Shared ownership is a government-backed scheme that lets you buy a share of a home, usually between 10% and 75%, and pay subsidised rent on the rest to a housing association. Because your deposit is based on the share you’re buying rather than the full property price, it’s often cheaper and more achievable than a standard purchase. All shared ownership homes are leasehold, and you can buy more of your home over time through a process called staircasing.
Buying a property is equal parts exciting and overwhelming, and shared ownership comes with its own set of terms you won’t hear anywhere else. Whether you’re just starting your property research or you’re mid-way through a purchase, this glossary is your go-to guide.
Basics of shared ownership
A government-backed scheme that lets you buy a share of a home, anywhere between 10% and 75% of its full market value, and pay a subsidised rent to a housing association on the share you don’t yet own.
Who is eligible for shared ownership?
To qualify for shared ownership, you must:
- Be at least 18 years old
- Have a household income of no more than £80,000 per year (£90,000 in London)
- Not currently own another property.
What is a housing association?
The not-for-profit organisation that owns the share of the property you haven’t purchased yet. They’re your landlord for the portion you rent, and they’re involved at several key stages of your conveyancing: issuing your lease, approving your application, and managing the nomination period if you later sell.
What is the difference between a leasehold and freehold in shared ownership?
| Leasehold | Freehold | |
|---|---|---|
| What you own | The property for a fixed period | The property and the land outright |
| Typical term | 99 to 125 years (some newer leases run to 999 years) | Indefinite |
| Applies to shared ownership? | Yes. All shared ownership homes start as leasehold | Only possible after staircasing to 100% on a house (not a flat) |
| Watch out for | Short leases can affect mortgages and resale value | Separate purchase cost after final staircasing |
All shared ownership properties are sold on a leasehold basis. Checking the lease length before buying is important, as shorter leases can affect your ability to get a mortgage and reduce the property’s resale value.
Buying your share: deposits, shares and affordability
What is an initial share?
The percentage of the property you purchase at the outset, anywhere between 10% and 75%. Most buyers start between 25% and 50%, depending on their finances and the housing association’s requirements. Your deposit is calculated as a percentage of your share value, not the full property price.
How much deposit is needed for shared ownership?
Typically 5% to 10% of the value of your share, not the full property price. For example:
| Full purchase | 40% shared ownership | |
|---|---|---|
| Property value | £300,000 | £300,000 |
| Amount you’re buying | £300,000 | £120,000 |
| 5% deposit needed | £15,000 | £6,000 |
What is an affordability assessment?
Before approving your application, the housing association will usually require you to complete an affordability assessment. This is a check carried out by a nominated adviser to confirm that your total monthly costs (mortgage, rent and service charge combined) are manageable based on your income and outgoings.
What is the nomination period?
When a shared ownership property is sold by the housing association or by an existing owner, the housing association typically has a fixed period (often 8 weeks) during which they have first right to find a buyer themselves before the property is marketed more widely. Understanding this helps set realistic expectations on timing, both when buying and when selling.
The legal process in shared ownership
The legal process of transferring ownership of a property. Shared ownership conveyancing involves an extra layer of complexity because your solicitor works with both you and the housing association throughout: reviewing the lease, obtaining approvals, and managing their legal team.
What searches are carried out when buying a shared ownership home?
Your solicitor carries out searches shortly after instruction. The three main types are:
- Local authority search: reveals planning history and land charges
- Environmental search: flags flood risk and ground contamination
- Drainage search: confirms how the property connects to public sewers and water search and more
Your solicitor will advise which are necessary for your specific property.
What is a report on title?
A document your solicitor produces once they’ve reviewed the lease and all relevant legal paperwork. It summarises the key terms: your rent, service charge obligations, staircasing rights, and any restrictions on the property. This is presented in plain English, so you fully understand what you’re buying before you sign anything.
What happens at exchange of contracts?
The point at which the sale becomes legally binding. Both buyer and housing association (or seller) sign contracts, which are then formally exchanged between solicitors. Your deposit is paid at this stage. Neither party can pull out after exchange without significant financial penalty.
What happens on completion day?
The day the remaining funds are transferred and you receive your keys. For new build shared ownership, completion is often tied to the construction schedule. For resales, it typically follows exchange by one to four weeks. After completion, your solicitor registers your ownership at the Land Registry (your deeds / title register).
Owning your home and building equity
What is a service charge?
A regular payment (usually monthly or annual) to the housing association or management company covering the upkeep of communal areas, buildings insurance, and maintenance of shared facilities. Service charges vary considerably between properties so ask for the most recent confirmed figure before committing, as it directly affects your total monthly outgoings.
Do I pay ground rent on a shared ownership property?
On new leases, no. Following the Leasehold Reform (Ground Rent) Act 2022, ground rent on new leases is set at zero (known as a “peppercorn” rent). If you’re buying a resale on an older lease, check whether ground rent applies and on what terms, because some older leases included escalating clauses that can cause issues with mortgage lenders.
What is staircasing?
Staircasing is the process of buying additional shares in your property over time, increasing the percentage you own. Each time you staircase, a RICS valuer assesses the current market value and you buy the new share at that price. Know whether the cost of staircasing is worth it according to your needs.
| 2021 model lease | Older model lease | |
|---|---|---|
| Minimum staircasing increment | 1% per year | Usually 10% |
| Designed | Building equity gradually without a lump sum | Larger, less frequent purchases |
What is final staircasing?
Purchasing the last share needed to reach 100% ownership. At this point, rent payments to the housing association stop entirely. For houses, you may also be able to buy the freehold at this stage.
What is a memorandum of staircasing?
A memorandum of staircasing is the legal document that records each staircasing transaction and is registered at the Land Registry. Your solicitor prepares this every time you purchase an additional share.
What is a RICS valuation and how much does it cost?
A RICS valuation is carried out by a surveyor registered with the Royal Institution of Chartered Surveyors, and is required before each staircasing transaction to establish current market value. It’s usually valid for three months and typically costs between £300 and £500, paid by you.
Selling your shared ownership home
What is a shared ownership resale?
A resale is a shared ownership property sold by its current owner rather than by a housing association as a new build. Buying a resale means taking on the existing lease and share percentage. For sellers, the process involves notifying the housing association, commissioning a RICS valuation, and working through the nomination period before the property can be marketed more widely.
Who is the vendor?
The vendor is the seller of the property: either the housing association (in a new build) or the existing shared owner (in a resale).
Frequently asked questions
Most allow it, but some leases (particularly in rural or protected areas) cap the maximum share. Your report on title will confirm your staircasing rights before you buy.
Often, yes. Combined mortgage, rent and service charge payments are frequently lower than open-market rent for an equivalent home, and you’re building equity. Your affordability assessment will confirm the exact figures for your situation.
Typically 8 to 12 weeks for a resale, though new builds depend on the construction schedule. The extra housing association approvals mean it usually takes slightly longer than a standard purchase.
If any of these terms have raised questions about your own situation, our shared ownership team at PLS is here to help. We handle shared ownership transactions every day and are well-versed in working with housing associations across the country.
Get a quote today or contact us for a no-obligation conversation about your next steps.
