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POSTED 09 March 2016 Mortgages

What is Shared Ownership - What are the Pros and Cons?

If you can’t afford to buy a property outright, then shared ownership properties can potentially be a great solution. In this post, we take a look at how a shared ownership mortgage works as well as the associated pros and cons.

How Does Shared Ownership Work?

Shared ownership properties are usually sold through housing associations. If you can’t afford a property outright, you buy a share of the home and rent the rest. 

You buy a stake somewhere between 25% and 75% depending on how much money you have available and a shared ownership mortgage.

The remainder of the home is owned by the local housing association and the rent you pay can be up to 3% of the association’s share of the property’s value. The government offers a Help to Buy: Shared Ownership scheme for those who may struggle to afford the deposit needed for 100% of the property.

Not all lenders offer shared ownership mortgages, so if you’re looking for one, be prepared to shop around.

Who is Eligible?

You’re eligible for shared ownership properties and shared ownership mortgages if:

  • your combined household income is £80,000 or less (outside London)
  • your combined household income is £90,000 in London 
  • you are a first-time buyer  

Shared ownership properties are a great way of getting into the property market, with shared property mortgages an ideal solution. However, this doesn’t mean that they’re perfect for everyone.

As such, it’s essential that you know the pros and cons of shared ownership properties.

Pros of Shared Ownership

  • A shared ownership scheme allows you to get into the property market much quicker than if you were buying a property outright.
  • Because you’re only renting a portion of the property’s value, it can be far cheaper than renting.
  • You can sell your share of the property at any time. As a result, if the value of the property rises, you make a profit.
  • You can buy additional shares from the local housing association as time passes.

Cons of Shared Ownership

  • Shared ownership properties aren’t available everywhere, so you may have to sacrifice your preferred location.
  • If the value of the property increases, the shares can be harder to buy as their price will also increase.
  • You’ll normally have to pay service charges.
  • They can be difficult to get if you don't meet the criteria


To conclude, shared ownership can be a great option for helping you get on the property ladder.

However, they’re not suitable for everyone, and not everybody is eligible. Consider the above carefully and make a decision that’s right for you.

Image courtesy of iStock.