Interest in shared ownership schemes is experiencing a significant surge across the UK as aspiring homeowners seek creative ways to get onto the property ladder.
According to property experts, approximately 250,000 people are currently using the Government-backed scheme, with numbers expected to continue rising throughout 2025.
What exactly is shared ownership?
Sam Fox, a leading mortgage expert from the UK Mortgage Centre, explains that shared ownership represents a government initiative designed to assist those who find buying a home outright financially challenging.
"The basic concept involves purchasing a share of a property rather than the entire home," Fox states. "Buyers can acquire between 10% and 75% of the market value while paying rent on the remaining portion, which is typically owned by a housing association."
The scheme's primary advantage lies in requiring a smaller deposit and mortgage than traditional purchases, making it particularly appealing to first-time buyers and those with limited savings.
The hidden costs you need to consider
While the lower initial investment makes shared ownership attractive, Fox emphasises the importance of understanding the complete financial picture.
Your total monthly commitment should include rent on the unsold share, service charges, repair costs, and insurance premiums - expenses that many first-time buyers overlook when calculating affordability.
Fox advises prospective buyers to carefully select their share size, warning against paying high rent for a small share or overstretching finances with too large a purchase.
Essential considerations before committing
Location remains crucial in shared ownership decisions. Fox recommends choosing areas with viable resale potential and long-term livability.
Prospective buyers should thoroughly investigate build quality, service charges, communal maintenance standards, and the management reputation of the landlord.
It's also vital to understand that shared ownership isn't always cheaper than a standard mortgage when combining rent, service charges, and mortgage repayments.
Fox highlights several potential drawbacks including eligibility restrictions, complexity around buying additional shares or selling, limited property selection, and potential rent increases.
"Crucially, seek specialist advice," he urges. "A professional experienced in shared ownership can help navigate mortgages, legalities, stair-casing, and resale processes."
Key advantages of shared ownership
- Lower deposit required compared to full property purchases
- Potential to access more expensive properties than otherwise possible
- Equity growth on owned share proportionally to property value increases
- Effective stepping stone onto the housing ladder for first-time buyers
Potential disadvantages to consider
- Monthly costs might exceed traditional mortgage payments for equivalent shares
- Income ceilings and eligibility restrictions limit accessibility
- Complex processes for buying further shares or selling the property
- Limited to specific property schemes rather than full market selection
- Rent and service charges can increase over time
- Less control over structural changes requiring landlord permission
As shared ownership continues gaining popularity among UK house hunters, understanding both the benefits and hidden costs becomes increasingly important for making informed property decisions.
