The pros and cons of shared ownership when buying a home
Shared ownership has been part of the UK housing market since the 1980s, offering people the chance to buy a portion of a property while paying rent on the rest. It was designed to help those who might otherwise struggle to get a foot on the property ladder, particularly first-time buyers.
Under the scheme in England, buyers typically purchase a share of between 25% and 75% of the home’s value. The rest is owned by a housing association or another registered landlord. Similar schemes operate in Scotland, Wales and Northern Ireland, although the details differ slightly between nations.
Buyers need only a deposit for their share rather than the whole property, making it far more accessible for those on modest incomes or with limited savings. They take out a mortgage for that proportion, while paying a subsidised rent on the remainder.
Over time, it is possible to increase the share you own in stages, a process known as “staircasing”. Each additional share is bought at the market value at the time of purchase, and as the ownership share rises, the rent payable falls. In principle, this can continue until the occupier owns the home outright.
The advantages
One of the biggest attractions is affordability. House prices in much of the UK have risen faster than wages for decades, leaving many unable to raise a large enough deposit. With shared ownership, the deposit required might be just 5% or 10% of a quarter share rather than the full market price, significantly lowering the barrier to entry.
Monthly costs can also compare favourably to renting privately. Because buyers are paying a mortgage on only part of the property and subsidised rent on the rest, the combined monthly outgoings can be lower than a standard rent for a similar property in the same area.
The security of tenure is another advantage. Unlike private renting, shared ownership provides an assured tenancy or leasehold arrangement, offering greater stability and protection from sudden eviction.
Staircasing is also a key benefit. It gives buyers flexibility to increase their share when their financial position improves. This can make ownership feel more achievable over the long term, even if buying outright from the start would have been impossible.
Shared ownership properties are usually new builds, which means they come with modern standards of energy efficiency and fewer immediate repair concerns. For many, this represents a chance to live in a home that would otherwise have been out of reach.
The disadvantages
Despite these benefits, shared ownership has drawn criticism and is not without pitfalls.
One concern is cost. While the initial outlay is lower, shared owners still face two separate sets of payments: the mortgage and the rent. Service charges and ground rent may also apply, particularly in flats. Over time, these combined costs can be similar to or even higher than a standard mortgage on a smaller property.
Another issue is staircasing itself. Although the principle is appealing, each purchase of an additional share is based on the property’s market value at the time. If prices rise sharply, increasing ownership can become prohibitively expensive. In some cases, shared owners remain long-term partial owners because they cannot afford to buy further shares.
Selling a shared ownership home can also be more complicated than selling on the open market. Housing associations typically have the right of first refusal to find a buyer, and sales may take longer to complete. The pool of potential purchasers is smaller, restricted to those who also meet the scheme’s eligibility rules.
Leasehold restrictions can create further frustrations. Some owners have reported difficulties in making alterations or subletting, and leasehold terms may include clauses that add costs or limit flexibility.
There is also the question of repairs and maintenance. Even if the buyer owns only a portion of the property, they are usually responsible for 100% of the repair costs. For flats, service charges can increase substantially over time, particularly where building safety works are required.
Eligibility and availability
Not everyone qualifies for shared ownership. The schemes generally set income caps – £80,000 a year outside London and £90,000 in London – and buyers usually need to show they cannot afford to purchase a suitable property outright on the open market.
Priority is often given to first-time buyers, but the schemes can also be open to those who previously owned a home but can no longer afford one, or existing shared owners looking to move. Local connection rules sometimes apply, with priority for applicants who already live or work in the area.
Availability varies widely by region. In some parts of the country, especially rural areas, the number of shared ownership properties is limited. In cities, particularly London, there are more opportunities but also greater demand.
A mixed picture
For some households, shared ownership provides a valuable stepping stone into long-term housing security. It enables people to put down roots, enjoy greater stability than private renting, and gradually work towards full ownership.
For others, however, the reality can be less attractive. Rising costs, restrictions on resale, and the practical challenges of staircasing can limit the benefits. Some owners find themselves caught between renting and ownership, with the disadvantages of both.
As housing affordability continues to be a pressing issue, shared ownership is likely to remain part of the policy toolkit. But it’s important to consider all aspects. Prospective buyers are advised to check the full details of leases, charges and eligibility criteria, and to seek independent financial advice before committing.
Please contact us if you would like advice about the legal aspects of buying or selling a home.