Resumo
Shared ownership is a government-backed scheme that lets you buy a share of a property (typically 10–75%) and pay subsidised rent on the portion you don’t own. The calculator shows your total monthly cost — mortgage payment on your share, rent to the housing association, and service charge — and compares it to renting privately and buying outright.
Como funciona
The three monthly costs
As a shared owner, you pay three things each month:
- Mortgage — on the share you purchased, minus your deposit. Calculated using the standard repayment amortization formula.
- Rent — on the housing association’s (unowned) share, typically at 2.75% per annum of the unowned value. The legal cap is 3%.
- Service charge — building maintenance, insurance, management fees, and sinking fund contributions. Varies by property.
Eligibility
| Criterion | Requirement |
|---|---|
| Household income (outside London) | ≤ £80,000 |
| Household income (in London) | ≤ £90,000 |
| First-time buyer or… | Former owner who can no longer afford, or forming new household |
| If currently a homeowner | Must have a sale agreed before completion |
Share sizes
Under the Affordable Homes Programme 2021–2026 (the “new model”), you can buy between 10% and 75% of the property. Older properties may have a minimum of 25%.
Deposit
Your deposit is calculated on your share, not the full property. Lenders typically require 5–10% of your share as a deposit. This means you need significantly less upfront capital than buying outright:
| Property price | Share (25%) | Deposit (10% of share) |
|---|---|---|
| £200,000 | £50,000 | £5,000 |
| £300,000 | £75,000 | £7,500 |
| £400,000 | £100,000 | £10,000 |
Rent on the unowned share
The housing association charges rent on the portion of the property they still own. The initial rate is capped at 3% per annum of the unowned value, though most charge 2.75%.
Annual rent increases follow one of two regimes:
| Lease signed | Formula | Notes |
|---|---|---|
| Before 12 October 2023 | RPI + 0.5% | Floor of 0.5% (rent always increases) |
| On or after 12 October 2023 | CPI + 1% | Floor of 0% (rent can be held flat) |
Staircasing
You can buy additional shares over time (“staircasing”), eventually owning the property outright. Under the new model, you can buy as little as 1% per year for the first 15 years without needing a formal valuation. Larger purchases (5%+ increments) require a RICS valuation at current market value.
Affordability
The calculator flags affordability based on housing costs as a percentage of gross income:
| Housing cost % | Assessment |
|---|---|
| Below 30% | Affordable (green) |
| 30–45% | Stretched (amber) |
| Above 45% | Unaffordable (red) |
A fórmula
Where
Where:
- Share value = property price × share percentage
- Unowned value = property price − share value
- Deposit = share value × deposit percentage
- Mortgage amount = share value − deposit
Exemplo prático
£300,000 property, 25% share, 10% deposit, 4.5% rate, 25 years
Share value (25% of £300,000)
= £75,000
Unowned value
= £225,000
Deposit (10% of share)
= £7,500
Mortgage amount
= £67,500
Monthly mortgage payment
= £375.19
Monthly rent (2.75% of unowned share)
= £515.63
Monthly service charge
= £150.00
Total monthly cost
= £1,040.81
Housing cost as % of income
= 25.0% — affordable
Result
Total monthly cost = £1,040.81 (mortgage £375 + rent £516 + service charge £150)
Comparison with alternatives
Using the same example:
| Option | Monthly cost | Difference |
|---|---|---|
| Shared ownership (25% share) | £1,041 | — |
| Renting (£1,200/month market rent) | £1,200 | £159 more |
| Buying outright (10% deposit, same rate) | £1,651 | £610 more |
The outright purchase comparison assumes the same deposit percentage (10%) and mortgage rate. It includes the service charge in both scenarios since a leasehold buyer would also pay it.
Entradas explicadas
- Property price — the full market value of the shared ownership property
- Share percentage — the share you’re buying (10–75%)
- Deposit percentage — your deposit as a percentage of your share (not the full property)
- Mortgage rate — annual interest rate on the mortgage for your share
- Mortgage term — years over which you repay the mortgage
- Rent percentage — annual rent as a % of the unowned value (typically 2.75%, max 3%)
- Annual service charge — yearly maintenance, insurance, and management fees
- Household income — gross annual income (used for affordability assessment)
- Market rent — equivalent private rental for comparison
Resultados explicados
- Total monthly cost — mortgage + rent + service charge
- Monthly cost breakdown — visual split showing how much goes to each component
- Deposit and mortgage amounts — upfront capital needed and amount borrowed
- Saving vs renting — how much cheaper (or more expensive) shared ownership is compared to private renting
- Saving vs buying outright — monthly saving compared to purchasing the property at full price
- Affordability gauge — housing cost as a percentage of gross income, colour-coded
- Lifetime costs — total interest, total rent, and total service charges over the mortgage term
Premissas e limitações
- Rent is fixed. The calculator uses a constant rent rate over the full term. In reality, rent increases annually (CPI + 1% or RPI + 0.5%), so the actual lifetime rent cost will be higher.
- No staircasing. The calculator assumes you keep the same share for the entire term. In practice, many shared owners buy additional shares over time, which reduces rent but increases mortgage payments.
- No property growth. The calculator does not model property appreciation. If the property value increases, staircasing costs more (you buy at market value) but your equity grows.
- Service charge is constant. Real service charges increase over time and can be subject to large one-off increases for major works.
- The affordability threshold (45%) is a calculator heuristic, not an official lending criterion. Lenders use their own detailed affordability assessments.
- Stamp duty is not calculated. Shared owners can either pay stamp duty on the full property value upfront or on each staircasing transaction once they exceed 80% ownership.
- Rates shown are for England only. Scotland, Wales, and Northern Ireland have different schemes (e.g. New Supply Shared Equity in Scotland, Shared Ownership Cymru in Wales).
Verificação
| Test case | Inputs | Expected total monthly | Source |
|---|---|---|---|
| Default | £300k, 25% share, 10% dep, 4.5%, 25yr, 2.75% rent, £1,800 SC | £1,040.81 | Manual calculation |
| Higher share | £300k, 50% share, 10% dep, 4.5%, 25yr, 2.75% rent, £1,800 SC | £1,244.12 | Manual calculation |
| Minimum share | £300k, 10% share, 10% dep, 4.5%, 25yr, 2.75% rent, £1,800 SC | £918.82 | Manual calculation |
| No service charge | £300k, 25% share, 10% dep, 4.5%, 25yr, 2.75% rent, £0 SC | £890.81 | Manual calculation |
| Max rent rate | £300k, 25% share, 10% dep, 4.5%, 25yr, 3.0% rent, £1,800 SC | £1,087.69 | Manual calculation |
Sources
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