Pros and Cons of Shared Ownership

Apr 09, 2024
Moving House
If you’re struggling to get onto the property ladder, the Shared Ownership scheme could be the way to go. Learn more about what it is, how it works and its pros and cons in our comprehensive guide to ensure you make an informed decision.

What is Shared Ownership?

Shared Ownership is a Government-backed scheme that helps prospective homebuyers purchase a share of the property from a housing association. The scheme applies to new builds, existing properties and flats.

Buying a home with Shared Ownership means a smaller deposit and mortgage because you only own part of it.

How does Shared Ownership work?

When buying your home through the Shared Ownership scheme, you purchase a share between 10% and 75% of the home’s full market value. You’ll need to put down a deposit of at least 5% of your share and take out a mortgage to cover the rest. You’ll also need to pay rent on the part you don’t own.

You can buy more shares through the ‘staircasing’ process until you own 75% of the property. In some cases, you can own 100%, but not all housing associations allow this.

Who is eligible for Shared Ownership?

To be eligible for Shared Ownership, you must:

• Have a household annual income of £80,000 or less (£90,000 or less in London)
• Be unable to afford all of the deposit and mortgage for a home

One of the following must also be true:

• You’re a first-time buyer
• You’re a homeowner but cannot afford to buy another property
• You’re an existing shared owner, and you want to move
• You’re forming a new household

The pros and cons of Shared Ownership

Buying a home through the Shared Ownership scheme comes with pros and cons, including the following:

Pros Cons
You could buy your new home faster because of the smaller deposit and mortgage. Shared Ownership properties are leaseholds, meaning you won’t own the land they’re on.
Shared Ownership is convenient if you’re on a lower income.
You have to pay service charges and potentially ground rent.
You can increase the share as and when you can afford it.
If you want to sell, you may need to do so through the Shared Ownership scheme rather than on the open market.
It’s available on new builds, existing properties and flats.
Buying more shares comes with extra costs. 

How do you sell a Shared Ownership home?

You can sell your Shared Ownership property at any time, but you need to let the housing association know first. They have the right to find a buyer before you advertise the property on the open market. This is known as the ‘nomination period’.

Nomination periods vary depending on the housing association. They can range from four to eight weeks.

If you can’t apply for Shared Ownership, you may be eligible for one of our offers. We have great homebuying schemes to help first and second-time buyers and sellers, from Deposit Boost and Parent Power to Movemaker.

Browse our range of brand-new homes across the UK and call our Sales Advisers to reserve yours today.