The Complete Guide to Shared Ownership Homes for Single People

Everything You Need to Know About Shared Ownership Homes
Most single people today struggle to purchase a home of their own, without the support of another income. That’s one of the reasons why it’s more common for single people to rent their home, rather than purchasing a property with a mortgage.

Property prices are still high in 2024, and finding the cash you need for all the extra expenses connected to home ownership (like deposits and legal costs), can be very difficult. Fortunately, Shared Ownership Homes offer a more affordable way to enter the property market.

Shared Ownership is a government scheme, which gives you the opportunity to buy a portion of a property from a housing association, then pay rent to your landlord for the share they own.

There are different rules to consider for shared ownership homes in:

For now, here’s everything you might need to know about Shared Ownership homes in England.

Understanding Shared Ownership Homes in England

When you purchase a home through the Shared Ownership scheme in England, you buy a share of the property for between 10% and 75% of the home’s total value. You’ll need to pay down a deposit for your home (just like with a typical mortgage), but you only need to find 5% of the cost of your share.

Once you have a share, you’ll pay rent on the portion of the property you don’t own to your new landlord. Over time, you can increase the share you have in the property through a process called “staircasing”, until you own either 75% of the property (for seniors over 55), or 100%.

Notably, there is a legal cost involved every time you purchase additional shares, so it’s worth keeping that in mind, but the more equity you own, the less rent you’ll pay.

In England, you can use the Shared Ownership Home schemes to purchase:

  • A new-build home
  • An existing home
  • A specific property that meets your needs

Who Can Apply for Shared Ownership Homes?

The good news for single people is that most individuals will be able to apply for a shared ownership home. All you need to show is that your household income is less than £80,000 per year (or £90,000 in London), and that you can’t afford the various payments to buy a property yourself.

One of the following things also needs to be true:

  • You own a home but can’t afford to move into a property that meets your needs.
  • You’re existing shared owner and you want to move.
  • You’re forming a new relationship (such as after a relationship breaks down).
  • You used to own a home but can’t afford to buy one in your current situation.
  • You’re a first-time buyer

The Gov.UK website has a handy tool here you can use to check your eligibility. Keep in mind, some housing associations and groups will prioritise offering Shared Ownership Homes to people in the armed forces, or those with disabilities.

How Much Does it Cost to Buy a Shared Home?

The great thing about the Shared Ownership Homes scheme, is it can significantly reduce the cost of buying your own property. But there will still be fees to pay. For instance, when you find a home, you want to buy, you might need to pay a reservation fee (up to £500) to your landlord.

This fee should be taken off the final amount you pay on the transaction completion day. You’ll also need to pay for:

  • A deposit (between 5% and 10% of your share’s value).
  • Your solicitors fees.
  • Monthly charges (like service fees).
  • Monthly mortgage repayments.
  • Rent for your landlord.

You may also be asked to pay stamp duty, and you might have to pay into a reserve fund that covers the cost of major work to your home, like replacing a roof.

The good news is that the rent you’ll pay is capped at 3% of the value of the share your landlord owns, which means you’ll likely pay a lot less than you would for a privately rented property.

Plus, as you buy more shares, you’ll generally pay less rent, because your landlord will own less equity in the property.

How to Apply to Purchase Shared Ownership Homes

Provided you’re eligible to apply for Shared Ownership Homes, the application process is pretty simple. You’ll usually start by finding the home you want to purchase. There’s a helpful guide here where you can search for shared ownership homes available in your area.

Next, you’ll need to:

  • Reserve your home, with a reservation fee given to the landlord.
  • Choose someone to do your legal work (conveyancing).
  • Move into your property and pay your rent and mortgage fees.

Notably, one thing to keep in mind is that with Shared Ownership Homes, you’re responsible to paying for repairs and maintenance (even if you only own a small share).

The good news is you can paint, decorate, and refurbish your shared home however you like. However, if you want to make structural changes you might need permission from your landlord. Some shared home deals also include an “initial repair period”, where your landlord will continue to give you an allowance you can use to make common repairs.

Once you’re in your home, you’ll be able to buy more shares. The current government rules allow you to purchase shares of 10% or more in your home at any time. However, some landlords offer the option to purchase just 1% of your home a year for the first 15 years. Every time you do this, however, you’ll need to pay for a valuation by a surveyor,

Selling or Renting Out a Shared Ownership Home

If you decide you want to move to a new property, and you’re using the Shared Ownership Homes scheme, you will be able to sell at any time, with some caveats. For instance, if you own 100% of the home, you can sell it whenever you like. If you don’t own the full equity, you’ll need to inform your landlord that you want to move.

After you let your landlord know, you want to sell, they’ll have a “nomination period” in which they can find a buyer. Sometimes, they might offer to buy your share back from you. If your landlord doesn’t find a buyer in this time, you can sell your share yourself on the open housing market. Once again, you’ll need to pay for a valuation here.

If you want to “sublet” part of your home, you can usually do this if you’re living in the property full-time. If you want to sublet your entire home, you’ll need to either own all of the property, or get permission from your landlord.

THE PROS & CONS OF SHARED OWNERSHIP HOMES

There are a lot of benefits to Shared Ownership Homes, particularly for single people with limited funds who want to get on the property ladder. However, there are some downsides you’ll need to take into consideration too.

The Pros: 

  • You should be able to purchase a home faster, because of the smaller deposit you’ll need to pay, and the reduced rent/mortgage costs.

  • Most people with a smaller income find Shared Ownership Homes more affordable to purchase and manage than standard homes.

  • You can easily increase your share in the property, as soon as you can afford it, which reduces the rent you’ll pay.

  • There are limits on how much your landlord can charge you for rent.

  • You’ll have plenty of properties to choose from, including both new and existing homes.

The Cons:

  • Shared Ownership Homes aren’t freehold, which means you won’t own the land the property is on (making it harder to build on your home).

  • You’ll have to pay service charges and other fees to maintain your home.

  • When you choose to sell, you might need to do so through the Shared Ownership scheme directly, rather than taking advantage of the open market.

  • Buying more of the property will require you to pay additional legal fees.

     If you need more information on the Shared Ownership scheme, here are some great resources: