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Guide

Introducing the new Shared Ownership model

By Share to Buy
Young family eating round the dinner table

How has the Shared Ownership scheme changed?

Back in September 2021, the government announced their new Affordable Homes Programme (AHP) which would see a £12 billion investment into the housing sector, providing up to 180,000 new homes across the country.

As part of the new programme, some changes to the Shared Ownership scheme were introduced in order to help more people get onto the property ladder. These changes included:

  • The minimum initial share being reduced from 25% to 10%.
  • The introduction of a 10 year repair warranty during which the shared owner will receive support from their housing provider/landlord to pay for essential repairs.
  • The introduction of a new 1% gradual staircasing model enabling shared owners to buy more shares in smaller instalments compare to the previous 10%, with heavily reduced fees.
  • Shared owners will be able to take control of the resales process from the landlord at an earlier point, giving them greater influence over the sale of their home.

How does Shared Ownership work?

Shared Ownership is a government-backed scheme which aims to help budding buyers who can’t quite afford to purchase a home on the open market.

The scheme works by offering eligible buyers the chance to buy a percentage share of a leasehold home, rather than the full market value of the property. As the purchaser only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is usually a lot lower when compared to the amount that would be required when purchasing outright.

As and when the owners financial circumstances change, they have the option to increase their share via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%. In this instance, the shared owner will no longer pay any rent, just their mortgage along with any service charges and ground rent.

Which homes will be affected by the new Shared Ownership model?

The new part-buy part-rent model will be implemented on all new build Shared Ownership homes delivered through the Affordable Homes Programme from April 2021, running for five years up to 2026.

Some homes will be available through the new model from 2022. However, the government will continue to fund the current Shared Ownership scheme through the AHP until 2023, meaning that there will be a transition period in which both the old and new Shared Ownership models will be available.  

The new Shared Ownership model will apply to all Shared Ownership homes delivered through the AHP, including Home Ownership for people with long-term disabilities (HOLD), Older Persons Shared Ownership (OPSO), homes in rural protected areas and homes purchased through the Right to Shared Ownership. The new model also applies to new Shared Ownership homes funded from April 2021 using receipts from the Voluntary Right to Buy programme.

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