What is Part-Buy Part-Rent?

If you can't get the mortgage for the home you want, there are other options. Check out our introduction to Part-Buy Part-Rent homes

A family putting up a picture in their new home

Part-Buy Part-Rent is another name for Shared Ownership or Share-to-Buy, an official government affordable housing scheme which gives first time buyers, as well as some other groups, the chance to gain a foothold on the property ladder.

Under the terms of the ownership scheme the buyer and a housing association share ownership of the property. The buyer typically buys between 25% and 75% and pays rent to the housing association on the remaining share.

What is the appeal of Shared Ownership?

If you’re on a lower or middle income, the Shared Ownership scheme gives you the chance to buy your own home if you would otherwise be unable to do so on the same new build property. Your deposit will be a smaller percentage than if you were trying to buy the same home outright and, in theory, you can eventually buy further shares all the way until you’ve ‘staircased’ your way to 100% ownership.

Are there any drawbacks to Shared Ownership?

The Shared Ownership scheme may not be a suitable route for everyone to buy a home and get on the property ladder because:

  • There’s a shortage of available properties and you might struggle to find a home in your preferred location – for example, London
  • Shared Ownership homes are generally restricted to either newbuild properties or new homes that are available through resale from existing shared ownership owners
  • You may struggle to find a competitively priced mortgage compared to buying a home outright with a mortgage
  • Some Shared Ownership homes are leasehold so you must pay a service charge to live in your home, even once you own it outright
  • There’s no facility to increase your ownership by paying excess rent on an ad hoc or even regular monthly basis
  • You must still pay rent in addition to mortgage costs until you own your Shared Ownership home outright
  • Staircasing (the process of buying further shares) is sometimes complicated, particularly if the value of your new Shared Onwership home significantly falls or rises

Is Shared Ownership any different in London

If you live in London you’re eligible for a Shared Ownership scheme if:

  • Your household income doesn’t exceed £90,000 a year
  • You’re a first time buyer or first time buyers together and not currently a homeowner
  • You’re unable to find a suitable property in London on the open market

If you’re considering Shared Ownership properties in London, there’s a London-specific search tool to help you find a Shared Ownership home in the capital. Learn more about shared home ownership in London.

Check over here for our huge guide on Shared Ownership!

Are you eligible?

Not all Shared Ownership schemes are created equal. They can differ between housing associations so get specific details from them if you investigate Shared Ownership further.

Shared Ownership is restricted to applicants with a household income that doesn’t exceed £80,000 (£90,000 in London) and you typically need to meet one of the following criteria:

  • You’re a first-time buyer or first time buyers
  • You’ve previously owned a home but can no longer afford to do so on the open market
  • You’re a council or housing association tenant
  • You qualify as a member of military personnel
  • You’ve a long-term disability and meet the criteria for the government scheme Home Ownership for People with Long-Term Disabilities (HOLD)
  • You’re 55 or over and meet the criteria for Older People’s Shared Ownership (OPSO)

You’ll also need to prove that:

  • You’re at least 18 years old
  • You’re unable to afford to buy a suitable new home on the open market
  • You’re not in mortgage arrears
  • You have, if applicable, been able to pay rent on your existing home
  • You have a good credit history
  • You plan to live in the property and have no plans to rent it out
  • You have the permanent right to live in the UK
  • You’ve been approved for a Shared Ownership mortgage (unless you're buying your share in cash)

How do you find a Shared Ownership mortgage?

It pays to research the market and decide carefully as not all mainstream lenders offer Shared Ownership mortgages. You may want to get specialist ‘sharetobuy’ mortgage advice to help you buy a home.

Are there specific lending criteria?

As with any mortgage application, the lender will perform an affordability calculation to work out if you can meet the monthly repayments on your new Shared Ownership home. Financial Conduct Authority (FCA) rules introduced in 2014 mean that fewer people will be able to borrow more than four-and-a-half times their income. In addition, the lender will consider all the following before it makes a decision:

•Your income, including salary, bonuses and pensions

•Your outgoings, including vehicle costs, commuting costs and utility bills

•Your personal debt

•Your insurance payments

•Child maintenance costs

•The amount of rent you’ll be paying on your Share to Buy property

•Any ground rent and service charges

Lenders are further required to ‘stress test’ your ability to repay the mortgage in the event of interest rate rises or any of the following events:

•Redundancy

•Having a baby

•A career break

You may want to get specialist mortgage advice.

Learn about rent to buy in our latest article. Head over there now!

rooftops

How much deposit do you need?

For a Shared Ownership home, you’ll typically need a deposit that is equal to at least 5% of your proposed share (although some housing associations may prefer 10%) to get on the property ladder this way.

For example, if you were buying a 50% share in a Shared Ownership home valued at £200,000, your mortgage lender would probably require a deposit of £5,000 (5% of £100,000).

How much should you budget for additional costs?

Everything depends on your individual circumstances, including the terms and conditions of your Shared Ownership housing association, but you should budget to ensure that you’ve access to enough funds to cover the costs of buying your Shared Ownership home – for example, solicitor and management fees. Give yourself some leeway.

How much rent do you pay?

You pay rent at an amount that is calculated by your housing association; in most cases, this is worked out as around 3% of the unsold equity. To get an idea of how much this might be, divide the value of the housing association share by 100 then multiply this number by 3. The figure you’re left with is an estimate of your annual shared ownership rental liability. Simply divide this sum by 12 to get an idea of your monthly rent.

Do you have to pay Stamp Duty?

As Shared Ownership first time buyers, you can choose between paying Stamp Duty Land Tax (SDLT) on the full value of the property or just paying on the share you’re buying (if the share exceeds the SDLT threshold). If you take the second option, you won’t have to pay anything further until you own more than an 80% share in your home. Once you reach the 80% threshold, you’ll have to pay SDLT on the transaction that took you over 80% as well as any transactions after that. SDLT for Share to Buy properties is confusing at times so it’s worth discussing everything in-depth with your solicitor. GOV.UK has more detailed information.

You may also want to get specialist tax advice.

Leasehold or freehold?

Freehold homeowners own both the property and the land that it’s on; leasehold homeowners lease the land. Some leases can be as much as 999 years but make sure you check before jumping in because others can be much less.

Shared Ownership properties are always leasehold. This means the housing association owns the land and the Shared Ownership property. In the event you staircase your home to the point you own it outright, you may, in theory, be able to buy the freehold from the housing association.

It's worth checking the restrictions of the housing association and it's probably a good idea to discuss the implications with your conveyancing solicitor beforehand so you have a clear idea of your rights and options with a Shared Ownership home.

Can you buy more shares?

Whether you’ve bought 25% of a Shared Onwership property or 75%, it’s possible to buy further shares through a process known as ‘staircasing’ – the exceptions are for Older People’s Shared Ownership (OPSO) owners, who can’t own more than 75% of their home and buyers in certain semi-rural locations where ownership may be capped at 80%. Whatever the case, different housing associations have different rules regarding how you staircase and how many times you can do it. Bear in mind that if you’re buying a flat, you’ll need to continue paying a service charge even once you’ve bought your home outright.

Do you have to pay fees to staircase?

Once you’ve informed the housing association of your intention to buy further shares, they’ll carry out a valuation, which you’ll be charged for. If the value of the property has risen, you’ll have to pay more per share than you did at the time of your last purchase. If the value of the property has fallen, you’ll have to pay less.

You’ll also need to budget for legal and mortgage fees as well as for the possibility of further valuation reports in the event there’s disagreement over the initial valuation.

What if you can’t pay your monthly costs?

If at any point you anticipate that you’ll struggle to meet monthly rental and mortgage costs on your Share to Buy property, you should notify your housing association and lender so that you can try and manage the situation. In some rare instances, the housing association may be able to buy back shares from you—a process known as ‘flexible tenure’.

light and bright living room with lots of plants

Are there any affordable housing alternatives?

According to a 2019 study by Santander Bank, only one in four under 34s will own their own home in 2026. This prediction followed two decades in which the average age of first time buyers rose from 25 to 33 and middle-income earners increasingly struggled to get a foothold on the property ladder. Santander says that more than six in ten of first time buyers today earn more than £40,000—nearly £12,000 more than the ONS median household income of £28,400. Fortunately, there are creative ways for first times buyers to begin the journey to home ownership other than just with Shared Ownership properties. These include the following:

Shared Equity (Help to Buy)

Shared Equity loans are offered via the government’s Help to Buy scheme. Using the Help to Buy Shared Equity loan means you can begin the journey with a smaller deposit and a relatively low mortgage. However, the Help to Buy loan must be repaid after a specified time period or once the property is sold. The amount you repay will vary depending on the value of the property. More information about the Help to Buy initiative can be found here.

Right to Buy

Long-term council tenants may be able to buy their homes at a discount. However, if you sell within five years of the purchase date, you’ll have to repay some or all of the discount. More information about Right to Buy can be found here.

Wayhome

Wayhome is another home ownership option and is similar to Part-Buy Part-Rent Shared Ownership, but there are some crucial differences. For example, Wayhome allows you to buy more of your home each month without additional fees. We also only buy existing homes and we don't buy brand new properties, which is often the case with a Shared Ownership scheme.

When you buy more, your ownership percentage is updated and your monthly rent adjusted accordingly. Wayhome applicants need at least £29,000 combined household income before tax and a minimum 5% deposit of at least £10,000. You’ll also need enough money to cover your share of buying costs like solicitor fees, or the property survey. Wayhome is for both first time buyers and those who've bought before.

What do you fancy doing next?

Check out our guide to What is Shared Ownership?

Read about how Wayhome works

Read our FAQs