Shared Ownership finances explained

Full Market Values

The cost of your home will depend in part on its full market value and we set the prices in line with similar properties in the area that have sold recently, based on guidance by independent valuers who are approved by the Royal Institute of Chartered Surveyors (RICS). We update our values every three months until a sale has been agreed. If we successfully match you to one of our homes and you agree to reserve it, we won't change the sale price for you.

We offer a wide range of newly built and resale properties across London and each development or property will have various types and sizes of home, as well as a range of internal finishes. This variety means we can make homes available to applicants across a range of incomes – you'll find guidance on the minimum and maximum household income you'll need to buy specific properties on our web pages and in our brochures. 

Your share

Shared Ownership means you can buy a share in a property – usually ranging from 25% to 75% – and pay us a lower-than-market rent on the rest. For resale homes, the share you can buy will be the same as the equity share that the leaseholder who is selling the property currently has.

Any guidance household incomes we provide when we market our homes are based on the minimum share available. But if we match you to one of our new build Shared Ownership properties, the equity share we'll offer you to buy will be the highest share you can afford, based on your household income, savings and any commitments you might have such as loans, credit cards or childcare costs. This is so that you own as much of your home as you can afford at the time you buy, and puts you in the best possible position to potentially buy a greater share in the future.

All households manage their finances differently, and will have a different view on how much they can afford to contribute to housing costs each month. But we have to assess all applications in the same way: our definition of an affordable share is where housing costs for a purchase are no more than 45-50% of your total household income, after any regular commitments. This is just to be sure that you can afford the home at the time you buy, and also into the future because the costs do increase slightly over time – there's more about equity loan costs here, and rent costs here. 

The monthly outgoings we consider when we work with this out include your estimated mortgage repayments, monthly rent and service charge bills. It doesn't include costs for Council Tax, utility bills or property maintenance.

The share we offer you is the amount of equity you'll need a mortgage to cover, after deducting your mortgage deposit. So, for example, a 30% share of a homewith a full market value of £310,000 means you're buying an equity amount of £93,000. If you have 10% of the equity value in savings as your deposit you'll need a mortgage for the remaining amount of £83,700.

You'll need to pay this equity amount on the day you complete – your solicitor will request these funds from your lender. You'll also need to pay for 1 to 2 months' rent and service charge on the day of completion, so please have the money ready to cover this too.

Monthly costs

To give you an idea of how much a Shared Ownership home will cost, here are two examples that show the monthly costs based on different market values and shares.

They're only estimates though – have a look at how we work this out.

Example 1: Home worth £270,000

With a 25% share

  • 25% share = £67,500
  • Estimated mortgage = £359
  • Rent = £464
  • Service charge = £125
  • Total = £948
  • Guidance household income required: £34,172

With a 50% share

  • 50% share = £135,000
  • Estimated mortgage = £718
  • Rent = £309
  • Service charge = £125
  • Total = £1,153
  • Guidance household income required: £41,540

Example 2: Home worth £400,000

With a 25% share

  • 25% share = £100,000
  • Estimated mortgage = £532
  • Rent = £688
  • Service charge = £200
  • Total = £1,420
  • Guidance household income required: £51,160

With a 50% share

  • 50% share = £200,000
  • Estimated mortgage = £1,064
  • Rent = £458
  • Service charge = £200
  • Total = £1,723
  • Guidance household income required: £62,080

Other costs

These examples don't include other monthly costs such as gas, electricity, water, internet and phone services or council tax. We don't factor these into our affordability calculations, so you'll need to consider them separately when you're deciding whether to buy a property.

You'll also need to budget for some extra fees you'll need to pay when you buy your home. We recommend you budget for at least £3,000 to £4,000 to cover:

  • legal costs
  • mortgage arrangements (including survey fees)
  • stamp duty (please ask your solicitor about this)
  • 1 to 2 months' rent and service charge costs up front when you complete.

How we work this out

We've made some assumptions in working out the monthly cost examples for buying a Shared Ownership home. These costs will vary, depending on the share amount you buy, your mortgage product and the service charge for a particular home.

Mortgage assumptions

We've used a capital and interest mortgage with an interest rate of 5% for the total share amount (i.e. including your deposit) on a 25-year repayment term without tax relief.

The annual percentage rate (APR) of your mortgage will depend on the amount of the loan and the costs linked to it. Your monthly mortgage payments will depend on the mortgage product you can get, and the interest rate – this could increase over the term of the loan unless you get a mortgage with a temporarily fixed rate.

When you speak to a building society, bank or insurance company about a mortgage, please ask them for a written quotation. We recommend you speak to one of our suggested Specialist Financial Advisors – they'll be able to advise you on mortgage products that may be available from lenders who handle Shared Ownership applications.

Rent assumptions

You'll pay us rent on the share of the property we own – so for example if you own a 25% share, we own 75%. In the examples shown, the rent you pay is 2.75% of the share we own. This is typical for new build homes, but it can vary from scheme to scheme.

The rent will increase every year, typically at a rate of the Retail Price Index plus 0.5%. You'll find details of the annual increase in the terms of your lease agreement.

Service charge example

Service charges will vary because some developments will have more communal services than others, like a concierge or shared gardens and terraces. The service charge is also based on the size of your home so will be higher for larger properties.

Your service charges cover the cost of maintaining any communal parts you have access to. This includes the maintenance and servicing of any plant rooms, energy centres and other mechanical or electrical equipment such as lifts. It will also cover costs such as your buildings insurance and contributions towards a reserve fund to cover any unexpected major repairs. Your solicitor will give you a full breakdown of costs during the buying process.

The service charge is based on the estimated costs over the course of a year. We review these annually, so they may increase over time.

NEXT: check out our complete guide to buying your Shared Ownership home

Need more information?

If you have any questions about Shared Ownership or these example costs, please get in touch: you can call us on 0203 815 2222.