Shared ownership lets you buy a percentage of a property — typically 25-75% — and pay rent on the remainder to a housing association. Your mortgage covers only the share you’re buying, which means a smaller deposit and lower monthly mortgage payments than buying outright.

It’s designed to help people onto the property ladder who can’t afford to buy on the open market. We arrange shared ownership mortgages for clients across Birmingham and the West Midlands regularly, and while it’s a great option for many first time buyers, it’s important to understand how it works before committing.

How It Works

You purchase a share of the property — say 40% of a £250,000 home. That means your mortgage is based on £100,000, not £250,000. Your deposit is typically 5-10% of the share you’re buying, so in this case £5,000-£10,000.

On top of your mortgage payments, you pay rent to the housing association on the remaining 60% share. The rent is usually set at around 2.75% of the unsold share per year, so roughly £345 per month in this example.

Total monthly outgoings are your mortgage payment plus rent plus any service charges. It’s usually cheaper than buying outright, but it’s not always cheaper than renting privately — so we always run the numbers properly before recommending it.

Who Qualifies?

Shared ownership has eligibility criteria. You must be a first time buyer (or a previous homeowner who can’t afford to buy now), your household income must be below £80,000 (£90,000 in London), and you must be unable to afford a suitable home on the open market.

You also need to be able to demonstrate that you can afford the combined mortgage, rent, and service charge payments. Lenders apply affordability assessments just as they would for a standard mortgage.

Staircasing — Buying More Later

One of the key features of shared ownership is staircasing — buying additional shares over time, increasing your ownership percentage. You can usually staircase in increments of 10% or more.

Each staircasing step requires a valuation to determine the current market value of the property. You then buy additional shares at the current valuation price — which could be higher or lower than your original purchase.

Eventually you can staircase to 100% ownership, at which point you stop paying rent entirely. However, staircasing up costs money (valuation fees, potential legal fees, possible remortgage costs), so it needs to make financial sense at each step.

What to Watch Out For

Service charges can be significant, especially on apartment blocks. Check what’s included, how much they are, and how much they’ve increased historically.

Rent increases are typically capped at RPI plus a margin (often 0.5-1%). This means your rent will increase over time — budget for this.

Selling a shared ownership property is more complex than a standard sale. The housing association usually has the right to find a buyer before you can sell on the open market, which can affect timing.

Restrictions — some shared ownership leases have restrictions on subletting, alterations, or pets. Read the lease carefully.

Mortgage availability — not all lenders offer shared ownership mortgages. This is where working with a broker helps, because we know exactly which lenders operate in this space and what their specific criteria are.

Is Shared Ownership Right for You?

It depends entirely on your circumstances. For some first time buyers, shared ownership is the most realistic path to property ownership. For others, waiting and saving for a larger deposit on an open market purchase might be better long-term.

We’ll run the numbers both ways and give you an honest comparison. Get in touch to talk through your options.

Your home may be repossessed if you do not keep up repayments on your mortgage.

We charge a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £149 to £499 and this will be discussed and agreed with you at the earliest opportunity.