Naz Financial

A Personal Financial Blog from Naz Miller

Is Shared Ownership Worth It, Now 95% Mortgages Are Back?

Shared ownership is a type of affordable housing where you part-purchase a property and pay rent on the balance. The balance is owned by a housing association. It’s mostly, but not exclusively, aimed at first-time buyers who are otherwise unable to buy on the open market.

In this blog post I’ll try to explain succinctly what shared ownership is, how accessible it is and whether it’s as good an option as buying outright, in the light of 95% mortgage availability and other first-time buyer incentives. There are quite a few misunderstandings about this scheme, so I’ll endeavour to explain those as we go

Shared Ownership Explained

With shared ownership you buy a share in a property from a housing association.

You then pay the housing association an ‘affordable rent’ on the part of the property you don’t own. That should be significantly less than an equivalent commercial rent.shared-ownership-worth-it

You can choose what proportion you own of your home between 25% and 75%. Over time you can grow this percentage, through a process called ‘staircasing’. Increments of 5-10% at a time until you own 100% are possible. There’s no pressure to make these increments in ownership, it’s your choice. As you grow your share of the property, your rent reduces, of course and your mortgage increases.

Eligibility for the shared ownership scheme is mainly for first time buyers with a household income under £80,000 per year (£90,000 in London). Even if you have owned property in the past, you could still be eligible for a shared ownership scheme in certain circumstances, for example, if you are recently divorced.

Over 55s can take advantage of the OPSO scheme (older people’s shared ownership scheme). The scheme can also be used by couples wishing to move to a larger property after having children. There are also specific home ownership plans for people with long-term disabilities (HOLD).

More Accessible Than You Might Think

I must point out that shared ownership does not necessarily mean a shared home. You live with who you want. Shared ownership refers only to the financial arrangement.


The most appealing aspect of shared ownership for many is that of affordability. As you’re taking out a mortgage for only part of the property, you need less of a deposit. This has been a major barrier in recent years for ‘Generation

 Rent’. Also, In many cases, the monthly payments for a shared ownership home can be less than renting privately. You need to do your homework to check that this applies to you if you’re considering it.

There are often concerns about complexity, too. The precise legality of being part-owner and part-tenant can best be explained to you by your conveyancing solicitor. In reality, your rights are only different in some ways. For example, you will be a leaseholder. If you want to sell, you may but you will have to give the housing association first option to sell for you. If they can’t sell within a defined period (in your lease), then you can go to market through an agent of your choice.

Also, decorating and home improvements concern some. You’ll be able to decorate and furnish the property as you wish. However, should you wish to make structural alterations, you’ll need the approval of the housing association.

Shared Ownership vs 100% Owned.

There are a lot of Government-backed schemes to help you own your own home. The website has good, clear explanations of these. Some, including Government encouragement to banks to restore 955 mortgages, were covered in my review of Budget 2021.

Frankly, there’s no single answer to which is the best option for you. It really does depend on your circumstances.

It’s undoubtedly true that as 95% mortgages have re-appeared on the market, for some people the economics of shared ownership are less appealing. If you can raise the 5% deposit, then you may find that full ownership is better for you. Especially as interest rates remain low. But others may be in a different position and shared ownership is still the best way of getting onto the property ladder.

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Naz Miller

I'm Naz and I'm a Financial Adviser. Prior to working in private practice, I spent 34 years working at Lloyds Bank in Cambridge and surrounding areas. My work has always focused on helping clients achieve their long-term financial objectives.

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

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