A guide to shared ownership for first time buyers

Home » Welcome to Cozee » Resources » buying property » The best schemes for first-time buyers » A guide to shared ownership for first time buyers

A guide on the shared ownership scheme for first time buyers

Buying your first home is an exciting but daunting process. The costs involved can make getting on the property ladder seem impossible, especially in expensive areas.

That’s where shared ownership schemes come in – they provide a way for first-time buyers to purchase a share in a property they might not otherwise be able to afford.

This guide will help you understand how shared ownership works, its benefits, and whether it could be the right path for you.

Understanding shared ownership

Shared ownership is sometimes misunderstood or confused with other homebuying schemes like the Help to Buy ISA. It’s a part-buy, part-rent scheme that splits the cost of purchasing a home between you and a housing association.

Get more information on the help to buy ISA

Under shared ownership, you buy a share of a property’s value, usually between 25-75%. You then pay a subsidised rent on the remaining share owned by the housing association. This rent is usually below market rates.

The big advantage is that you need a much smaller deposit and mortgage than if buying outright. However, you can still end up owning a home.

How shared ownership works

To illustrate the potential savings, imagine a £300,000 house:

Share PurchasedShare CostMinimum Deposit (10%)

So with a 25% share, your deposit could be under £8,000 instead of £25,000+ when buying outright. You pay rent on the remaining share, but can buy further shares over time through “staircasing” until you own 100% of the home.

Don’t want to staircase your way to home ownership?

Get a list of great leasehold deals from Cozee properties so you can own 100% of your home

It is also useful to note that the shared ownership scheme is:

  • Available on new-build and resale properties
  • Eligible to lodgers (leaseholder will be responsible)
  • Properties adapted for disabilities if needed
  • Usually leasehold, so ground rent/service charges apply

Working out if you are eligible for the scheme

To use shared ownership, you need to be a first-time buyer, or have previously owned a home but can no longer afford one outright. There are also financial criteria:

  • Your household income must be £80,000 a year or less (£90,000 in London)
  • You should have a good credit rating
  • You must show you can afford mortgage fees and other costs

If eligible, you’ll go through an application process with a housing association and be prioritised based on your specific circumstances.

A house that is in the UK bought with shared ownership

Shared ownership allows many to get a first step on the property ladder sooner. If buying a first home seems unaffordable, it’s certainly worth considering this part-buy, part-rent option.

What are the benefits of shared ownership?

The shared ownership scheme offers several attractive benefits that can make getting on the property ladder much more achievable for first-time buyers.

Lower deposit requirements

One of the biggest hurdles for first-time buyers is saving a large deposit. Shared ownership drastically reduces the deposit needed upfront compared to purchasing a property outright:

50% Shared Ownership 100% Ownership
Property Value £300,000 £300,000
Share Value £150,000 £300,000
Deposit (5%) £7,500 £15,000
Mortgage Amount £142,500 £285,000
Est. Monthly Payment* £642 £1,285

*Estimated monthly mortgage payment based on 4% interest rate, 25 year term

As this example shows, the required deposit is cut in half when buying a 50% share, making it much easier to get funded.

Reduced monthly costs

Not only is the upfront deposit lower under shared ownership, but the monthly costs are significantly reduced as well. Since you are taking out a smaller mortgage amount, your monthly payments will be far less than if you bought the entire property.

Home ownership over time

Even though you start out owning a share of between 25-75%, the long-term goal of shared ownership is to eventually own the property outright through “staircasing”.

Don’t want to staircase your way to home ownership?

Get a list of great leasehold deals from Cozee properties so you can own 100% of your home

Gradually purchasing more shares when you can afford to do so. This allows you to benefit from the stability of homeownership and potential future price appreciation.


One aspect of shared ownership that sometimes raises concerns is that all properties are leasehold rather than freehold. However, being leasehold on a new-build property can have some advantages:

  • Often amenities and services like grounds keeping are included
  • New properties meet modern specifications and standards
  • Service charges can be cheaper than similar freehold properties

While paying ground rent isn’t ideal, it can be a worthwhile tradeoff to get into an affordable, quality new home through shared ownership when buying outright is not an option.

How to sign up to the shared ownership scheme as a first time buyer

If you’ve decided shared ownership could be the right path for you, the process for securing a property works a bit differently than an outright purchase.

Signing up to the shared ownership scheme

The following steps will guide you through buying a home under the scheme.

Step 1: Explore available properties and housing associations

With shared ownership, you’ll need to find and apply through the housing associations and councils offering properties, rather than starting with mortgage pre-approval. Some of the major housing associations with shared ownership homes include:

Housing Association Website
Clarion Housing www.clarionhg.com
Sovereign Housing www.sovereignliving.org.uk
L&Q lqhomes.com
Hyde Housing www.hydegroup.co.uk

You’ll also want to search for your local council’s shared ownership program, as availability can vary significantly by area.

Step 2: Get prepared financially

Before proceeding with reserving a property, ensure you are financially prepared:

  • Calculate your budget based on your income, debts, and monthly costs
  • Get your credit report in order and clear up any issues
  • Assess your job security to ensure mortgage affordability long-term
  • Reduce any outstanding expenses where possible
  • Save cash for the deposit, fees, and inevitably moving costs

Having your finances organised upfront will make the mortgage application and overall process much smoother.

Step 3: Reserve a property

Once you find a suitable shared ownership property you want to pursue, you will need to pay a reservation fee to formally start the process and take it off the market. This fee can range from a few hundred up to £1,000 depending on the housing association.

At this stage, carefully review all paperwork and be sure you understand the terms before signing.

A house in a shared ownership scheme being bought

For example, know if the reservation fee is refundable, the required deposit percentage, and the timeline for completing the purchase. With shared ownership, the process can vary more between housing associations than a traditional purchase.

Once reserved, the formal mortgage application, survey, and solicitor work will commence before you can finally complete and move into your new shared ownership home.

Step 4: Exchange contracts and complete the sale

After reserving your shared ownership property, the process follows similar steps as a traditional home purchase:

  • Hire a solicitor/conveyancer to oversee the legal side
  • The solicitor will conduct searches on the property title, local authority, and environmental factors
  • They will also raise inquiries with the housing association’s solicitors
  • Review and negotiate the lease terms carefully with your solicitor
  • Finalise your mortgage application and get a mortgage valuation survey conducted
  • Agree on a completion date to exchange contracts and transfer funds

The searches, inquiries, and mortgage process can take 8-12 weeks on average.

Learn more about the house buying process

Be prepared for fees beyond just the deposit, such as solicitor costs, mortgage fees, moving costs, and Stamp Duty if applicable.

Step 5: Move in to your new property

After exchanging contracts, you’ll get the keys and can finally move into your new shared ownership home! This is an exciting milestone, but there may still be some work to do:

  • Decorate and make the property your own
  • Review if any repairs or renovations are needed
  • Decide if you want to purchase any additional shares right away through staircasing
  • Ensure you understand all ground rent and service charge obligations

With shared ownership, your goal will likely be to gradually purchase more shares over time when possible.

Proper budgeting is key to staircase efficiently and reach 100% ownership without getting overextended.

Looking to buy or sell your property? Go with Cozee

  • Trusted estate agent
  • More than 25 years of experience combined
  • We help you focus on your objective (investment, 1st time buy)
Skyscrapers of London