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Buying a home can feel like a big step, especially when saving for a deposit while covering everyday living costs. The good news is that buying on the open market is not the only route into homeownership. With options such as Shared Ownership and Rent to Buy it can make getting onto the property ladder much more achievable.
So, when comparing Shared Ownership vs Rent to Buy, which scheme is right for you?
The simplest answer comes down to how ready you are to buy. Shared Ownership could be a good choice if you are ready to become a homeowner now but cannot afford to buy a suitable home outright, whereas Rent to Buy may be better if you need more time to build your deposit before committing to a mortgage.
Both schemes can provide a route towards owning a home, but they work in very different ways. Keep reading to compare the costs, commitments, and benefits of each option.
Shared Ownership allows you to buy a percentage of a home and pay rent on the remaining share.
Depending on the property, you can usually purchase between 10% and 75% of its full market value. Because you only need a mortgage and deposit for the share you are buying, the amount you need upfront can be considerably lower than purchasing the same home outright.
For example, rather than finding a deposit and mortgage for a £250,000 property, you might initially purchase a 10% share worth £25,000.
You will, however, still have regular housing costs, which can include:
Once you have purchased your home, you can usually buy additional shares over time through a process called staircasing. As your ownership percentage increases, the percentage you pay in rent decreases, making it an easier path to owning your own home.
Rent to Buy takes a different approach to Shared Ownership. Instead of purchasing part of your home immediately, you rent a property at a discounted rate while giving yourself time to save towards buying a home in the future.
Plumlife Rent to Buy homes are generally offered at an affordable rent that can be up to 20% lower than comparable local market rents, typically for an initial period of up to five years. The idea is that the money you save on rent can be put towards building a future house deposit.
However, during the Rent to Buy period, you remain a tenant rather than becoming a homeowner. But you could later use your savings to:
Rent to Buy can therefore act as a stepping stone between renting and buying.
Although both schemes are designed to make homeownership more accessible, the standout difference is this: with Shared Ownership, you become a homeowner straight away, but with Rent to Buy, you continue renting while preparing to buy later.
Below, we’ve listed a few more differences between the two schemes to help you decide which might be best for you.
| Shared Ownership | Rent to Buy | |
|---|---|---|
| Your status | You buy and own a share of the home | You rent the home |
| Upfront costs | Deposit, mortgage costs, and legal fees | Rental deposit and rent in advance |
| Monthly payments | Mortgage, rent on the remaining share, and possible service charges | Discounted monthly rent |
| Do you own part of the property? | Yes | No, not during the rental period |
| Can you increase ownership? | Usually, through staircasing | You may be able to buy later |
| Main purpose | Start homeownership with a smaller initial purchase | Gives you more time to save towards buying |
| Best suited to | Buyers who are mortgage-ready but cannot afford a full open-market purchase | People who need additional time to build a deposit |
Neither option is automatically better than the other. The right choice depends on your personal situation, including where you are financially today and how quickly you want to become a homeowner.
Shared Ownership could best suit you if you already have some savings and are in a position to take out a mortgage, but buying the kind of home you need on the open market is still beyond your budget.
Shared Ownership may be worth considering if:
The important difference is that you are buying from day one, rather than waiting until you have saved enough to purchase outright.
To qualify for Shared Ownership in England, your household income must generally be £80,000 a year or less, or £90,000 or less in London. You must also be unable to afford the deposit and mortgage payments needed to buy a suitable home outright. Other eligibility conditions may also apply.
Rent to Buy may be more suitable if homeownership is your goal but you are not financially ready to purchase just yet.
For example, you might have a stable income and be comfortable paying rent each month, but still need a few years to build a bigger deposit.
Rent to Buy could make sense for you if:
Rent to Buy gives you breathing room. Rather than stretching your finances to buy before you are ready, you can spend time improving your financial position while living in a home at a discounted rent.
With Plumlife, Rent to Buy applicants generally need to be in permanent employment, have the Right to Rent in the UK, and be a first-time buyer or someone returning to the property market. Applicants also need to demonstrate that they can afford their rent and other costs. Specific eligibility criteria can vary between properties and developments.
Although the two schemes offer a way onto the property ladder, the cost is likely to be one of the biggest factors when deciding between the two.
The main upfront expense is usually your deposit. However, unlike a standard home purchase, the deposit is calculated against the share you are buying, rather than the full value of the property.
Imagine a home is worth £250,000 and you purchase a 25% share:
You would then need a mortgage for the remaining cost of your purchased share and would pay rent on the part of the property you do not own.
With Rent to Buy, there is no mortgage to arrange when you initially move into the home. Instead, you pay discounted rent.
For example, imagine a property that costs £1,250 per month to rent privately:
If you were able to save the full £250 every month for five years, you could build up £15,000 in additional savings, before taking into account any interest earned.
Of course, rents and personal circumstances can change, and the discount is not automatically paid into a savings account. You will need to make your own arrangements to save towards your future deposit.
There are advantages and drawbacks to both options, so it can help to compare what matters most to you.
Choosing between Shared Ownership and Rent to Buy ultimately depends on your circumstances rather than one scheme being better than the other.
Shared Ownership could be the answer if you are financially ready to buy now, have some savings, and can afford the mortgage and ongoing costs of purchasing a share.
Rent to Buy could be the answer if you want to buy in the future but need more time to save, particularly if the cost of private renting is making it difficult to save for a deposit.
To help discover which scheme would be best for you, you should think about:
You do not need to make the decision based on guesswork. Checking your eligibility and looking at the actual monthly costs of available properties can make the comparison much clearer.
Whether you are ready to purchase your first share now or need more time to build your savings, there could be an affordable route to homeownership that works for you.
Plumlife has been helping people find their way into homeownership for more than 20 years, with Shared Ownership and Rent to Buy homes available across a growing range of developments.
Explore our current Shared Ownership and Rent to Buy properties, use our eligibility checker, or get in touch with our friendly team to find out which option could work for you.
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