TL;DR
In short
- The monthly cost of Shared Ownership is your mortgage payment plus rent on the landlord’s share plus service charge, and sometimes an estate charge and ground rent. Compare homes on that total, not on the share price.
- In our example, a flat with a 25% share needs a smaller deposit but costs about £150 a month more than a house with a 40% share.
- Rent is usually reviewed each year under the formula in your lease: RPI + 0.5% for older leases, and RPI + up to 0.5% or CPI + 1% for leases signed from 12 October 2023. At a review it may rise or stay the same; GOV.UK says it will not fall. With an assumed 4% rise each year (CPI 3% + 1%), rent of £550 would reach about £669 after 5 years.
- Staircasing lowers your rent, but if you borrow to fund it your total monthly cost can rise. On top of the share price you pay for a RICS valuation and legal costs; the landlord may charge an admin fee.
- Shared Ownership can work out less well when the service charge is high, you plan to move within a few years or your lease caps the share you can own.
Shared Ownership lowers the cost of getting onto the ladder, but it does not always lower your monthly outgoings. Before you reserve a home, it is worth working out what you will really pay today, in a few years’ time and when you buy more shares.
This guide shows how to compare Shared Ownership homes in England using illustrative figures. The scheme rules, eligibility and buying process are on our Shared Ownership page, and buying an existing share is covered in Shared Ownership resale. Both homes are hypothetical, with figures chosen only to show the calculations; they are not available listings or current mortgage offers. This is general information, not personal advice.
How do you work out the monthly cost of Shared Ownership?
Your monthly cost is the mortgage on your share plus rent on the landlord’s share plus the service charge. Some homes also have an estate charge (for shared areas of the development), ground rent and contributions to a reserve fund.
You will find the figures in the key information document, which the provider should give you before you reserve. Check:
- the full market value and the price of your share,
- the annual rent and the rate it is based on,
- the rent-rise limit in your lease (RPI + 0.5%, RPI + up to 0.5% or CPI + 1%, depending on when you signed and the lease terms),
- the current service charge and any estate charge,
- the minimum share you can buy later and the maximum share you can own.
On a new-build Shared Ownership home, starting rent is capped at 3% a year of the value of the landlord’s share, and GOV.UK says most landlords charge 2.75%. On a resale home, the starting rent is what the previous owner was paying.
Example: two homes with different monthly costs
A smaller share means a smaller deposit and mortgage but higher rent, so the cheaper home to buy into can cost more every month.
Both homes are hypothetical. We assume a deposit of 10% of the share, a 30-year repayment mortgage with an unchanged 4.75% rate solely for the calculation, and rent at 2.75% a year of the landlord’s share. Service charges are example amounts, not typical figures.
| Home A: flat | Home B: house | |
|---|---|---|
| Full market value | £320,000 | £280,000 |
| Share bought | 25% (£80,000) | 40% (£112,000) |
| Deposit (10% of share) | £8,000 | £11,200 |
| Mortgage | £72,000 | £100,800 |
| Mortgage payment | about £376 | about £526 |
| Rent (2.75% of landlord’s share) | £550 | £385 |
| Service / estate charge (assumed) | £180 | £45 |
| Total per month | about £1,106 | about £956 |
Home A needs £3,200 less deposit but costs about £150 more each month, and your share is worth £80,000 rather than £112,000. In this example, the difference comes from rent on the larger landlord’s share and the flat’s assumed higher service charge.
On top of the deposit you need buying costs: legal fees, valuation, mortgage fees, any stamp duty and a reservation fee, which GOV.UK says is usually up to £500.
How much could the rent rise over 5 years?
Rent is usually reviewed once a year. At a review it may rise or stay the same; GOV.UK says it will not fall. Your lease sets the limit, not a guaranteed increase. For leases signed before 12 October 2023 it is RPI + 0.5%; for later leases it is RPI + up to 0.5% or CPI + 1%, depending on the lease (GOV.UK).
The hypothetical Home A’s £550 rent after five annual increases at the stated rate, assuming the same inflation each year and a lease with the corresponding formula:
| Assumption | Annual increase | Rent after 5 years |
|---|---|---|
| CPI 2% + 1% | 3% | about £638 |
| CPI 3% + 1% | 4% | about £669 |
| RPI 4% + 0.5% | 4.5% | about £685 |
These are scenarios, not an inflation forecast or a scheduled rent rise. Actual reviews may result in a smaller increase or no change. Under the assumptions shown, rent is about £88–£135 a month higher after five years. The service charge can also rise, especially when major work is needed on the building, and your mortgage payment can change when a fixed rate ends.
How do rent and service charge affect your mortgage?
Lenders include rent and service charge as fixed monthly outgoings, so they can reduce the amount you can borrow. A smaller mortgage on your share does not automatically make approval easier.
In Home A, rent and service charge alone come to £730 a month, or £8,760 a year, before your first mortgage payment. The lender checks whether your budget still works after these costs, the mortgage and your other spending. Each lender does this differently, and not every lender finances Shared Ownership or every lease. We explain the general approach in What is affordability?.
How much does staircasing cost?
The price of each new share depends on the home’s value when you buy it, not on the price you paid at the start. Transaction costs come on top.
Example for Home B: after 5 years the value has risen by 3% a year to about £324,600 (an assumption). Buying another 25%, taking you from 40% to 65%, would then cost about £81,150. According to GOV.UK you will also pay:
- a valuation by a RICS-registered surveyor,
- a possible landlord admin fee, around £150 to around £500 according to GOV.UK when you buy a share of 5% or more,
- your own legal fees,
- mortgage costs if you borrow to fund the purchase.
For a monthly comparison after five years, we assume five annual rent rises of 4%, an unchanged £45 service/estate charge and a 4.75% rate on both loans. The original £100,800 mortgage had a 30-year term, so it has 25 years left and its payment remains £525.82. For this illustration, a separate 25-year mortgage funds the full rounded £81,150 price of the additional share; its payment is £462.65. Transaction fees and rate changes are excluded.
| Per month after 5 years | Before staircasing | After buying another 25% |
|---|---|---|
| Original mortgage payment | £525.82 | £525.82 |
| Additional mortgage payment | — | £462.65 |
| Rent (landlord’s share 60% → 35%) | £468.41 | £273.24 |
| Service / estate charge (assumed) | £45 | £45 |
| Total | £1,039.23 | £1,306.71 |
In this scenario, rent falls by about £195.17, but total monthly outgoings rise by about £267.48. This is the result of the stated assumptions, not a forecast for any particular home; actual borrowing terms, rent and charges can differ.
For some homes bought on or after 1 April 2021, you can also buy 1% a year for the first 15 years, priced using the House Price Index and with no admin fee. When buying more shares makes more sense than overpaying or remortgaging is covered in our Shared Ownership resale guide.
Shared Ownership or buying outright with a 5% deposit?
With a larger share, the Shared Ownership deposit can be close to a 95% LTV deposit; the real difference is in monthly costs and what you own.
| £280,000 house | Shared Ownership 40% | Buying outright, 5% deposit |
|---|---|---|
| Deposit | £11,200 | £14,000 |
| Mortgage | £100,800 | £266,000 |
| Per month | about £956 (mortgage + rent + charge) | about £1,388 (mortgage) |
| What you own | 40% of the home | 100% of the home |
Both columns use the same 4.75% rate over 30 years to keep the comparison simple. In practice, rates at 95% LTV usually differ from rates at lower LTV, and availability depends on the lender.
The outright-purchase monthly figure covers only the mortgage payment; it excludes insurance, repairs and any property charges. Compare the full costs of the particular home.
Remember that Shared Ownership is for people who cannot afford all of the deposit and mortgage payments for a home that meets their needs. If you can buy outright, you are unlikely to qualify. The comparison helps you see what you get for the lower monthly cost, rather than choose between two equal options.
When can Shared Ownership work out less well?
It can be a good first step, but in some situations the costs and restrictions outweigh the benefits:
- A high service charge. In blocks with lifts, concierge or large shared areas, charges can eat into the saving on your mortgage.
- A short stay. If you plan to move within a few years, buying, valuation and selling costs are spread over a short period. When you sell, the landlord usually has 4, 8 or 12 weeks (depending on the lease) to find a buyer.
- Fast-rising local prices. Each extra share costs more, so reaching 100% can move further away.
- A capped share. In designated protected areas you may only be able to buy up to 80%, and some leases require you to sell back to the landlord. Older Persons Shared Ownership has a 75% maximum.
- Plans to let. Until you own 100%, letting the whole home usually needs the landlord’s permission, normally only in exceptional circumstances.
- Repair costs. You pay for repairs and maintenance whatever share you own. Some newer leases include an initial repair period, usually 10 years, when the landlord covers some costs.
What to check before you reserve
Before paying a reservation fee, ask for the key information document and the lease, then check the five things that affect cost most:
- The rent review formula and review date.
- The service charge budget, recent accounts and any planned major works.
- The minimum share you can buy, the 1% option and the maximum share.
- Whether the lease has an initial repair period and what it covers.
- Whether your chosen lender accepts that specific lease.
Buying a resale home adds questions about the remaining lease term and the conditions you take over; see our Shared Ownership resale guide. For the basics of leasehold, read Freehold or leasehold.
How we can help
An Extend Finance adviser can work out the full monthly cost of a specific home with you, check which lenders will finance that lease and compare Shared Ownership with your other options. We speak English and Polish. The lending decision rests with the lender, and the provider assesses your eligibility for the scheme. Any applicable mortgage advice fee is disclosed to you before you decide to proceed.
Summary
Shared Ownership may be worth considering when the combined monthly cost fits your budget with room for possible rent and charge increases, and you plan to stay for a good number of years. Compare homes on mortgage plus rent plus service charge, and treat staircasing as an option rather than a certain plan. If you are looking at a specific home, book a free, no-obligation consultation.
FAQ
Frequently asked questions
Does a smaller Shared Ownership share mean lower monthly costs?
Not necessarily. A smaller share means a smaller deposit and mortgage but higher rent, because you pay rent on a larger landlord’s share. In our example, a flat with a 25% share costs about £1,106 a month and a house with a 40% share about £956, on the assumptions set out in the article.
How much can Shared Ownership rent go up?
Your lease sets the maximum increase: RPI + 0.5% for leases signed before 12 October 2023, and RPI + up to 0.5% or CPI + 1% for later leases. Rent is usually reviewed once a year; it may stay the same or rise, but GOV.UK says it will not fall at a review. If it rose by 4% in each of five years, rent of £550 would reach about £669.
Do rent and service charge reduce how much I can borrow?
Yes. Lenders include rent and service charge as fixed monthly outgoings alongside the mortgage and other commitments. Higher costs can reduce the loan a lender may accept. Each lender applies its own criteria.
What does staircasing cost on top of the share price?
When you buy a share of 5% or more, you pay for a RICS valuation; the landlord may charge an admin fee (around £150 to around £500 according to GOV.UK). You cover your own legal fees and mortgage costs if you borrow. Buying 1% shares under an eligible lease carries no admin fee.
When is Shared Ownership not worth it?
When the service charge is high, you plan to stay only a few years, local prices are rising quickly so each new share costs more, or your lease limits the maximum share. In those cases it is worth comparing other options with an adviser.
