Keelman Homes logo

Our guide to shared ownership.

by Anne-Marie Pearce & filed under Help to Buy, Latest news, Owning your home, Shared ownership

How does shared ownership work?

Basically if you can’t afford to buy a home outright, you could initially buy between 25% and 75% of one of our new homes and pay rent on its remaining share.

Buyers are expected to buy the biggest share in the home that they can afford. You can then opt to purchase further shares in the property and eventually own your home.

You will need to secure a mortgage and/or have savings for the share you wish to purchase.

Who is shared ownership suitable for?

Shared ownership is generally aimed at first-time buyers, but with priority to serving members of the British Armed Forces and those honourably discharged in the last two years.

If you are interested in the scheme, your application will be assessed by Help to Buy NEYH, the Help to Buy agent for the North East, Yorkshire and Humberside appointed by the Homes and Communities Agency, who will determine whether you can afford to buy the property without assistance and without getting into financial difficulty.

Your household income must be less than £60,000 per annum and you will undergo a full credit check.

Homeowners living in the local area who are currently selling their property may be considered depending on their circumstances and if their buyer is ready to proceed.

The scheme is not open to investors with a buy-to-let intention.

What income do I need to afford shared ownership?

This will depend on the value of the share you purchase.

The minimum affordability criteria are that your cost of housing (rent, mortgage and service charges) should not exceed 40% of your net monthly income.

Your net monthly income would include any benefits plus your pay after tax and national insurance, and any loan or credit card payments.

What would it cost to buy a share of a property?

Below is an example of what a shared ownership home could cost with a 10% deposit: however, there is the option to pay a minimum of 5%, making it a lot more accessible.

Property price (two-bed house) £115,000

  • Your share: 50% (£57,500)
  • Keelman Homes’ (a subsidiary of The Gateshead Housing Company) share: 50% (£57,500)
  • Deposit needed: 10% (£5,750)
  • Mortgage required: 40% (£51,750)

Monthly repayment mortgage (including interest) based on a 4% fixed rate over 25 years: £276.05*

Monthly rent based on 50% share of £115,000 property value: £162.29*

Total monthly rent and mortgage payment: £438.34*

Prices will vary depending on the percentage of the property you buy, and the possible mortgage repayments and rent.

*These figures are for illustration purposes only. Rents are variable depending on share purchased and size of property.

Other mortgage products are available and you are advised to make your own arrangements with independent financial advice. Prices are determined by an independent valuer and cannot be discounted.

You have to pay rent on the property until you own it outright.

The rent you pay will be reviewed on 1st April each year, and will increase in line with retail prices index each September +0.5%, as stated in the lease.

Your rent will include buildings insurance and an administration fee.

Please note that if you are buying a home, you will need to pay a solicitor to carry out the legal work involved, for third party fees like Land Registry and Stamp Duty Land Tax, mortgage fees and for surveys, and arrange your own contents insurance.

There will be a £250 holding fee, which is deducted from the price you pay when you complete the purchase.

This will reserve a property for six weeks. If you then back out of the sale, the fee is non-refundable.

You should also remember that house prices can go up and down, so you may have to pay more for additional shares in a property in the future; or have to sell at a price that is less than what you originally paid.

Examples of monthly rents

The table below highlights examples of some monthly rents for shared ownership properties based on current charges (2015/16).

Rent per calendar month based on market value

% purchased £115,000 (two-bed semi-detached house) £126,000 (three-bed mid-terraced house £132,000 (three-bed end-terraced house) £134,000 (three-bed semi-detached house) £168,000 (four-bed detached house) £175,000 (five-bed detached house)
25 £232.57 £252.98 £263.97 £267.63 £331.14 £344.39
30 £218.44 £237.60 £247.86 £251.27 £310.63 £323.03
35 £204.40 £222.23 £231.74 £234.92 £290.13 £301.67
40 £190.37 £206.85 £215.63 £218.56 £269.62 £280.32
45 £176.33 £191.47 £199.52 £202.21 £249.12 £258.96
50 £162.29 £176.09 £183.41 £185.85 £228.61 £237.60
55 £148.26 £160.71 £167.30 £169.50 £208.11 £216.24
60 £134.22 £145.33 £151.19 £153.14 £187.60 £194.88
65 £120.19 £129.96 £135.08 £136.79 £167.10 £173.52
70 £106.15 £114.58 £118.97 £120.43 £146.60 £152.16
75 £92.12 £99.20 £102.86 £104.08 £126.09 £130.80


Please note that your monthly rent may differ as the market value of the property may rise or fall – contact Help to Buy NEYH for more information.

Rents may also vary as shares between 25% and 75% of the market value of the property can be sold.

The rents above include an administration charge of £12.83 per month plus buildings insurance.

This is calculated based on the size of the property in metres squared, plus the current rate of tax for insurance.

When you buy a shared ownership property, rent is always due in advance of the coming month. Non-payment of rent could result in your home being repossessed.

Shared ownership rents are reviewed on an annual basis and will change through the application of a specific formula. This ensures any increase or decrease in rent is fair, consistent and transparent.

This is all set out in your lease and involves altering the rent at the same level as the percentage change in the retail prices index for the 12 months to the previous September, plus no more than 0.5%.

A full breakdown can be provided on request.

Rights and responsibilities under the shared ownership lease

Shared ownership homes have a leasehold tenure, which means you would own the property for a fixed period of time, usually 99 years, but not the land on which it is built.

This would be for a freehold property.

Keelman Homes will own the property, which will be managed by The Gateshead Housing Company.

The housing company will set out the rights and responsibilities for the landlord and the tenant.

As you (the tenant) own a share in the property and are the home owner, you will be solely responsible for its maintenance under the terms of your lease.

What if I want to increase my share of the property at a later date?

Over time you can opt to buy a larger share in your home – this is known as ‘staircasing’.

You do not have to do this – you can maintain the initial share you bought in the property for as long as you like.

If, however, you do increase your share, your rent would also decrease.

Please note that if the property is bought outright the freehold interest will not be transferred as it is in a protected area.

If I decide to buy my home, what happens to the charges payable to Keelman Homes?

The rent will no longer be payable.

Keelman Homes will continue to insure the building on your behalf, and you must carry on paying the buildings insurance premium and administration fee.

What running costs should I expect to pay after I buy a shared ownership property?

You should budget for:

  • Mortgage repayments, which may differ depending on interest rates, the amount borrowed, length of terms and any fees
  • Rent based on the proportion of the share you own, which will also include your building insurance
    Council Tax
  • Any repairs and maintenance to the building
  • Contents insurance
  • Heating, lighting, water and sewerage charges
  • Fixtures and fittings
  • Making savings for unforeseen circumstances.

What happens if I don’t pay my mortgage or rent?

Your home could be repossessed by either Keelman Homes or your mortgage lender.

Will Keelman Homes pay for the cost of repairs?

No. Even though you own a share of the property, you are the home owner and under the terms of the lease you are solely responsible for the maintenance of your home.

This includes the maintenance of any gardens, fences, walls and hedges.

In addition to repairs, you are also responsible for arranging for all gas installations within the property to be tested (serviced) annually and providing a copy of the servicing certificate to Keelman Homes.

Failure to do so will result in Keelman Homes obtaining entry to the property, carrying out the test and billing you for the cost of the service.

Can I make alterations to the property?

Before making any alterations or additions to the property you must seek written permission from Keelman Homes.

You will be responsible for obtaining all licences, planning permission and building regulation consent in relation to any work being carried out.

Can I sublet the property?

No, you are not permitted to sublet the property.

What if I want to move?

You can sell your property at any time but you must inform The Gateshead Housing Company to arrange a valuation on your behalf.

At the time of a sale if you have, for example, a 50% share in the property, you would be entitled to 50% of the value of the home at that time.

You should be aware that the market value of the property at the time of the valuation and subsequent sale may be higher or lower than the original purchase price.

Keelman Homes will have first refusal on whether it will buy the property from you.

Clauses in the lease will enable the housing company to nominate or approve prospective buyers and restrict the sale price as per an independent valuation.

How to apply

For more information contact Help to Buy NEYH, who can provide more information on the properties available and carry out an assessment of your current financial circumstances.

Help to Buy NEYH will assess your application against the following criteria before passing to the housing company:

  • You must have a household income below £80,000 but have enough to afford the minimum share in the property
  • You are a first-time buyer or in priority need of housing if you already own a property
  • You are unable to purchase a property that meets your needs on the open market without help.

The information you provide will be fed in to central government to highlight who is buying affordable home ownership products to determine future planning.

If you meet the above criteria you will be invited to an information interview with the housing company to give you the opportunity to discuss how shared ownership works and hand in documentation such as payslips and bank statements.

Want to know more?

Want to know more?