Frequently asked questions about shared ownership

They can be:

• housing associations (in most cases)
• local councils
• other organisations that received funding from Homes England (a government department) to help build your home

All shared ownership homes (houses and flats) are sold as leasehold. You will need to agree and sign a lease (a contract), which sets out:

• your rights and responsibilities as the leaseholder
• what the landlord is responsible for
• any restrictions or obligations on both parties

You can sell your shared ownership home at any time.

If you have less than a 100% share, you must inform your landlord when you intend to sell your share. The landlord has ‘first option to buy’. This means the landlord has a period of time (set out in your lease) to find a buyer.

If the landlord does not find a buyer within the specified period, you can sell your share yourself on the open market. For example, through an estate agent.

If you have a 100% share, you’re free to sell the home yourself on the open market.

If your home’s market value has increased, then you’ll benefit in proportion to the amount of your equity. However, if the market value of your home has decreased then you may receive less money than you have paid in.

Your landlord’s sales team will advise you how the process works when you’re at the point of selling your share.

You can buy more shares in your home. This is known as ‘staircasing’.

When you buy more shares in your home, you’ll pay less rent in proportion to the landlord’s remaining share.

The rules on share amounts you can buy in a single purchase are different depending on whether the home was funded by the shared ownership programme 2016 to 2021 or the new programme for 2021 to 2026. When you find a property for sale that you like, check the key information document to see what share amounts you’ll have the option to buy.

For homes funded by the shared ownership programme 2016 to 2021, you can buy shares of 5% or more at any time.

For homes funded by the shared ownership programme 2021 to 2026, you:

• can buy shares of 5% or more at any time
• can buy a 1% share each year for the first 15 years
• cannot buy shares of 2%, 3% or 4%
  
  

For homes funded by earlier affordable homes programmes you can buy shares from:

• 10% or more
• 25% or more

The provider selling the home will tell you which applies.

You’ll need to contact your landlord. Your lease will set out the process to follow.

If you want to buy a share of 5% or more, you’ll need to know your home’s market value. You’ll need to pay for the landlord to arrange a valuation by a surveyor who is registered with the Royal Institution of Chartered Surveyors (RICS). You can find a registered surveyor on the RICS website.

The landlord may charge an administration fee each time you buy a share of 5% or more. The fee is stated in the ’Summary of costs’ document given to you before you buy the home.

Where you require legal advice when buying more shares, you are responsible for paying your own legal fees. Your mortgage lender will require you to instruct a legal adviser if you are borrowing money to fund any purchase of additional shares. The landlord is responsible for paying their own legal fees related to share purchase transactions.

All shared ownership homes (houses and flats) are sold as leasehold. This is because the landlord has an interest in the remaining share.

If you reach 100% ownership, where possible, for most houses the freehold will transfer to you, and the shared ownership lease falls away. For most flats, the lease will remain in place but the shared ownership obligations will fall away.

The provider selling the home will tell you how this works.

Your purchase costs will include:

• a reservation fee of up to £500 to the provider
• a home valuation
• your deposit
• any mortgage fees
• your solicitors’ fees
• stamp duty (where applicable)

When you register interest in a home, the provider will give you a ‘Summary of costs’ document. This sets out the purchase costs, the monthly payments, and any future costs if you choose to buy more shares or sell the home.

You’ll need to make monthly payments to the landlord for:

• rent
• service charge (where applicable)
• estate charge (where applicable)
• buildings insurance
• reserve fund (also known as ‘sinking fund’) payment (where applicable)
• management fee (where applicable)

You’ll need to budget for your other monthly costs, which may include:

• mortgage repayment
• contents insurance
• Council Tax
• gas and electricity
• water

Service charges typically cover the cost of maintaining communal areas in the building, communal gardens and cleaning the external windows of a block of flats.

When you register interest in a home, the provider will give you a ‘Summary of costs’ document. This sets out the service charge and what it covers.

There is more information on the GOV.UK website about service charges and other expenses.

As the leaseholder, you are responsible for keeping the home in good condition. You are responsible for the cost of repairs and maintenance of the home.

For new-build homes, the building warranty will cover the cost of structural repairs in the first 10 or 12 years. If you buy a home through a shared ownership resale, any remaining period on the building warranty will transfer to you.

Any work required that is covered by a warranty or guarantee must be claimed through the policy by the policyholder. The building owner (typically the landlord) is responsible for carrying out structural repairs.

Your responsibilities and the landlord’s obligations will be set out in the lease. These will be explained to you during the application process.

In the new model for shared ownership, there is a 10 year repairs allowance period. In this period, you’ll be able to claim costs up to £500 a year from your landlord to help with essential repairs. A limited number of these homes will be available in 2021. More will become available from 2022 onwards.

You can paint, decorate and refurbish the home as you wish, like any other homeowner. For new-build homes, it’s better to not decorate for the first year though. This gives building materials like timber and plaster time to dry out and settle.

The landlord is not responsible for carrying out refurbishment or decorations. For example, replacing kitchens or bathrooms.

If you want to make any structural changes to your home, you’ll need to check with your landlord first to see if you need permission. You’ll need to check with your landlord what counts as a home improvement and get permission before you carry out these works.
You can benefit from increases in market value that these bring to your home.

Your responsibilities and the landlord’s obligations will be set out in the lease. These will be explained to you during the application process.

A limited number of homes will be available for sale under the new model for shared ownership in 2021. More will become available from 2022 onwards.

In the new model:

• the minimum initial share purchase is reduced from 25% to 10%
• there is a 10 year repairs allowance period - in this period, you’ll be able to claim costs up to £500 a year from your landlord to help with essential repairs
• you’ll have the option to buy a 1% share each year for the first 15 years to help you increase your share with smaller instalments, with heavily reduced fees
• you’ll be able to take control of the resale process quicker if your landlord is unable to find a buyer

You can use a financial adviser or mortgage adviser to help you understand what home you could afford. You can find them on the Financial Services Register.

When you have found a home that you want to buy, the provider will refer to you a mortgage adviser. There is no cost and you do not have to take out a mortgage through them.

The mortgage adviser will:

• assess your income and outgoings to make sure you can afford the payments for your home purchase
• let you know the share you can afford
• check with lenders what they would be willing to lend based on your circumstances
• recommend to the provider what share purchase price they should offer to you

To buy a home, you must instruct a conveyancer to act on your behalf. They will:

• handle the legal aspects of buying the home
• explain the terms of the shared ownership lease to you
• communicate with the provider’s conveyancer on your behalf

Conveyancers’ fees can vary. They will provide a quote setting out what the fees cover and the exact cost for your purchase.

We recommend choosing a conveyancer who is familiar with the shared ownership scheme.

To help you, the landlord may have a list of conveyancers they have worked with and consider reputable. However, you do not have to use them. You can find an alternative qualified conveyancer near you on The Law Society’s website.

Rent to Buy properties are new-build or re-let homes that are available to rent initially. The rent you pay is normally 20% less than the market rent for similar homes in the area.

The discounted rent aims to help you save for a deposit. You can then buy the home outright if you can afford to.

Alternatively, you may be able to apply to buy the home through shared ownership, as long as you meet the eligibility criteria for shared ownership.

It may be possible to stay in the home as a tenant if you cannot afford to buy it at the end of your tenancy, either outright or through shared ownership. Your landlord will discuss the options available to you after this time.

To be eligible for Rent to Buy, one of the following must be true:

• you’re a working household intending to buy your own home at the start of the letting period
• you’re a first-time buyer
• you’re returning to the market following a relationship breakdown

You can find homes available through Rent to Buy on our property search.
If you’re interested in a Rent to Buy home, you’ll need to contact the landlord directly.