Shared Ownership: how does it work?

It could be said getting together a large enough deposit is arguably the biggest barrier to home ownership - Shared Ownership can help break this down for first time buyers.

With Shared Ownership, you own a share of a property rather than all of it. Because your deposit amount is based only on the share value, rather than the full property value, it means you may need a much smaller deposit to become a homeowner.

So what is Shared Ownership?

Shared Ownership gives you the chance to buy a share of a property – usually between 25% and 75% (you can buy a 10% share on some homes) – and then pay rent on the remaining share. You’d typically be paying your rent to a Housing Association.

Once you become a homeowner, you can then buy more shares when you’re ready. This process is called ‘staircasing’.

Who can use Shared Ownership?

Each UK country runs their own Shared Ownership scheme slightly differently, and this includes who can use the scheme. The scheme is aimed at first time buyers but there is a specific list of requirements. Take a look at the government website for more information.

In England, you can apply if:

• You’re a first time buyer, or you’re someone who used to own a home but can no longer afford one
• You cannot afford all of the deposit and mortgage payments for a home that meets your needs
• Your household income £80,000 a year or less (in London it’s £90,000 or less)

Alternative criteria could also apply if you’re not a first time buyer or someone who used to own a home.

Shared Ownership is available on a range of different properties, however many are new builds. This is great news when it comes to running costs and energy bills – which are typically lower in newer, more energy efficient properties. When it comes to moving home, there’s also the opportunity to apply for another Shared Ownership property, but you can also buy homes outside of the scheme using the equity you have built up.

If you’d like more information, the Own Your Home website is a great place to start.

Why choose Shared Ownership?

• Shared Ownership might be right for you because: You could significantly lower the deposit you’ll need to buy a home because it’s based on the share you’re purchasing and not the full property value.
• You can buy more shares through ‘staircasing’.
• You’ll be paying rent on the unowned share of the property, as well as mortgage payments for the share you do own. But you'll know the amount of rent you're expected to pay when you move in, with any potential increases and how they'll work, detailed in the lease.
• There are lenders out there who specialise in Shared Ownership mortgages, so you can get expert help throughout the homebuying process.

It's worth noting, Shared Ownership might not be for everyone. It's worth doing your research, speaking to people who've used it before and take independent financial advice to determine whether it's right for you.

We’re the Shared Ownership champions

We won the title of Best Shared Ownership Mortgage Lender at the 2023 What Mortgage Awards – making us the only lender to win the award eight years in a row. We're Britain's largest lender in Shared Ownership, and along with our award success, it continues to highlight our focus on supporting first time buyers get onto the property ladder.

If you’re thinking about Shared Ownership and want some more information, browse our Shared Ownership mortgages online, or get in touch.

This is intended as a summary only and does not constitute financial advice given by Leeds Building Society. No reliance should be placed on this guide and you must make your own decisions. We recommend that you seek independent financial advice if you have any questions or queries.