sharedownership

Shared ownership is a form of housing tenure in which a buyer purchases a share of a property and pays rent on the remaining share, which is owned by a housing association or other registered provider. Purchasers typically buy a stake between 25% and 75% of the property's value and pay a mortgage on that share. The provider retains the rest, and the property is usually leasehold.

The buyer signs a lease with the provider and agrees to pay rent on the unowned portion. The lease sets terms such as length, usually 99 or 125 years. Over time, the owner can increase their stake through a process called staircasing, often in increments of 10% or 5%, until they own 100%.

Eligibility and suitability: Shared ownership is aimed at people who cannot afford to buy a home outright, including first-time buyers, key workers, or those with modest incomes. Properties are typically new builds or re-sales through a housing association. There are income and residency requirements and mortgage availability varies.

Costs: Upfront costs commonly include a deposit, legal fees, and stamp duty where applicable. Ongoing costs include mortgage payments on the purchased share, rent on the unowned portion, service charges, maintenance, and insurance. Rent and service charges can rise with property values or at set intervals.

Advantages and limitations: Shared ownership lowers upfront costs and provides a pathway to full ownership, with predictable monthly costs in early years. Limitations include rent on the unsold share, resale restrictions, and potential long-term costs if the property value rises.

Context: The model is most common in the United Kingdom, administered by housing associations and Homes England, with variations in other countries.