Ongoing costs of shared ownership

There are ongoing costs to pay when you own a shared ownership property.

These include:

• rent you pay on the percentage of the property you do not own – this will increase over time
• your mortgage repayments – these can increase if interest rates go up
• service charges – these can increase over time
• costs of extending your lease (if you choose to)
• costs involved in staircasing – if you choose to buy more shares of your property
• buildings insurance (this cost may be included in the service charge instead)
• certain maintenance costs
• contents insurance

You may also need to pay:

• ground rent
• management fees
• estate charges
• administration charges to the housing provider – for example, for permission to make improvements or sublet your property
• marriage value – if your lease drops below 80 years and you extend it before the leasehold reforms end marriage value

When you buy a share of a property, you pay rent on the share that belongs to the landlord (housing provider). The cost of your rent for the first year is usually based on 3% of the share your landlord owns.

If you buy a new-build shared ownership home, the rent limit is 3% of the value of the share the landlord owns. Most landlords charge 2.75%.

Each year, your rent will increase.

If you buy more shares of your property (‘staircase’) this will reduce the amount of rent you have to pay. But staircasing can be expensive.

If you have a shared ownership property through the Older Persons Shared Ownership (OPSO) scheme, you will not have to pay rent once you own 75%.

Example of how rent is calculated

If you signed your lease before 12 October 2023

Your rent will increase each year, but there is a maximum amount it can increase in any year.

The maximum amount rent can increase by is 0.5% plus the percentage increase in the Retail Prices Index (RPI) over the last 12 months.

This means that if the RPI increase for the last 12 months is 0% or negative, the most your rent can go up by is 0.5%.

If you signed your lease before 12 October 2023

Check the terms of your lease to see how much your landlord can increase your rent by. It will be either:

• the Retail Prices Index (RPI) plus up to 0.5%
• the Consumer Prices Index (CPI) plus 1%

If your rent increase is linked to the CPI, the most your rent can go up by is the percentage increase in the CPI for the last 12 months, plus 1%.

If CPI for the last 12 months is -1% or below, your rent will not increase.

Service charges can go up or down, depending on the level of maintenance done to your building from year to year.

Check that your service charges are correct. You can challenge a service charge if you think you’ve been charged unfairly.

You can find out more about service charges and how to challenge your service charge if it’s unreasonable.

To sell a shared ownership property, you need to have more than 80 years remaining on the lease. If the lease drops to 80 years remaining or less, you’ll need to extend it.

Costs of extending a lease include:

• a property valuation with a RICS surveyor
• your legal fees
• your landlord’s legal fees
• an administration charge paid to the landlord
• marriage value – if your lease is less than 80 years and you extend before leasehold reform ends marriage value

You can read more about extending your shared ownership lease.

If you plan to buy more shares in your property (staircase), you’ll need to know about the costs involved.

The minimum share you can buy at a time depends on the type of lease you have. See more information about staircasing and model leases.

When you staircase, you’ll need a valuation to work out the current market value of the property. If the value of your property has gone up since you bought it, the cost of buying a share will have increased too. For example, if a 25% share was worth £100,000 10 years ago, it could cost £140,000 now.

Costs of buying a share of 5% or more include:

• a property valuation with a RICS surveyor
• your legal fees
• an administration charge paid to the landlord
• Stamp Duty Land Tax (SDLT) – once you reach 80% ownership

You can read more about buying more shares in your shared ownership home (staircasing).

You may need to pay an estate charge to cover the cost of maintaining communal areas such as roads. This is separate from the service charge.

The landlord may charge you administration charges, such as a fee for permission to sublet, or to make changes such as renovating your bathroom.

Example 1

Example 2

Natasha bought 25% of a shared ownership property 10 years ago. Since then, the value of the property has increased, as well as her rent and service charges. She wants to staircase to 50%.