Shared ownership has often been hailed as a stepping stone for first-time buyers struggling to get onto the property ladder. On the surface, it sounds like an ideal arrangement — part-buy, part-rent, and potentially a chance to own your home outright one day.
However, while it can be a viable route into homeownership for some, there are important financial and practical considerations that buyers must be aware of before signing on the dotted line. Top Leyton estate agents are increasingly guiding clients through the intricacies of shared ownership, urging prospective buyers to go in with their eyes wide open.
What Is Shared Ownership?
Shared ownership schemes, primarily overseen by housing associations, allow individuals to buy a portion of a property, typically between 25% and 75%, and pay rent on the remaining share. This rent is paid to the housing association or organisation that owns the remainder of the property. In most cases, buyers can ‘staircase’, that is, purchase additional shares over time until they potentially own the property outright.
This setup is aimed at helping those with lower incomes or limited deposits to access homeownership, especially in high-cost areas like London. However, while the model is designed to be affordable, it’s essential to look beyond the initial costs and understand the true financial obligations.
The Upfront Costs:
At first glance, shared ownership seems less costly because the initial deposit is lower. Since you’re only buying a share of the property, you only need a deposit based on that portion. For instance, if a home is valued at £400,000 and you’re buying a 40% share (£160,000), a 10% deposit would be £16,000 — far more manageable than £40,000 for a full purchase.
However, don’t let the smaller deposit lull you into a false sense of financial ease. You’ll still need to budget for:
- Mortgage fees and arrangement costs
- Solicitor or conveyancer fees
- Survey and valuation costs
- Stamp duty (this can sometimes be deferred depending on the share you purchase, but it often catches buyers off guard later)
Monthly Costs Add Up:
Where many shared ownership buyers feel the pinch is in their monthly outgoings. In addition to your mortgage repayments, you’ll need to cover:
- Rent on the remaining share – This is usually set at a discounted rate but still adds a sizeable chunk to your monthly outgoings.
- Service charges and ground rent – These can be significant, especially in newer developments or buildings with shared facilities. Importantly, these charges apply whether you own 25% or 75% of the property.
- Buildings insurance and maintenance – Even if you only own a portion, you’re often responsible for 100% of the maintenance within your home.
Over time, these costs can rival — or even surpass — what you’d pay on a full mortgage, particularly in areas with high service charges.
Restrictions and Limitations:
Unlike a traditional property purchase, shared ownership comes with a host of rules. Subletting is typically prohibited, and you may need permission from the housing association for major alterations or renovations. Even selling your home isn’t straightforward — housing associations often have the right to find a buyer before you can market the property independently. This can make it harder to sell quickly or at a competitive price.
Moreover, the valuation of your home when you decide to staircase (buy a larger share) is based on the current market value, not the original purchase price. So, if the value of the property has increased, you’ll pay more for additional shares, even though you’ve already been paying rent and maintenance costs all along.
Staircasing Sounds Good — But Is It?
In theory, staircasing is the path to full ownership. But in reality, it can be prohibitively expensive. Every time you staircase, you incur costs: valuation fees, legal fees, mortgage arrangement fees, and potential stamp duty.
Some buyers never reach full ownership because the cumulative costs are too high. Even those who do find that it’s taken years of saving and sacrificing to make each additional purchase.
Plus, in some areas, even owning 100% of a shared ownership home doesn’t grant you full control. Some properties remain leasehold indefinitely, with associated ground rents and restrictions remaining in place.
Hidden Pitfalls:
Other, often overlooked, aspects can make shared ownership less appealing over time:
- Negative equity: If the market dips, your share could be worth less than your mortgage, making it difficult to sell or staircase.
- Maintenance burden: Buyers are usually responsible for all interior maintenance, regardless of how much of the property they own, and in leasehold buildings, collective upkeep costs can be eye-watering.
- Limited lending options: Not all mortgage lenders offer shared ownership products, which can restrict your choices and result in higher rates or fees.
- Difficult resale: Finding a buyer for a shared ownership home is not always straightforward, particularly if the housing association insists on pre-approving the next buyer.
Who Does It Work For?
Shared ownership can work well for those:
- With stable incomes but limited savings
- Who plans to stay in the property long term?
- Looking for a foothold in an expensive area, like East London
- Who are fully aware of and comfortable with the associated costs
But it’s less suitable for those who may need to move quickly, are uncertain about their future finances, or expect flexibility in renting, selling or altering their home.
What Do Experts Recommend?
Top estate agents in the UK frequently advise clients to treat shared ownership with the same caution and due diligence as any other major financial commitment. It’s vital to get advice from a solicitor experienced in shared ownership agreements and to fully understand your rights and obligations before proceeding.
Many estate agents also suggest speaking to independent mortgage advisers, who can compare products across the market and help you factor in long-term costs, not just what you can afford now.
Final Thoughts:
Shared ownership might seem like a shortcut to homeownership, but it’s anything but simple. While it can offer an affordable way in, especially in London’s fiercely competitive market, the hidden costs, rigid rules, and long-term commitments can be daunting.
Before diving in, prospective buyers should weigh all options, do the maths thoroughly, and talk to local experts. Whether it’s reviewing lease terms or estimating service charge increases, having an informed view from the start can save you from costly surprises down the line.
Ultimately, shared ownership isn’t a one-size-fits-all solution. But with the right planning — and the right advice — it can still be a stepping stone towards full ownership for those willing to take the time to understand it.
Prime Star 
Alia Shafique 2