Shared Ownership of Property : A Guide for Homeowners
Shared ownership is an increasingly popular route to homeownership in England and Wales, especially amongst first-time buyers and those priced out of the full property market. Often described as a “part-buy, part-rent” model, the shared ownership scheme provides an opportunity to purchase a share in a property (usually between 25% and 75%) while paying rent on the remaining portion owned by a housing association or registered provider.
While shared ownership offers a potential stepping stone onto the property ladder, it also comes with complexities that homeowners and prospective buyers must understand fully.
In this guide Head of Property Kellie Darke and Litigation Department Solicitor Leigh Prebble-Benn, provide a comprehensive overview of the shared ownership model and how to avoid disputes when considering lease terms, subletting rules, staircasing, selling, lease extensions, as well as upcoming leasehold reforms.
If you’d like more specialist advice suited to your personal circumstances, you can speak to one of our solicitors and specialist lawyers in Ashford, Cranbrook and Hythe.
Please be aware that this blog is for informative purposes only and should not be taken as legal advice.
What Is Shared Ownership?
Shared ownership is a government-backed scheme that enables individuals to purchase a share in a leasehold property and pay rent on the remaining share. Over time, you may be able to buy more shares in the property through a process called staircasing, potentially up to 100% ownership.
While the term "part-buy, part-rent" is widely used, it has been criticised as misleading. Shared ownership is more complex than it seems, and many owners’ express concerns about a lack of transparency, particularly around legal obligations and the resale process.
Key Terms in Shared Ownership Leases
For a lease to qualify as a shared ownership agreement, it must contain certain fundamental clauses. These include:
- The right to purchase additional shares (staircasing)
- Protection for mortgage lenders
- Specific procedures for rent reviews
- Restrictions on subletting or letting the property
These clauses are critical for maintaining the integrity of the shared ownership model and safeguarding both parties' interests.
Subletting and Lodgers: What’s Permitted?
One common area of confusion for shared owners is the distinction between lodging and subletting.
- Subletting the entire property is generally prohibited under shared ownership leases unless the landlord gives explicit written consent. This consent is typically only granted in exceptional circumstances, such as financial hardship, and subject to conditions including mortgage lender approval.
- Lodging, where the owner continues living in the property while renting out a room, may be permitted depending on the lease terms. However, it’s vital to seek written approval and clarify conditions with your housing provider.
Selling a Shared Ownership Property
Selling a shared ownership home is not the same as selling a fully owned property. Most leases require you to notify your landlord of your intent to sell and allow them a period (known as the Nomination Period) to nominate a buyer.
Standard Selling Procedure
- Notification: You must inform your landlord of your intent to sell and obtain a market valuation, typically from a RICS-qualified surveyor.
- Nomination Period: This is usually one to two months. During this time, your landlord will attempt to find a suitable buyer.
- If Unsold: If the landlord cannot find a buyer within the nomination period, you may sell on the open market—either the share you own or the full 100% of the property.
- Simultaneous Staircase and Sale: You may sell your home outright (100%) by staircasing to full ownership simultaneously with the sale. Be aware, though, that if you sell for more than the RICS valuation, you may owe the landlord the increased share value.
- Fees: Expect to pay administrative fees (e.g. 1% of your share value), legal costs, and possibly estate agent fees.
Lease Extensions: Avoiding the Pitfalls of a Short Lease
A key consideration for shared owners is the length of the lease. A lease with fewer than 80 years remaining is considered "short" and can:
- Reduce the market value of your home
- Make the property harder to sell or remortgage
- Incur higher lease extension costs due to Marriage Value.
(Marriage Value is the increase in the value of the property following the completion of the lease extension)
Extending a Shared Ownership Lease
Unlike other leaseholders, shared owners do not have a statutory right to extend their lease under the Leasehold Reform, Housing and Urban Development Act 1993. Instead, you must negotiate an informal extension with your landlord.
The extension process involves:
- Obtaining a valuation from a RICS-qualified surveyor (approx. £350 + VAT)
- Agreeing on a premium with the landlord
- Paying additional costs including:
- Legal fees (both yours and the landlord’s)
- Administration charges
- Potential Marriage Value (for leases under 80 years)
The process usually takes 6–8 weeks but can be delayed due to legal tussles, valuation, and Land Registry backlogs.
Staircasing: Increasing Your Ownership Share
Staircasing is the process of purchasing additional shares in your home. This reduces your rental payments and increases your equity.
- You can staircase in increments of at least 10%, up to full ownership (100%).
- Once you reach 100% ownership, the shared ownership lease is terminated and replaced by a standard lease, often with a 999-year term.
Be aware that staircasing incurs costs such as valuations, legal fees, and potential Stamp Duty, depending on the transaction.
Downward Stair casing: A Rare Option
Some housing providers offer a “Buy Back Policy” or downward staircasing for shared owners in financial distress. However, this is entirely at the discretion of the landlord and is not a right. Eligibility criteria typically include:
- Demonstrated financial hardship
- Attempts to sell, sublet, or seek alternative solutions
- Agreement to pay valuation and legal costs even if the request is denied
Leasehold Reform: What’s Changing?
The UK Government has passed the Leasehold and Freehold Reform Act 2024, which aims to make lease extensions cheaper—particularly for leases below 80 years. However, most provisions are not yet in force.
Key reforms include:
- Abolition of Marriage Value for leaseholders extending leases under 80 years
- Standardisation of lease terms
- A more transparent pricing structure for extensions
Implementation is expected no earlier than 2026, and further legislation is required to activate key measures. This delay and uncertainty is not helpful to any party involved in the process.
Complaints and Dispute Resolution
If you face difficulties with your housing provider begin by following their (likely) internal complaints process. If unresolved, escalate to the Housing Ombudsman, which handles disputes on:
- Property condition and repairs
- Rent and service charges
- Handling of complaints
- Subletting and sales
For valuation disputes, you can also file a complaint with RICS (Royal Institution of Chartered Surveyors).
Final Thoughts: Should You Buy, Sell, or Extend?
Shared ownership offers a vital path to homeownership for many, but it's not without its challenges. If your lease is approaching 80 years or you’re considering selling, weigh your options carefully:
- Selling without a lease extension may result in a lower sale price.
- Extending your lease now could save you money before the 80-year threshold triggers Marriage Value.
- Waiting for leasehold reform may benefit owners of short leases, but timelines are uncertain.
Consulting a Specialist Solicitor and a financial advisor can help you decide on the best course of action based on your individual circumstances and long-term goals.
Key Takeaways
- Shared ownership is a viable yet complex route to homeownership in England and Wales.
- Understand your lease terms, especially around subletting, selling, and staircasing.
- Keep your lease above 80 years to protect your investment.
- New legislation may make lease extensions cheaper—but not before 2026.
- Always seek expert advice before making major decisions.
For those navigating the intricacies of shared ownership, being informed is your greatest asset.
Speak to our Residential Property Lawyers and Litigation & Disputes Solicitors today before making major decisions about Shared Ownership Properties in the UK.
We take great measures to be communicative and approachable to all of our clients with a dedicated team of Solicitors and Specialist Lawyers available to support you.
If you’d like more specialist advice suited to your circumstances, you can speak to one of our solicitors or Lawyers in Ashford, Cranbrook and Hythe.