With shared ownership, you can purchase between 10 – 75% of your property to start with. This means you’ll need a smaller mortgage and a smaller deposit. Say you initially purchase 25% of your property, this means that we still own 75% of the property. You’ll have to pay us rent for that percentage of the property.
Usually your rent is calculated as 2.75% of the unsold equity in your home (the part that you don’t own). Your lease will set this out in more detail.
Example
Property value = £275,000
Initial percentage owned = 50%
Portion of equity to calculate = £137,500
£137,500 x 2.75% = £3,781.25 per year. Dividing this by 12 would provide the monthly rental of £315.10.
The rent you pay us is simply to cover the shares of your home that we still own. When you bought your home, we too will have taken out a loan to cover the percentage you don't own. The rent you pay goes towards paying that loan off as well.
The more shares you buy, the lower the rent you pay will be.
Will the amount of rent I pay change?
For shared ownership homes, rent is capped at 3% of the value of the shares that we still own. Your rent is reviewed each year and the most it can go up by is the Retail Price Index + a defined percent (your lease will have this information). This means that the rent you pay is affected by what is going on in the external environment, such as inflation and interest rates.
For example, if the defined percentage in your lease is 0.5% and RPI was 8.9% then your rent would increase by 9.4% (0.5% + 8.9%).
What this could look like
Based on the above example (where the rent was £315.10 per month) you can see how the rent would be projected to change over the course of 7 years. Please note, the below is for illustration purposes only:
| Year | RPI (as used for the rent increase) | Additional percentage on the lease | Increase amount | Amount of rent to pay |
| 1 | - | - | £315.10 | |
| 2 | 5% | 0.5% | £17.33 | £332.43 |
| 3 | 4.5% | 0.5% | £16.62 | £349.05 |
| 4 | 3% | 0.5% | £10.64 | £359.69 |
| 5 | 2% | 0.5% | £8.99 | £368.68 |
| 6 | 2% | 0.5% | £9.22 | £377.90 |
| 7 | 1.5% | 0.5% | £7.56 | £385.46 |
Retail Price Index (RPI) is a measure of consumer inflation and is produced by the UK’s Office for National Statistics (ONS). From 2023, it was replaced by Consumer Price Index as the main indication of consumer inflation, however we still use RPI as a measure for our rent review.
You can keep an eye on RPI using the ONS website, which could help you predict any possible change to the rent you pay: Inflation and price indices - Office for National Statistics (ons.gov.uk)
Shared ownership is a Government model to help more people get on the property ladder. The way rent is calculated is also set by the Government to ensure shared ownership rent is kept fair and accessible.
We review your rent and service charge (if applicable) every April but we’ll be in touch with you about any changes around the end of February each year.
Please note, the way rent increases are calculated means that your rent will never decrease.
N.B If your lease started before 15 January 1989, it’s likely that the terms of your lease refer to the rent being reviewed by the Rent Office. If your lease does specify this, you rent is reviewed by this agency every two years.
We understand that things come up in life that put a strain on our finances. That’s why we have an in-house Money Advice Team who are here to help you with any queries or issues you’re having with your finances. They can help you with claiming benefits, maximising your income, debt relief, budgeting, accessing food banks and lots more.
You can get in touch with them here or phone us on 0345 60 20 540.
