there may be service charges and maintenance fees if the property is a flat or part of a managed development.
This combined monthly cost is usually lower than renting the property outright or taking on a full mortgage, making shared ownership an attractive option for those who have a steady income but struggle to save a large deposit.
Who Is Eligible for Shared Ownership?
Shared ownership is primarily designed to help first-time buyers and those who cannot afford to buy a suitable home on the open market.
Eligibility often includes household income thresholds, typically up to £80,000 a year outside London, or £90,000 within London. Priority is usually given to first-time buyers, existing shared ownership tenants, and people already living in social or council housing. However, each scheme and housing association may set additional criteria, such as local residency requirements or employment within a specific sector.
While the scheme is designed to improve affordability, applicants must still pass standard mortgage affordability checks. Lenders will want to see evidence of stable income, manageable outgoings, and a good credit history to ensure you can meet both your mortgage and rent commitments.
The Role of a Shared Ownership Mortgage
A shared ownership mortgage is specifically tailored for this type of property purchase. Lenders will assess your ability to borrow based only on the percentage of the property you are buying. Because the mortgage is smaller, the deposit is too, in many cases, deposits for shared ownership mortgages can start from as little as 5% of your share.
Not all lenders in the UK offer shared ownership mortgages, but specialist brokers, such as AMS Mortgages, can help you identify suitable deals. These products function similarly to traditional mortgages in that you can choose between fixed, variable, or tracker interest rates, with repayment periods usually ranging from 25 to 35 years.
Staircasing: Increasing Your Ownership Over Time
One of the unique features of shared ownership is the ability to buy more shares in your property over time, a process known as “staircasing.”
As your financial situation improves, for example, if your income increases or you build up savings, you can purchase additional portions of the home, gradually reducing the rental share you pay to the housing association.
In most cases, you can staircase up to 100% ownership, at which point you become the outright owner and no longer pay rent. However, the cost of staircasing is based on the current market value of the property, which means it may become more expensive if house prices rise. There are also legal and administrative fees to consider each time you staircase.
Advantages of Shared Ownership
Shared ownership provides a stepping stone into the property market for those who might otherwise be locked out.
It requires a smaller deposit, reduces the size of the mortgage needed, and allows buyers to start building equity in a home rather than paying rent alone.
For many, it is a more secure and stable alternative to private renting, with the added benefit of long-term investment potential if staircasing to full ownership becomes achievable.
It can also make it easier to live in areas that might otherwise be unaffordable. Shared ownership properties are often available in sought-after urban locations, including London, where buying a home on the open market would be unrealistic for many households.
Challenges and Considerations
While shared ownership offers clear benefits, there are also important factors to weigh up. Monthly costs can still be significant once rent, mortgage repayments, and service charges are combined, so buyers need to budget carefully.
Selling a shared ownership property can also be more complex, as the housing association usually has the right to find a buyer before you can sell on the open market.
Additionally, because you are effectively both a tenant (for the rented portion) and an owner (for your share), responsibilities can sometimes feel more complicated. Repairs and maintenance are typically your responsibility, even though you do not yet own the property outright.
Is Shared Ownership Right for You?
Shared ownership mortgages can be an excellent way to get on the property ladder, but they are not suitable for everyone. If you want to buy outright in the near future, or if you anticipate frequent moves, a traditional purchase may be more straightforward.
On the other hand, if your priority is to reduce upfront costs and secure a stable home with the potential to increase your share later, shared ownership can be an effective solution.
Before proceeding, it’s wise to speak with a mortgage adviser who specialises in shared ownership. They can explain the full costs involved, assess your eligibility, and help you secure a suitable mortgage product.
Shared ownership mortgages are an important part of the UK’s housing market, designed to make home ownership more accessible in a climate where affordability remains a significant challenge. By purchasing a share of a property and paying rent on the rest, buyers can enjoy the security of owning a home sooner, while retaining the flexibility to increase their stake over time.
Like any property purchase, it’s essential to weigh the long term financial implications and ensure the arrangement fits your goals.
With the right advice and careful planning, shared ownership can provide a valuable route to home ownership for thousands of people across the UK.
