Shared ownership: buying a share of a home — how it works and the catches

A full mortgage in the UK needs a large deposit that many cannot raise. Shared ownership is a government scheme that lets you step onto the housing ladder with less money: you buy part of a home, not the whole of it. Here is how it works and where the risks are.

How it works

You buy a share of a home — usually 25% to 75% of its market value (some homes offer a share from 10%). You take a mortgage and put down a deposit on that share. On the remaining part, owned by a housing association or developer, you pay them rent. So each month you have two payments: a mortgage on your share and rent on theirs.

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The deposit is on the share, not the whole home

The main advantage: the deposit is usually 5-10% not of the full price but only of the share you buy. That is a much smaller sum than a normal purchase — which is how the scheme helps you in.

Staircasing — buying more shares

Later you can buy more shares (called staircasing). The larger your share, the lower the rent, because rent is based on the share the association still owns. In many cases you can reach 100% and become the full owner.

Who can apply

Your household income must be no more than £80,000 a year (£90,000 in London). And one of these must apply: you are a first-time buyer; you used to own but cannot afford to buy now; you are forming a new household (for example after a relationship breakdown); or you are an existing shared owner who wants to move.

The catches

First: all shared-ownership homes are leasehold. So on top of the mortgage and rent you pay ground rent and service charges for the upkeep of the building, and these can rise.

Second: you have two housing payments at once — mortgage and rent. Third: selling a share can take longer than a normal home — the association often has a period in which it can find a buyer first. Fourth: under many modern leases the resident is responsible for repairs to the whole home, even the share they do not yet own. All of this is set out in the lease — read it before you buy.

In short

Shared ownership is a real ladder onto the market for those who cannot manage a full purchase: you buy a share (usually 25-75%), pay a mortgage on it and rent on the rest, and the deposit is only on the share. Income must be under £80,000 (£90,000 in London). Remember it is leasehold with ground rent and service charges, two payments at once and possible difficulty selling. The terms are in the lease.