Older Persons Shared Ownership: Costs and affordability

Can I afford a home through the Older Persons Shared Ownership (OPSO) scheme?

Older Persons Shared Ownership (OPSO) offers an accessible route to homeownership for those aged 55 and over who may not have the financial means to buy a home outright. By purchasing a share in a property and paying subsidised rent to a housing association on the remainder, the scheme provides an often more affordable way to enjoy the benefits of homeownership later in life. You can learn more about the eligibility criteria for OPSO here.

What are the costs of buying an Older Persons Shared Ownership property?

When purchasing an OPSO home, there are a number of additional fees to consider alongside the price of the property, both the upfront costs of buying a share and the ongoing monthly expenses you will need to budget for. Be sure to factor the following costs into your calculations to avoid surprise charges cropping up on you.

Upfront costs of buying an OPSO home:

• Deposit: The deposit required for an OPSO property is calculated based on the share being purchased, rather than the full market value of the property. Typically, buyers need to provide a deposit of 5% to 10% of the share value.

For example: If you’re purchasing a 50% share in a property valued at £200,000, your share value would be £100,000. A 5% deposit on this amount would be £5,000.

• Mortgage fees: If you require a mortgage to buy your share, you may incur arrangement fees (a fee paid to the lender for setting up the mortgage deal), valuation fees, and potential broker charges (a fee paid to a mortgage broker for finding and arranging a mortgage on your behalf). Many mortgage advisors offer a free initial consultation to help you understand your borrowing options.
• Solicitor fees: Conveyancing fees will apply when buying an OPSO home, covering legal work such as property searches and contracts. It’s best to check that your chosen solicitor has experience with Shared Ownership purchases as they will be able to best advise you on the specifics of buying an OPSO property making for a smoother process.
• Stamp Duty: Buyers purchasing an OPSO home may benefit from reduced or deferred Stamp Duty Land Tax (SDLT) payments, depending on whether they choose to pay SDLT on their share only or the full market value of the property, and whether they are a first time buyer. We would suggest speaking with your solicitor to determine the options available to you.
• Additional moving costs: Expenses such as removals, furnishing the new home, and utility setup should also be considered. We generally recommend setting aside between £3,000 and £5,000 to cover these additional costs.

Ongoing monthly costs of living in an OPSO home:

Once you get your hands on the keys and move into your OPSO home, there are regular costs you will need to manage – be sure to get clued up on these amounts so you’re fully prepared before going ahead with buying the property. It’s important to make sure you can afford to pay these monthly fees which include:

• Rent payments: Rent is charged on the portion of the property you do not own. Under OPSO, the rent is set at a subsidised rate, typically around 2.75% of the unowned share per year – however, this amount can vary.

For example: If you own 50% of a home worth £200,000, you would pay rent on the remaining 50% (£100,000). At 2.75%, your annual rent would be £2,750, equating to approximately £229.17 per month.

• Service charges: These cover the cost of maintaining communal areas, building insurance, and other shared facilities. Charges can vary depending on the property and location, and they may fluctuate annually.
• Mortgage repayments: If you have taken out a mortgage to purchase your share, monthly mortgage repayments will depend on the size of your loan, the interest rate, and the mortgage term.
• Council tax: OPSO homeowners are responsible for paying council tax, which varies based on the local authority and the property’s valuation band.
• Insurance: While buildings insurance is typically included within the service charge, contents insurance to protect your belongings is recommended and will need to be arranged separately.

Can I buy more shares in an Older Persons Shared Ownership property?

Through a process known as staircasing, you can choose to buy more shares in your home as and when you can afford to. As you buy more shares, your mortgage (if applicable) will increase and your rent will decrease.

If you choose to staircase to the maximum 75% share of an OPSO home, you will continue to pay your mortgage (if applicable) but will usually no longer pay rent on the remaining 25%.

What are the key financial benefits of Older Persons Shared Ownership?

• No rent after 75% ownership: One of the key advantages of the OPSO scheme is that if you purchase a 75% share, you are generally not required to pay rent on the remaining 25%, reducing your monthly outgoings.
• More manageable upfront costs: Compared to buying outright, OPSO allows buyers to secure a home with a smaller deposit and lower upfront costs.
• Flexibility: The ability to purchase a share that suits your financial circumstances and remain in control of your housing costs.

What else should I consider when budgeting for an Older Persons Shared Ownership home?

When planning your budget, you’ll stand yourself in good stead by planning ahead and factoring in both one-time and recurring costs, as well as potential future expenses such as repairs, lease extensions, and increased service charges.

Where should I start my Older Persons Shared Ownership property search? 

If you’re ready to begin your search for an OPSO home that suits your needs, explore our property portal to browse a range of affordable homes and take the next step towards securing your perfect property.

To further your knowledge about the OPSO scheme, eligibility, prioritisation, and available properties so you can feel confident in making the right decisions for you, explore our OPSO hub, including how the scheme works and the eligibility criteria.