Shared Ownership – A Comprehensive Guide for First-Time Buyers

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Although recent trends show property prices are falling slowly across the UK, the dream of homeownership remains elusive for many first-time buyers. Shared ownership properties offer a solution to this challenge, providing a more attainable pathway to owning a home without bearing the full financial burden.

Shared ownership schemes allow first-time buyers and those who cannot afford to purchase a property outright to buy a share in a home, typically between 25% and 75%. The buyer then pays rent on the remaining share owned by the housing association. This offers a more affordable entry into the housing market, but it also comes with its unique set of challenges.In this article, we will explore five key aspects to consider before buying a shared ownership property, including eligibility criteria, financial implications, location and property type, lease terms, and staircasing options. By understanding these factors, you can make an informed decision about whether shared ownership is the right choice for you and move closer to achieving your dream of homeownership.

The 5 Key Aspects to Consider Before Buying

The Eligibility Criteria

As you start on your shared ownership journey, it’s essential to first establish that you meet the eligibility requirements defined by the government and housing associations. To qualify for shared ownership, you must satisfy both of the following conditions –

  • Your annual household income does not exceed £80,000 (£90,000 or less in London)
  • You lack the financial means to cover the entire deposit and mortgage payments for a suitable home

Furthermore, you must meet at least one of the following criteria –

  • You are a first-time buyer
  • You once owned a home but are now unable to afford one
  • You are establishing a new household, which may have resulted from a relationship breakdown
  • You are a current shared owner seeking to relocate
  • You own a home but are unable to afford a new one that fulfils your requirements

Bear in mind that certain shared ownership properties may necessitate proof of a connection to the local area. This connection can be established through residency, employment, or other ties to the community.

To minimize the risk of rejection for shared ownership, conduct a comprehensive review of the eligibility requirements and prepare all relevant documentation beforehand.

The Financial Implications

When considering shared ownership, it’s essential to understand the financial implications and additional costs that come with this type of property ownership. Apart from your mortgage payments and rent on the remaining share of the property, you will also be responsible for service charges and maintenance costs.

Service Charges

These are fees paid to the housing association or management company for the upkeep of common areas and shared amenities within the development. These charges can cover various expenses, such as cleaning, gardening, and maintenance of communal spaces, as well as the costs of building insurance and management fees.

Maintenance Costs

For example expenses incurred for the repair and upkeep of your property. As a shared owner, you may be responsible for costs such as internal repairs, appliance maintenance, and any improvements you wish to make to your home. It’s crucial to factor these costs into your budget when considering shared ownership.

Create a Budget

Creating a budget is a crucial step in understanding the affordability of shared ownership. Here are some hints and tips to help you create a budget –

  • Make a list of your monthly income sources, including your salary, any freelance or part-time work, benefits, or other financial support.
  • Create a comprehensive list of your monthly expenses, such as rent and potential mortgage payments, utility bills, groceries, transportation, insurance, savings, and any debts or loans.
  • Be sure to include the costs of service charges and maintenance for the shared ownership property in your list of expenses.
  • Subtract your monthly expenses from your monthly income to determine your disposable income. This will give you a clearer idea of how much you can afford to allocate towards shared ownership costs.
  • Don’t forget to set aside an emergency fund for unexpected expenses, such as urgent repairs or changes in your financial situation.

By carefully planning your budget, you can gain a better understanding of whether shared ownership is a feasible option for you and ensure you are financially prepared for the ongoing costs associated with this type of property ownership.

Location and Property Type

Location is a critical factor when purchasing any property, and shared ownership is no exception. With shared ownership, you purchase a percentage of the property (usually between 25% and 75%) and pay rent on the remaining share owned by the housing association. As your financial circumstances change, you may have the option to increase your share, a process known as “staircasing,” which allows you to gradually own more of the property over time.

When selecting a location for a shared ownership property, consider factors like closeness to public transport links, access to local amenities such as shops and schools, and future growth potential. Remember that the share you own affects your potential return on investment, so choose wisely. 

To maximize your investment, research property values and trends in the areas you’re considering. Look for up-and-coming neighbourhoods with strong growth potential.

Why is this important?

The impact of property values on shared ownership is an important consideration. If the property value increases, the value of your share in the property will also increase. This can be beneficial if you decide to sell your share or staircase to a higher percentage of ownership, as you will benefit from the appreciation in value. Conversely, if the property value decreases, the value of your share will also decrease, which could result in a loss if you decide to sell or staircase.

In the case of decreasing property value, it’s essential to carefully evaluate your long-term goals and financial situation before deciding to sell or staircase. It might be more advantageous to wait for the market to recover and property values to rise before making any decisions. By thoroughly researching property values, market trends, and location factors, you can make a more informed decision when choosing a shared ownership property that suits your needs and offers the best potential for return on investment.

Lease Terms and Resale Restrictions

In a shared ownership property, the property is held under a lease agreement between the buyer and the housing association. A lease is a legal document that outlines the terms and conditions of property ownership and the responsibilities of each party. It defines the length of time for which the buyer has the right to occupy and use the property, typically 99 or 125 years for shared ownership properties.

When purchasing a shared ownership property, it’s essential to thoroughly review the lease terms, as they may include specific clauses, such as restrictions on subletting, alterations to the property, or the process for selling your share. Understanding these terms will help you avoid potential issues or disputes in the future.


Staircasing is the process of increasing your share in a shared ownership property by purchasing additional shares from the housing association. This allows you to gradually own a larger percentage of the property, potentially reducing the rent you pay on the remaining share and increasing the equity you hold in the property. In some cases, you may even be able to achieve 100% ownership, effectively converting your property into a traditional freehold or leasehold home.

Here are a few key points to consider when staircasing –

  • Staircasing typically requires a minimum purchase of an additional 5% to 10% share, although this may vary depending on the housing association’s policies.
  • The cost of purchasing additional shares will be based on the current market value of the property, which is determined by an independent valuation.
  • When staircasing, you will need to cover the costs associated with the transaction, such as valuation fees, legal fees, and any mortgage arrangement fees.
  • Staircasing can be a smart financial move if the property value has increased, as you’ll benefit from the appreciation in value on the additional shares you purchase in the future.

Before deciding to staircase, it’s essential to weigh the potential benefits against the costs involved and consider the impact on your overall financial situation. Staircasing may not always be the right choice for everyone, so it’s crucial to thoroughly evaluate your circumstances and consult with a financial advisor if necessary.


Shared ownership properties offer a more attainable route to homeownership for those who may struggle to afford a property outright. By understanding the eligibility criteria, financial implications, location and property type, lease terms, and staircasing options, you can make an informed decision about whether shared ownership is the right choice for you.

As with any property purchase, it’s essential to take a cautious and informed approach when considering shared ownership. To ensure that you fully understand the process and are prepared for the responsibilities and potential risks involved, consult with professionals such as financial advisors, solicitors, and experienced mortgage advisers like The Mortgage Stop. By seeking expert guidance, you can confidently navigate the shared ownership journey and move closer to achieving your dream of homeownership.

Your home may be repossessed if you do not keep up repayments on your mortgage

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