Shared Ownership Explained: How Does It Work?
Quick answer: Shared ownership lets you buy a share of a home, usually between 25% and 75% (10% on some homes), with a mortgage on that share, and pay rent to a housing association or council on the part you do not own. Your household income must be £80,000 or less, or £90,000 or less in London, and you must be unable to afford a suitable home on the open market. You can buy more shares later (“staircasing”), which lowers the rent. All shared ownership homes are leasehold, so you usually pay a service charge as well.
How shared ownership works
- You buy a share of the home’s full market value, usually 25% to 75%. Some homes let you start at 10%.
- You pay for your share with a deposit (usually 5% to 10% of the share) and a mortgage, or with savings.
- You pay rent to the landlord (a housing association, council or other provider) on the share you do not own.
- You also usually pay a service charge and, on some homes, ground rent.
- You can buy more shares later, which reduces the rent. On most homes you can go all the way to 100%.
Shared ownership homes are mostly new builds from housing associations, but resale homes and homes for specific needs are also offered. The rules here are for England; Scotland, Wales and Northern Ireland run their own schemes.
Who can apply?
| Rule | Detail |
|---|---|
| Household income | £80,000 a year or less (£90,000 or less in London) |
| Affordability | You cannot afford all of the deposit and mortgage payments for a home that meets your needs |
| Your situation (one must apply) | First-time buyer; used to own a home but cannot afford one now; forming a new household; existing shared owner who wants to move; homeowner who cannot afford a suitable home |
| If you already own a home | You must have formally accepted an offer on it |
| Local connection | Some homes require you to live or work in, or have a connection to, the area |
What does shared ownership cost each month? A London example
Take a £400,000 flat in London and a 25% share. Rent on new-model homes is commonly set at 2.75% a year of the value of the share you do not own; your provider’s Key Information Document shows the exact figure. The mortgage uses an illustrative 5% rate over 30 years.
| Item | Amount |
|---|---|
| Your share (25%) | £100,000 |
| Deposit (10% of your share) | £10,000 |
| Mortgage | £90,000 |
| Mortgage payment (5%, 30 years) | £483 a month |
| Rent on the 75% you do not own (2.75% a year) | £688 a month |
| Service charge | Varies by building; ask for the last three years of figures |
| Total before service charge | £1,171 a month |
Compare that with buying outright: a 10% deposit on the whole £400,000 would be £40,000. Shared ownership cuts the deposit a lot, but the rent and service charge mean the monthly cost is not always much lower. Run your own numbers with the mortgage calculator. Stamp duty has special rules for shared ownership: you can pay on each share as you buy it, or choose to pay on the full market value up front. First-time buyer relief can apply; ask your conveyancer which option costs less.
Staircasing: buying more of your home
- You can usually buy shares of 10% or more at any time. Some older leases need 25% steps; some newer ones allow 5%.
- Homes bought on or after 1 April 2021 may let you buy 1% a year for the first 15 years. Unused 1% options cannot be carried forward. There is no admin fee on 1% purchases.
- Each purchase is priced at the current market value, set by a RICS-registered surveyor. If prices have gone up, so has the cost.
- The landlord’s admin fee is usually around £150 to £500, and you pay your own legal fees.
- You must buy within 3 months of the valuation, or the home is revalued.
- In some protected rural areas the maximum is 80%, and for Older Persons Shared Ownership it is 75%.
Pros and cons
| Pros | Cons |
|---|---|
| Much smaller deposit than buying outright | You pay rent, a mortgage and a service charge |
| A route onto the ladder in expensive areas like London | Always leasehold, with the landlord’s rules on subletting and alterations |
| You can buy more over time and reduce the rent | Staircasing gets dearer as prices rise |
| New-model leases include help with some repairs in the first 10 years | Selling can be slower; the landlord usually has a first chance to find a buyer |
Checks before you buy
- Read the Key Information Document: rent, rent review formula, service charge, lease length and staircasing terms.
- Ask how the service charge has changed over the past few years and whether major works are planned.
- Read our guide to leasehold vs freehold and budget for conveyancing fees.
- Use a mortgage broker and a solicitor who know shared ownership; not all lenders offer it.
Frequently asked questions
How does shared ownership work?
You buy a share of a home, usually 25% to 75% (10% on some homes), with a deposit and mortgage on that share, and pay rent to the landlord on the rest. You can buy more shares later, which lowers the rent.
What is the income limit for shared ownership?
Your household income must be £80,000 a year or less, or £90,000 a year or less in London.
Can I buy 100% of a shared ownership home?
On most homes, yes. Some homes in protected rural areas are capped at 80%, and Older Persons Shared Ownership homes are capped at 75%.
Can I staircase in 1% steps?
If you bought on or after 1 April 2021, your lease may let you buy 1% a year for the first 15 years, with no admin fee. Check your Key Information Document.
Is shared ownership leasehold?
Yes. All shared ownership homes, houses and flats, are leasehold, so you usually pay a service charge and must follow the lease rules.
Sources
- GOV.UK: Shared ownership homes
- GOV.UK: Shared ownership, who can apply
- GOV.UK: Buying more shares (staircasing)
Figures checked on 1 November 2026. This article is general information, not legal or financial advice.
