Shared ownership has become an increasingly popular route onto the property ladder for buyers who cannot afford to buy a home outright on the open market. It allows buyers to buy a share of a property, typically between 10% and 75%, and pay a subsidised rent on the remaining share to a housing association. Over time, owners can buy additional shares in the property through a process called staircasing, with the option to eventually own 100% of the home.
But what happens when a shared ownership homeowner wants to sell? The rules around selling a shared ownership property are different from those that apply to a standard freehold or leasehold sale and understanding them before you begin can save valuable time and avoid unnecessary complications. This guide explains how shared ownership works, what your options are when you want to sell, and what to expect from the process.
How Does Shared Ownership Work?
Shared ownership is a government-backed scheme administered through housing associations. It is designed to help people who cannot afford to buy on the open market, including first-time buyers, those who previously owned a home but can no longer afford to buy, and people with a long-term disability.
When you buy through shared ownership, you buy a share of the property using a mortgage and a deposit, just as you would with a standard purchase. The key difference is that you only need a mortgage for the share you are buying rather than the full value of the property, which significantly reduces the deposit and monthly mortgage payments needed.
In addition to your mortgage, you pay rent to the housing association on the share of the property you do not own. This rent is typically set at a subsidised rate below the open market level. You also pay a monthly service charge to cover the maintenance of communal areas and the building, particularly relevant for flats.
Shared ownership properties are always leasehold, regardless of whether the property is a flat or a house. This means you own a lease on the property rather than the property itself, and the housing association keeps the freehold.
What Is Staircasing?
Staircasing is the process of buying other shares in your shared ownership property over time. Each time your staircase, you buy a further percentage of the property at its current market value, as determined by an independent RICS valuation. As you increase your share, the rent you pay to the housing association reduces proportionally.
Under the rules introduced by the government in 2021 for new shared ownership properties, buyers can staircase in increments of as little as 1%, making it more accessible to increase ownership gradually. For older shared ownership properties, the minimum staircasing increment is typically 10%.
Once you own 100% of the property through staircasing, you effectively become the full owner. At this point, for houses, it may be possible to buy the freehold from the housing association. For flats, you will remain a leaseholder but will no longer pay rent to the housing association.
Can You Sell a Shared Ownership Property?
Yes, you can sell a shared ownership property, but the process is different from selling on the open market. The key difference is that your housing association has what is known as a nomination period, typically between four and eight weeks, during which they have the right to find a buyer for your property before you can market it openly.
During the nomination period, the housing association will try to find a buyer from their waiting list of eligible shared ownership applicants. If they find a suitable buyer within the nomination period, you must sell to that buyer at a price decided by an independent valuation. You do not have the option to market the property or negotiate a higher price during this period.
If the housing association does not find a buyer within the nomination period, you are then free to sell your share on the open market. In this case, the buyer does not have to be a first-time buyer or meet the shared ownership eligibility criteria, though they will be taking on the shared ownership lease and will need to meet the housing association's requirements going forward.
It is also worth noting that if you have staircases to 100% ownership, the nomination period and shared ownership selling rules no longer apply. You can sell the property on the open market in the same way as any other home.
Getting a Valuation Before You Sell
Before you can sell a shared ownership property, regardless of whether you are in the nomination period or selling on the open market, you will need to obtain an independent RICS valuation. This valuation sets the price at which the property must be sold and is valid for a limited period, typically three months.
It is important to instruct a qualified RICS surveyor with experience of shared ownership valuations. The valuation must be acceptable to your housing association, and using a surveyor they have approved or recommended can avoid disputes further down the line.
If you disagree with the valuation, you have the right to challenge it, though this process can take time. If you have made improvements to the property during your ownership, make sure the surveyor is aware of these, as they may affect the valuation positively.
The Costs of Selling a Shared Ownership Property
Selling a shared ownership property involves similar costs to selling any leasehold property, but with some added considerations:
• RICS valuation fee: typically, between £200 and £400 depending on the surveyor and the property.
• Solicitor fees: you will need a solicitor experienced in shared ownership transactions, as the legal process is more complex than a standard sale.
• Estate agent fees: if you are selling on the open market after the nomination period, you will need to instruct an estate agent or an online estate agent.
• Housing association admin fee: some housing associations charge an administration fee for processing the sale.
• Early repayment charges: if you have a fixed rate mortgage, check whether early repayment charges apply if you are selling before the end of your fixed term.
Tips for a Smooth Shared Ownership Sale
Selling a shared ownership property can take longer than a standard sale, partly because of the nomination period and partly because the leasehold nature of the property adds complexity to the conveyancing process. The following steps can help the process run as smoothly as possible:
• Notify your housing association as early as possible that you intend to sell, so the nomination period can begin promptly.
• Instruct a solicitor with specific experience in shared ownership sales before you begin the process.
• Obtain your RICS valuation promptly and check its validity period so you are not left needing a second valuation if the sale takes longer than expected.
• Gather all relevant paperwork including your lease, service charge accounts, and details of any improvements made to the property.
• If your lease has fewer than 80 years remaining, consider extending it before selling as a short lease can deter buyers and complicate mortgage applications.
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With over 17 years of experience helping UK sellers of all property types, we understand the complexities of leasehold and shared ownership sales and are here to support you at every stage of the process. Ready to list your shared ownership property? List your property with I Am The Agent today and find out how much you could save.