How does shared property ownership work for UK landlords?

Shared ownership represents one of the most talked-about routes into property ownership in the UK, yet many landlords struggle to understand how it works, whether it affects their investment strategy, and what opportunities or restrictions it creates for buy-to-let portfolios.

If you're a landlord considering purchasing a shared ownership property, letting out your share, or simply trying to understand how shared ownership tenants fit into the rental market, this comprehensive guide explains everything you need to know in 2025.

What is shared ownership?

Shared ownership is a government-backed affordable housing scheme that helps people who cannot afford to buy a home outright get onto the property ladder. It's sometimes called part-buy, part-rent because buyers purchase a share of a property (typically between 10% and 75%) and pay rent on the remaining share owned by a housing association or local authority.

The scheme is designed for first-time buyers, existing shared ownership tenants moving home, or those who previously owned a property but can no longer afford to buy on the open market. It's not generally available to landlords looking to expand their portfolios, but understanding the mechanics matters if you're considering a shared ownership mortgage or dealing with tenants moving between rental and shared ownership properties.

Here's how it typically works:

Initial purchase - Buyers acquire a share of the property, usually 10%, 25%, 50% or 75% depending on their financial situation and the scheme rules.

Monthly rent - They pay subsidised rent to the housing association on the remaining share, typically 2.75% of the unsold equity per year.

Service charges - Buyers are responsible for 100% of maintenance costs, service charges, and ground rent if applicable, even though they only own a portion.

Staircasing - Buyers can increase their share over time, a process called staircasing, eventually owning 100% of the property if they choose.

Shared ownership properties are almost always leasehold, with leases typically running for 99 to 125 years. This matters for landlords because leasehold properties come with additional responsibilities and potential restrictions that affect rental yields and management complexity.

How does shared ownership work for tenants?

From a tenant's perspective, shared ownership bridges the gap between renting and outright ownership. It offers stability and a foot on the property ladder without requiring the full deposit and mortgage capacity needed for traditional home purchase.

Eligibility criteria typically include earning less than £80,000 per year (£90,000 in London), being a first-time buyer or existing shared ownership tenant, and being unable to afford a suitable home through other means. This means many of your current tenants may be considering shared ownership as their next step, which affects tenant retention and void management.

Once accepted into a shared ownership scheme, buyers typically need a deposit of 5-10% of their share, not the full property value. If buying a 25% share of a £200,000 property, the share costs £50,000, so a 10% deposit would be £5,000 rather than £20,000 for the full property. This substantially lower barrier to entry is why shared ownership has become increasingly popular, particularly in high-cost areas like London and the South East.

Monthly costs include a mortgage payment on their purchased share, subsidised rent on the housing association's share, service charges, and buildings insurance. These combined costs can sometimes exceed private rental rates in the same area, which creates interesting dynamics in the rental market as tenants weigh their options.

The housing association retains significant control over the property. Shared owners cannot sublet without explicit permission, cannot make structural alterations without consent, and must follow lease terms that are often more restrictive than standard residential leases. This is crucial for landlords to understand because it means shared ownership properties are generally not available for buy-to-let investment.

What does shared ownership mean for landlords?

For most landlords, shared ownership properties sit outside the traditional buy-to-let market due to lease restrictions. However, there are several ways shared ownership intersects with landlord interests.

Can you rent out a shared ownership property?

The short answer is usually no. Most shared ownership leases explicitly prohibit subletting without permission from the housing association, and permission is rarely granted except in exceptional circumstances like temporary work relocation or family care responsibilities.

If you own a shared ownership property and want to let it out, you must obtain written consent from the housing association. Some associations allow limited subletting for up to two years in specific circumstances, but they typically require you to own at least 80% of the property through staircasing before considering any letting arrangement.

Breaking these rules can result in forfeiture of your lease, legal action, and financial penalties. For landlords accustomed to the relative freedom of freehold or standard leasehold buy-to-let properties, these restrictions represent a fundamental difference in how shared ownership functions.

Can landlords buy shared ownership properties?

Shared ownership schemes are designed for owner-occupiers, not investors. Eligibility criteria explicitly exclude landlords purchasing for investment purposes. If you already own property and are applying for shared ownership, you'll need to demonstrate that you cannot afford to buy a suitable home on the open market and intend to live in the shared ownership property as your main residence.

However, if you're an existing homeowner looking to downsize or relocate, you may qualify for shared ownership provided you meet the income thresholds and genuinely need the scheme to access suitable housing. You cannot hold onto your existing property as a rental while living in shared ownership housing, most schemes require you to sell any existing property or demonstrate why retaining it doesn't disqualify you from needing affordable housing support.

For landlords, this means shared ownership properties are generally unavailable as portfolio additions. If you're considering expanding your rental portfolio, traditional buy-to-let, auction properties, or off-market deals remain more viable routes.

Shared ownership properties and stamp duty

Stamp duty on shared ownership properties works differently from standard purchases. Buyers have two options:

Pay stamp duty on the share being purchased - Buyers pay stamp duty only on their initial share value. When staircasing to increase their share, they pay stamp duty on each additional purchase.

Pay stamp duty on the full market value upfront - Buyers can elect to pay stamp duty on the entire property value at the initial purchase, avoiding further stamp duty liability when staircasing.

For a £200,000 property where the buyer purchases a 25% share (£50,000), choosing option one means paying no stamp duty as the share is below the £125,000 threshold (£250,000 in certain circumstances). However, future staircasing purchases may incur stamp duty. Choosing option two means paying stamp duty on £200,000 immediately, but no further liability later.

Landlords purchasing investment properties face different stamp duty rates with an additional 3% surcharge on second homes. Shared ownership properties are exempt from this surcharge because they're intended as main residences, but this exemption disappears if the property is later used for rental without proper conversion, creating potential tax complications if rules are broken.

What is shared ownership mortgage?

A shared ownership mortgage is a specific type of home loan designed to finance the purchase of a share in a shared ownership property. Not all lenders offer these mortgages, and terms can differ significantly from standard residential mortgages.

Lenders offering shared ownership mortgages include most major banks and building societies, though the range of products is smaller than for conventional mortgages. Loan-to-value ratios typically max out at 95% of the share being purchased, with interest rates often slightly higher than standard residential mortgages due to perceived higher risk.

When applying for a shared ownership mortgage, lenders assess affordability based on your share's mortgage payment, the rent on the unsold share, and service charges. This total monthly cost must be affordable within standard income multiples, typically 4-4.5 times annual income.

For landlords with existing mortgages, obtaining a shared ownership mortgage as a second property is virtually impossible due to eligibility restrictions. The scheme is designed for those who cannot otherwise afford housing, so demonstrating genuine need while holding investment property creates an obvious conflict. If you're a landlord looking to move into shared ownership for personal reasons, you'll likely need to sell your rental portfolio first.

Shared ownership mortgage rates and terms

Interest rates on shared ownership mortgages in 2025 typically range from 4% to 6%, depending on the deposit size, share percentage, and lender. These rates are slightly higher than standard residential mortgage rates, reflecting the added complexity and perceived risk of shared ownership structures.

Mortgage terms are usually 25 years, though some lenders offer up to 30 or 35 years for larger shares. Early repayment charges apply during initial fixed or tracker periods, similar to conventional mortgages, so it's essential to understand exit penalties if planning to staircase quickly.

Remortgaging a shared ownership property can be more complex than traditional properties. Not all lenders offer shared ownership products, so choice is limited when your initial deal ends. Some shared ownership homeowners find themselves stuck on their lender's standard variable rate because alternative lenders won't accept the property type, creating higher costs over time.

Can you rent out shared ownership property?

We've touched on this already, but it's worth exploring in detail given how often landlords ask the question.

Shared ownership leases almost universally prohibit subletting. The properties are provided through affordable housing schemes funded by government subsidies, and allowing widespread subletting would undermine the policy intent of helping people onto the property ladder rather than enriching landlords.

That said, housing associations understand that life circumstances change. If you need to move temporarily for work, care for a family member, or face other exceptional situations, you can apply for permission to sublet. The process typically requires:

Written application - Submitting a formal request explaining your circumstances and how long you'll be away.

Supporting evidence - Providing proof of your situation, such as employment contracts or medical documentation.

Minimum ownership threshold - Many associations require you to own at least 80% of the property before considering subletting requests.

Time-limited permission - If granted, permission is usually temporary, typically up to two years, and must be renewed if circumstances continue.

Compliance requirements - You must meet all landlord legal obligations, including gas safety, electrical checks, deposit protection, and Right to Rent compliance, just as with any other tenancy.

If permission is granted, you remain responsible for all ongoing costs including rent to the housing association, service charges, and building maintenance. The rental income must be sufficient to cover these costs plus your mortgage, and you may need to inform your mortgage lender who may require consent or a rate change.

Crucially, unauthorised subletting can result in lease forfeiture. Housing associations take this seriously and have legal powers to reclaim properties if lease terms are breached. For landlords used to the flexibility of buy-to-let ownership, this level of restriction makes shared ownership unsuitable for investment purposes.

Shared ownership staircasing explained

Staircasing is the process of purchasing additional shares in your shared ownership property, increasing your ownership stake and reducing the rent you pay to the housing association.

Most shared ownership leases allow buyers to purchase additional shares in increments, commonly 10% at a time. Each time you staircase, the share is valued at current market rates, so if property values have risen since your initial purchase, you'll pay more for the same percentage share than you originally paid. Conversely, if values have fallen, you'll pay less.

Here's how it works in practice. You initially purchase a 25% share of a property valued at £200,000, costing £50,000. Five years later, the property is worth £240,000 and you want to purchase another 25% share. That additional 25% now costs £60,000, not £50,000, because it's based on the current valuation.

Each staircasing transaction incurs costs including valuation fees (typically £200-£300), legal fees (£500-£1,000), and potentially stamp duty on the additional share purchased. These costs add up, particularly if staircasing in small increments, so many buyers choose to staircase in larger chunks when they have sufficient savings.

Some shared ownership properties allow full staircasing to 100% ownership, at which point you own the property outright and no longer pay rent to the housing association. However, some rural and older shared ownership properties have caps, limiting ownership to 80%, meaning you'll always pay some rent regardless of how much you buy.

For landlords, understanding staircasing matters when tenants discuss their housing plans. A tenant saving to staircase may be more financially committed than one simply renting, and tenants who successfully staircase out of shared ownership reduce the pool of potential renters in your market.

Shared ownership eligibility and who can apply

Shared ownership schemes prioritise specific groups, and eligibility varies between England, Scotland, Wales, and Northern Ireland. In England, the primary criteria include:

Household income - Total household income must be below £80,000 per year (£90,000 in London).

First-time buyer status - You must be buying your first home, or an existing shared ownership tenant looking to move.

Previous homeowners - If you previously owned but can no longer afford to buy, you may be eligible.

Affordability - You must demonstrate you cannot afford a suitable property on the open market in your area.

Age restrictions - Some schemes target specific age groups, such as older persons' shared ownership for those aged 55+.

Priority is often given to people with local connections, key workers, or those nominated by the local authority due to housing need. For landlords, this means understanding your tenants' eligibility can help gauge their likelihood of leaving your property for shared ownership, affecting your tenant retention strategies.

Scotland operates a similar scheme called New Supply Shared Equity, with income thresholds and eligibility criteria set by the Scottish Government. Wales runs Shared Ownership Wales, with income limits of £60,000 outside Cardiff and £66,000 in Cardiff. Northern Ireland's Co-Ownership scheme has different rules again, highlighting the importance of understanding regional variations.

Is shared ownership worth it? Pros and cons

For potential buyers, shared ownership offers clear advantages and notable drawbacks. Understanding both sides helps landlords anticipate tenant behaviour and market dynamics.

Advantages of shared ownership

Lower deposit requirements - Buying a share rather than the full property means smaller upfront costs, typically £5,000-£15,000 compared to £20,000-£40,000 for outright purchase.

Step onto the property ladder - Buyers gain equity and benefit from property value increases on their owned share, rather than paying rent with no capital growth.

Subsidised rent - Rent on the unsold share is typically below market rates, making monthly costs potentially more affordable than private renting in high-cost areas.

Stability and security - Shared ownership provides long-term security compared to private renting where tenancies can end with two months' notice under current rules.

Staircasing potential - Buyers can gradually increase ownership as their financial situation improves, eventually owning the property outright.

Disadvantages of shared ownership

Complex costs - Monthly outgoings include mortgage payments, rent, service charges, and maintenance, which can exceed private rental costs when combined.

Restricted subletting - Owners cannot freely let the property, limiting flexibility if circumstances change.

Staircasing costs - Purchasing additional shares incurs valuation and legal fees each time, and shares are valued at current market rates which may have increased substantially.

Leasehold complications - Shared ownership properties are leasehold, meaning ground rent, service charges, and lease extension costs apply just as with standard leasehold properties.

Maintenance responsibilities - Owners pay 100% of maintenance and repair costs even if they only own 25% of the property, which can be financially challenging.

Selling challenges - When selling, the housing association has first refusal and controls the sale process, potentially limiting buyer choice and sale speed.

Limited mortgage options - Fewer lenders offer shared ownership mortgages, restricting choice and potentially resulting in higher rates or unfavourable terms.

For landlords, these pros and cons influence tenant decisions. A tenant weighing up shared ownership against continued renting will consider total monthly costs, long-term financial benefits, and lifestyle flexibility. If shared ownership costs exceed rental costs in your area, tenants may choose to keep renting, particularly if they value the flexibility of being able to move without selling complications.

Shared ownership vs Help to Buy

Both shared ownership and Help to Buy are government schemes designed to help people buy homes, but they work very differently and appeal to different buyers.

Help to Buy (which closed to new applications in October 2022 for most properties, and March 2023 for new builds) was an equity loan scheme where the government lent buyers up to 20% (40% in London) of the property value interest-free for five years. Buyers needed a 5% deposit and a 75% mortgage, with the government's equity loan making up the difference.

Shared ownership, by contrast, involves buying a share and renting the rest, with the option to purchase additional shares over time. Buyers don't repay the housing association for the unsold share unless they choose to staircase.

Key differences include:

Ownership structure - Help to Buy buyers owned 100% of the property from day one despite the equity loan, while shared ownership buyers only own their purchased share initially.

Repayment obligations - Help to Buy loans had to be repaid when selling or after 25 years, whereas shared ownership rent continues indefinitely unless you staircase to full ownership.

Property types - Help to Buy was available on new-build properties up to £600,000, while shared ownership is available on both new and resale properties up to varying price caps depending on location.

Exit flexibility - Help to Buy buyers could sell freely on the open market, while shared ownership sellers must offer the property to the housing association first.

For landlords, Help to Buy increased competition in the new-build purchase market but didn't directly affect the rental market since borrowers could afford to buy outright. Shared ownership, conversely, appeals to would-be tenants who might otherwise rent long-term, potentially reducing your pool of prospective tenants in affordable housing segments.

What happens when selling a shared ownership property?

Selling a shared ownership property follows a different process from standard home sales. When you decide to sell, you must notify the housing association, who typically has an eight-week period to find a buyer. This is called the nomination period.

During the nomination period, the housing association markets the property to eligible shared ownership buyers through their own channels. You cannot advertise the property on Rightmove, Zoopla, or other open market platforms during this time. The housing association determines the asking price based on an independent valuation, which you must pay for (typically £200-£300).

If the housing association finds a buyer within eight weeks, the sale proceeds through them. If no buyer is found, you gain the right to sell on the open market through an estate agent, though you'll pay their fees on top of the earlier costs. Either way, you're responsible for estate agent fees, legal costs, and any early repayment charges on your mortgage.

When the sale completes, you receive the proceeds from your share only. If you owned 50% of a property that sold for £250,000, you'd receive £125,000 minus selling costs, while the housing association retains the value of their 50% share. Any outstanding mortgage and rent arrears are deducted from your proceeds.

If you've staircased to 100% ownership, you can sell freely on the open market without involving the housing association, just like any other property sale. This flexibility is one reason many shared owners aim to reach 100% ownership as quickly as finances allow.

For landlords, understanding this process matters if you have tenants considering shared ownership. The restricted sale process means shared ownership isn't as liquid as standard property ownership, which may affect tenants' decisions about whether shared ownership suits their circumstances.

Shared ownership and the private rental sector

The growth of shared ownership has nuanced effects on the private rental market that landlords should understand.

In areas where shared ownership is widely available and affordable, it can reduce demand for private rentals among first-time buyer demographics. Tenants earning £25,000-£40,000 who might otherwise rent long-term may qualify for shared ownership, particularly if they have modest savings for a deposit. This affects tenant retention for landlords in areas with significant shared ownership developments.

However, shared ownership has limitations that keep many people renting. The combined costs of mortgage, rent, and service charges can exceed private rental rates for equivalent properties, particularly in areas where rents are relatively affordable compared to purchase prices. Tenants who value flexibility, dislike maintenance responsibilities, or prefer to avoid the financial risks of ownership may choose renting over shared ownership even if eligible.

Shared ownership also doesn't suit everyone's lifestyle. Young professionals who anticipate relocating for work, couples planning to upsize as families grow, or people who simply want flexibility to move without selling complications often prefer renting despite having the means to buy a share.

For landlords, the strategic implication is to understand your local market's shared ownership supply and how it affects your tenant demographic. In areas with large shared ownership developments targeting first-time buyers, expect higher tenant turnover among younger, financially stable renters. In areas where shared ownership is limited or unaffordable, tenants may have no choice but to continue renting, providing more stable demand.

How August helps landlords stay organised

Managing rental properties in an evolving housing landscape requires robust systems to track tenancies, compliance, and financial performance. Whether your tenants are considering shared ownership, moving between properties, or settling in for the long term, you need clear visibility over your portfolio.

August's property management software is specifically designed for small landlords managing their own properties. The platform combines rent tracking, compliance management, document storage, and tenant communication in one intuitive app.

When tenants give notice to pursue shared ownership, August helps you manage the transition smoothly. Track notice periods, schedule property viewings, store checkout inventories, and coordinate end of tenancy tasks without manual spreadsheets or scattered emails.

The compliance journey keeps you on track with gas safety certificates, electrical checks, deposit protection, and licensing requirements, with automated reminders ensuring nothing lapses. This is particularly valuable as regulations tighten under the Renters Rights Bill and compliance becomes ever more critical.

August's AI assistant answers questions about your portfolio instantly, from "has flat 3 paid rent this month?" to "when does the gas certificate expire for my Birmingham property?" This saves hours of manual checking and keeps information at your fingertips exactly when you need it.

For landlords managing multiple properties, August eliminates the chaos of disconnected systems. Everything lives in one place, accessible from your phone or computer, with your tenants getting their own app experience for rent payments, maintenance requests, and document access.

The bottom line on shared ownership for landlords

Shared ownership sits at the intersection of social housing policy and private home ownership, designed to help people who can afford more than social rents but less than outright purchase. For landlords, it's not a direct investment route, as eligibility restrictions and subletting prohibitions effectively exclude buy-to-let purposes.

However, understanding shared ownership matters for portfolio planning, tenant behaviour, and market dynamics. If your tenants are considering shared ownership, you need to anticipate turnover and plan accordingly. If shared ownership developments are expanding in your area, you should assess how that affects rental demand and property values over time.

The key takeaways are:

• Shared ownership is designed for owner-occupiers, not landlords, with strict eligibility and subletting restrictions

• Tenants purchasing through shared ownership typically cannot rent out their property without exceptional circumstances and housing association permission

• Understanding shared ownership helps landlords anticipate tenant decisions and plan for turnover

• Shared ownership affects the rental market by providing an alternative route to housing for first-time buyers who might otherwise rent long-term

• Landlords cannot generally add shared ownership properties to their portfolios unless they qualify as genuine owner-occupiers meeting eligibility criteria

For small landlords focused on building sustainable rental portfolios, traditional buy-to-let, auction properties, and off-market purchases remain the most viable routes to growth. Shared ownership serves a different purpose in the housing market, and while it's not suited to landlord investment, understanding how it works ensures you're informed about the options your tenants face.

Stay informed, plan ahead, and use the right tools to keep your rental business running smoothly as the housing market evolves. Whether your tenants stay for years or move on to shared ownership, being prepared makes all the difference.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice about shared ownership, property investment, or landlord obligations.