Buying a home through a shared ownership scheme can make property ownership more accessible, but it also comes with its own costs. Recent changes to shared ownership properties in England and Northern Ireland, including updated stamp duty thresholds, have slightly shifted what buyers can expect to pay both upfront and over time.
Understanding how deposits, mortgages, rent and fees fit together is important before you commit. This article explores what to expect when buying shared ownership houses, from the first reservation fee to subsequent staircasing costs.
Initial Buying Costs
1. Deposit
When buying shared ownership properties with a mortgage, you will only need a deposit only against the value of the ownership share you are purchasing and mortgaging, not against the full market value of the home.
- Typical deposit amount: Between 5% and 10% of the value of the share you are buying. For example, if a property is worth £300,000 and you buy a 25% share, i.e. worth £75,000, a 10% deposit would be £7,500.
- Flexibility: The lower deposit requirement remains one of the biggest advantages of shared ownership, allowing first-time buyers to get on the property ladder sooner.
- Proof of funds: Lenders and housing associations will require evidence of your deposit, which, for example, might come from your savings, Lifetime ISA or family contribution.
2. Shared ownership mortgage
You will only need a shared ownership mortgage for your portion of the property. The mortgage is secured on your share and works in a similar way to a standard home loan:
- Affordability: Lenders assess your income, expenses and credit history to ensure you can afford both the mortgage and rent.
- Rates: While interest rates for shared ownership houses are generally competitive, the range can be slightly narrower than for standard mortgages.
- Repayment terms: Most mortgages run for 25 - 35 years and you can switch products or lenders later if better rates become available.
3. Stamp Duty Land Tax (SDLT)
As of 1 April 2025, new stamp duty thresholds came into effect for first-time buyers purchasing shared ownership properties in England and Northern Ireland:
- 0% stamp duty on your share of the first £300,000.
- 5% on the portion between £300,001 and £500,000.
The above concessionary stamp duty rates for first-time buyers cease to apply (and normal higher rates apply instead) if the value of the property exceeds £500,000.
You pay stamp duty only on the share you purchase, not the full property value.
4. Reservation fee
Before finalising your purchase, most housing associations require a reservation fee to secure your home.
- Amount: Typically, between £250 and £500.
- When: Deducted from your final payment on completion.
- Refunds: Usually non-refundable if you withdraw from the transaction, so ensure your mortgage agreement is in place first so that you can complete.
5. Additional buying fees
Some other upfront costs to plan for include:
Cost Type
Estimated Range
Description
Legal Fees
£1,000-£2,000
Conveyancing, lease checks and liaison with the housing association.
Surveyor’s Fee
£300-£700
Valuation to confirm the property’s worth.
Mortgage Broker Fee
£300-£500
Helps you find the best shared ownership mortgage deals.
Removal Costs
£500-£1,000+
Depends on the location and distance.
Budgeting for around £5,000 in additional expenses is sensible to avoid unexpected shortfalls.
Ongoing Monthly Costs
Once you move into your shared ownership house, your monthly outgoings will include a combination of mortgage payments, rent and service charges.
1. Mortgage payments
Your monthly shared ownership mortgage payment covers only the portion of the home you own. If you purchase a 25% share, for instance, your repayments will reflect just that amount, making it more affordable than a full property loan.
2. Rent on the remaining share
The rent you pay on the share you rent is calculated as a percentage (typically 2.5% to 2.75%) of the housing association’s retained share.
- Rent increases: Rents can increase annually, usually based on inflation plus a small margin (e.g., CPI + 1%).
- Benefit: As you buy more shares through staircasing, your rent decreases proportionally.
3. Service charges
Most shared ownership properties are leasehold, so a service charge applies.
- Covers communal area maintenance, buildings insurance and management fees.
- For flats, this can range from £100 to £300 per month, though some higher-end developments or city-centre locations may charge more.
- Always review the breakdown in your lease to understand what is included and how charges might increase over time.
4. Buildings and contents insurance
While your landlord or housing association usually arranges buildings insurance for the block or development, you should confirm this in writing. You will also need separate contents insurance for personal belongings.
Future and Hidden Costs
Owning shared ownership properties also means planning for longer-term or less obvious costs.
1. Staircasing costs
Staircasing allows you to purchase additional shares in your home, gradually increasing your ownership until you reach the maximum possible 100%.
- Valuation: Each time you staircase, a new property valuation is required.
- Fees: Expect to pay valuation, legal and mortgage arrangement fees each time.
- Stamp Duty: You may owe additional stamp duty depending on how much more you buy and your total ownership share.
- Benefit: The more you own, the lower your rent becomes, and you may gain more equity if property values rise.
2. Lease extension
Most shared ownership houses are leasehold, and if your lease falls below 80 years, you will need to extend it to maintain property value and mortgage eligibility.
- Cost: Lease extensions can be quite expensive, depending on property value and the length of the remaining ease term.
- Timing: Extending earlier (when your lease still has 80+ years left) is usually cheaper.
3. Maintenance and repairs
You will be responsible for repairs inside your property, while the housing association covers communal maintenance (via service charges). As of 2025, buyers of new shared ownership homes may be entitled to a 10-year repair support period under the government’s model lease, reducing maintenance costs in the early years.
4. Selling your share
When you decide to sell, most housing associations have the right of first refusal.
Key Takeaways
- Deposits are lower (5-10%), but buyers must budget for additional fees.
- Monthly costs include mortgage, rent and service charges.
- Expenses such as staircasing fees and lease extensions can add up over time.
- Always seek independent financial and legal advice before committing to shared ownership properties.
With rising house prices and tightening affordability criteria, shared ownership remains a valuable stepping stone for first-time buyers, but understanding the full cost picture ensures that you are properly prepared.
Conclusion
For many first-time buyers, shared ownership properties represent an accessible path to homeownership, with smaller deposit and mortgage requirements, as they staircase their way towards an increasing share of equity ownership. Yet, beneath the affordability appeal lie several layers of cost, including rent for the share not owned, service charges and staircasing costs.
Before applying for shared ownership, review all current and future expenses, from initial purchase fees to potential lease extensions. A clear financial plan, supported by legal and mortgage advice, can make the difference between an affordable investment and an ongoing financial strain. Shared ownership can be a smart move, but it demands full awareness of both short-term affordability and the long-term financial commitment.
FAQs
Q. What is a shared ownership property?
A. Shared ownership properties allow buyers to purchase a share of a home (usually between 25% and 75% initially) while paying subsidised rent on the remainder owned by a housing association and the ability to buy further shares over time.
Q. How much deposit do I need for shared ownership houses?
A. Deposits are typically 5-10% of the share you buy, not the full property value, making entry into property ownership more achievable.
Q. How does a shared ownership mortgage work?
A. A shared ownership mortgage covers only your purchased share. You will make monthly payments to the lender, while also paying rent to the housing association for their share.
Q. Do I have to pay stamp duty on shared ownership?
A. As of April 2025, first-time buyers pay 0% on their share of the first £300,000 and 5% on the portion from £300,001 up to £500,000 in England and Northern Ireland. Properties valued at above £500,000 do not qualify for these concessionary first-time buyer stamp duty rates.
Q. What is staircasing in shared ownership?
A. Staircasing is the process of buying more shares in your home over time. Each purchase increases your equity ownership percentage and reduces the rent you pay.
Q. Are there any hidden costs in shared ownership?
A. Important additional costs to be aware of include lease extensions, service charges, valuation fees and staircasing costs. It is important to budget for these future expenses.
Q. Do shared ownership properties increase in value?
A. They can. As with other homes, property values may rise or fall depending on the housing market.
Q. Can I sell my shared ownership home?
A. Yes, but your housing association usually has first refusal. After a set period, you can market it on the open market.
Q. Who is responsible for repairs?
A. You are responsible for interior maintenance. The housing association covers communal repairs, funded through service charges.
Q. Is shared ownership cheaper than renting?
A. In many cases, yes. Monthly costs for shared ownership houses are often lower than private rent, especially with a small mortgage and modest rent.
Additional sources:
https://www.plumlife.co.uk/blog/what-shared-ownership-costs-should-i-be-aware-of/
https://www.moneysavingexpert.com/mortgages/shared-ownership-scheme/
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