Shared Ownership Pros and Cons

on 5 January 2022

Shared ownership makes buying a home more affordable for first-time buyers and current or former homeowners struggling to move up or get back onto the property ladder.

Sales and Marketing Director at St Arthur Homes says ‘Shared Ownership is a valuable help to buy product that supports first-time buyers who cannot afford to buy a home on the open market.’ Read the what is shared ownership guide for more information.

However, should you consider the shared ownership scheme? This guide will go through all the pros and cons to consider before making a final informed decision.

What are the pros of shared ownership?

Higher mortgage approval rate

As the deposit needed for the shared ownership scheme is lower, this means the risk to lenders is lower. This can be the difference between a mortgage approval or denial, particularly for anyone with a low income individually or jointly. Read the mortgages for shared ownership comparison guide for more information.

Smaller mortgage deposit

 As you’re buying a share of the property, the deposit needed will be lower. The amount of the deposit a person will need to pay depends on the amount of property share they want. This is great news for individuals with a low income because they can climb onto the property ladder with more accessible mortgages.

Smaller mortgage repayments

As the deposit needed is less for shared ownership and you only own a share of the property, the mortgage repayments are smaller. Keep in mind you will also have to pay rent, which will be cheaper than the costs on the rental market.

Owning your own home

Unlike renting, there is less risk of being uprooted from your home at the decision of a landlord. This is based on keeping on top of your financial repayments. Also, a person will have an owner-occupier status. Owner occupiers are considered to be more responsible due to their home investments. Additionally, should the worst happen the share the home occupier has will be left to a beneficiary.

You can sell your shares

Many housing associations will require you to be in your property for a minimum of one year before being able to sell your shares. Once the minimum term has passed, you have the option to do so.

New build warranty

Shared ownership homes will generally be new builds and because of this, they will be covered by a structural warranty that will cover any damages and faults that may happen after an owner moves in. Depending on the warranty, they usually last 10 to 12 years.

Shared ownership to full ownership

Homeowners have the option to buy more shares in shared ownership homes if they want. This is known as staircasing.

No stamp duty

Usually, there is no stamp duty tax to pay on the property.

 What are the cons of shared ownership?

Staircasing costs

Staircasing can be costly. For example, you would need the finances for a new deposit, further legal fees, a property surveyor and more. Whereas, if you bought a home outright, the costs would only need to be done once.

 Selling a shared ownership home

Selling your shared ownership home deviates from the traditional open market process. Typically, there’s a ‘first refusal’ stipulation, mandating the offer of the property to the housing association, a procedure that may span up to 8 weeks. 

Should they fail to secure a buyer, you gain the option to sell on the open market. Keep in mind that as a shared owner, you hold only partial ownership, necessitating the marketing of the property as shared ownership and finding a buyer willing to acquire at the same percentage or a higher share.

When delving into shared ownership, it’s vital to anticipate future sales, even if relocating isn’t on your current agenda.

You may miss out on profits

Owning a smaller share amount of a home means you gain less in profits. For example, if you own 25% of a shared ownership home, you will be entitled to only 25% of the increased value.

Fewer mortgage products

There are fewer mortgage products on the market for shared ownership in comparison to buying a home the traditional way.

Stamp duty payments

When you own 80% of the property, you will be authorised to pay stamp duty on your shared ownership home.

Ground rent and service charge

 It doesn’t matter how low or high your share amount is, it is your responsibility to pay 100% of the ground rent and service charge.


 shared ownership is sold through leasehold, in which you have an agreement to use the property for a specified period. The actual ownership of the land and building remains with the freeholder. Once the lease term expires, ownership reverts to the freeholder unless the leasehold is extended or renewed.

Restrictions on home improvements

Making changes to your shared ownership home may be prohibited. Even though you are an owner-occupier, there will be rules set by the housing association that will need to be abided. Significant home improvements are usually prohibited.

Stamp duty on Shared ownership

The stamp duty rules for shared ownership can be complex and may depend on various factors, including the value of the property and whether it’s a first-time purchase. 

For a shared ownership property, stamp duty tax will not need to be paid unless you own 80% of the property. 

However, it’s important to note that tax regulations can change, and it’s advisable to consult the latest guidelines or a tax professional for the most up-to-date information on stamp duty for shared ownership in your specific location.