Shared ownership in England: a 10% to 75% share, rent on the rest and the charges nobody mentions

Shared ownership is the scheme for people who cannot afford the full deposit and mortgage payments for a home that meets their needs. You do not buy the flat — you buy a share of it. The rest stays with a landlord, and you pay rent on their part. The scheme is government-run, but the rules below are the English ones: Scotland, Wales and Northern Ireland have their own.

What exactly do you buy under shared ownership?

A share of between 10% and 75% of the home's full market value. In practice the share on offer is usually between 25% and 75%; 10% is available only on some homes.

On the share the landlord keeps, you pay rent. On top of that you usually pay monthly ground rent and a service charge — towards the maintenance of communal areas, for example. Every shared ownership home, house or flat, is a leasehold property.

You can buy a new-build, an existing home through a shared ownership resale scheme, or a home that meets specific needs if you have a long-term disability — a ground floor flat, say. The sellers are housing associations, local councils and other organisations; the paperwork calls them providers, or simply the landlord.

Who can apply?

Your household income must be £80,000 a year or less, or £90,000 a year or less in London. A second condition applies at the same time: you cannot afford all of the deposit and mortgage payments for a home that meets your needs.

Beyond that, one of five things must be true. You are a first-time buyer; you used to own a home but cannot afford to buy one now; you are forming a new household, for example after a relationship breakdown; you are an existing shared owner who wants to move; or you own a home and want to move but cannot afford a new one that meets your needs. Some homes carry an extra local-connection test: you must live in, work in, or have a connection to the area.

Owning a home comes with its own condition. By the time you buy the share you must have formally accepted an offer on your current home — the status known as sold subject to contract — and written confirmation of the sale agreed, the memorandum of sale, stating the price and your intention to sell. The sale itself must complete on or before the day your shared ownership purchase completes.

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Are there special rules for older and disabled buyers?

Yes, two separate schemes. From age 55 at the time of buying, Older Persons Shared Ownership lets you buy up to a 75% share — and once you own that 75%, you pay no rent on the rest at all.

The second is HOLD, home ownership for people with a long-term disability. It applies where the ordinary scheme properties do not meet your needs, for instance when you need a ground floor home.

Priority is set out separately: where several households make an offer on the same home at the same time, a serving member of the armed forces is prioritised. Those who previously served may be prioritised too, depending on what their role was.

What does it cost to get in?

The first payment is a reservation fee of up to £500 to the landlord. It takes the home off the market for others for a fixed period and is deducted from the final amount on completion day. If the purchase falls through, though, you usually do not get it back — worth checking before you reserve.

The deposit is usually between 5% and 10% of the share you are buying, paid when you exchange contracts. Then come solicitors' fees, the monthly mortgage repayments, rent to the landlord and monthly charges such as the service charge. Stamp duty may apply as well. Before you reserve, the landlord must give you a key information document — that is the paper the costs are checked against.

Once you own the home, buildings insurance is added, and on some properties an estate charge for communal areas the service charge does not cover, such as roads, a management fee for the landlord's administration costs, and payments into a repairs reserve fund, also called a sinking fund, which pays for major works like replacing the roof. Money paid into such a fund is not usually returned, even if you move.

Can you increase your share later?

Yes — it is called staircasing. You buy further shares, and each purchase cuts the rent, because the rent is based on the landlord's share.

Check the length of the lease before you buy. If too little of the term remains, the home becomes hard to sell or remortgage and its value is affected. You cannot extend the lease without the landlord's permission, so find out their rules for shared owners and the price of an extension in advance.