Share:
If you are looking to get on the property ladder fast, shared ownership can seem like an appealing option. With rising rental costs and expensive mortgages to consider – you may be wondering whether shared ownership is a better alternative to renting. So, is this an ideal option for you, and how exactly does it compare to renting?
Shared ownership offers a route to homeownership with lower upfront costs compared to buying outright, and can often be cheaper than renting privately. It allows you to buy a share of a property and pay rent on the rest, helping you build equity over time. Renting, by contrast, offers flexibility but no ownership. Whether shared ownership is better depends on your goals, finances, and how long you plan to stay.
Read on to explore the pros and cons of shared ownership versus renting.
Shared ownership is a government-backed scheme designed to make homeownership more accessible. Instead of buying a home outright, you purchase a share (typically between 10% and 75%) and pay rent on the remainder to a housing association.
You’ll usually need a mortgage for your share and will often be responsible for some or all of the property’s maintenance costs. Over time, you may have the option to “staircase”, which refers to buying additional shares until you eventually own the property outright.
You can find some key information on how shared ownership works here.
Renting offers flexibility, with no long-term commitment to a property. You pay rent to a private landlord, usually under a tenancy agreement of six or twelve months. Maintenance costs are typically covered by the landlord, and you’re free to move relatively easily if your circumstances change.
However, monthly rental payments can be high — especially in popular areas — and you won’t be building any equity. As a tenant renting a property, you may also face uncertainty about tenancy renewals and potential rent increases.
If you’re currently renting and wondering about alternatives, shared ownership could offer a more stable, longer-term option. Shared ownership allows you to buy a share of a property and pay rent only on the part you don’t yet own. Instead of paying a landlord for the use of the home, you are gradually investing in a property of your own. While you’ll still have some rental costs, your mortgage repayments help you build equity. Shared ownership typically offers more stability than renting, with the ability to stay in your home long-term without worrying about a landlord’s decisions.
However, shared ownership also comes with more responsibilities, such as arranging your own maintenance and paying service charges. Read our introduction to shared ownership here to find out more.
In many cases, shared ownership can be more affordable than renting privately — especially in areas where rents are high. While you’ll pay a mortgage and rent with shared ownership, the rent charged on the unsold share is usually below market rates. This can result in total monthly costs being lower than renting a similar property privately.
However, it’s important to remember that you will have additional costs, such as service charges and maintenance expenses. You will also need a deposit, although this is normally between 5–10% of the share you’re buying. In addition to this, you’ll be responsible for legal fees, mortgage fees, and possibly stamp duty.
Read our customer stories here.
Shared ownership can offer several advantages compared to renting:
Every mortgage repayment you make contributes towards owning more of your home (depending on the mortgage type), helping you to build equity over time.
Shared ownership gives you greater security compared to private renting, where your tenancy can be ended by a landlord’s decision or property sale.
In many areas, the combined mortgage and rent payments for a shared ownership property can be cheaper than renting a comparable home privately.
You have the opportunity to staircase, meaning you can increase your ownership over time and eventually own 100% of the property. Bear in mind, however, that this is subject to lease terms.
While tenants may face restrictions on decorating, shared owners usually have more freedom to make their homes their own (though major changes may need approval).
View our selection of shared ownership properties here.
While shared ownership can be an affordable and sensible option, you also need to consider the potential drawbacks:
Shared ownership is a long-term financial commitment. Selling your share can take time and must often be done through the housing association first.
Unlike renting, you’ll likely be responsible for all maintenance and repairs — even if you only own part of the property. For newer Shared Ownership homes, there may be a 10-year ‘initial repair period’, which entitles you to claim costs of up to £500 a year from the landlord to help with essential repairs. During this time, the landlord is also responsible for any repairs to the external fabric of the home and internal structural repairs.
Service charges, ground rent, and other fees can add up and should be considered when budgeting.
Find out more about the costs associated with shared ownership here.
You may benefit from shared ownership if you have a stable income but struggle to save for a full deposit. If you are happy to take on the responsibilities of homeownership and want to build equity rather than continue to pay rent with no return – shared ownership may be ideal for you. You can find out if you are eligible for shared ownership here.
However, if you need maximum flexibility (for example, you expect to move for work or personal reasons), or you’re not ready to commit to a mortgage and property maintenance, renting might be a better option for your current needs. Feel free to contact us today for more guidance.
Shared ownership can be a strong alternative to renting — offering more security and an affordable way to build equity. However, it also brings additional responsibilities and financial commitments that renters don’t face.
If you’re thinking about making the move from renting to shared ownership, it’s a good idea to speak with a financial adviser, assess your budget carefully, and explore your options thoroughly. Get expert advice from Plumlife today.
At Plumlife Homes, we specialise in providing affordable shared ownership properties designed for first-time buyers and movers. View our available shared ownership homes today, or get in touch with our friendly team for advice on your next steps. Use our handy eligibility and affordability checkers below to see if shared ownership is right for you:
Read our customer stories to find out more about how shared ownership could benefit you.
Shared ownership deposits are typically lower than buying outright. You usually need 5–10% of the share you’re purchasing rather than the full property value. You’ll need a minimum level of income and savings, and the amount will be determined by the value of the home you want to buy, your personal circumstances, and your lender’s requirements. If you want to see what you can afford, why not try our affordability calculator?
Shared ownership is largely aimed at first-time buyers, however, you don’t need to be a first-time buyer to qualify. For example, you may be able to meet requirements if you used to own a home, but can’t afford to buy one in the current market. Or, you may currently own a home and would like to move, but cannot afford the payments for a new home that meets your needs.
You won’t be able to make your own offer on a ‘Shared Ownership’ property. They are purpose built for the scheme using government subsidies and the advertised price is based on a valuation by a RICS-certified surveyor. There is a positive side to this, however, as it means there won’t be any bidding wars and homes should be sold on a first come, first served basis.
The buying process for shared ownership
What are the benefits of shared ownership?
Share:
