Shared ownership housing is available to households earning below set income caps: currently these are £90,000 in London and £80,000 for the rest of England.

The occupier of a shared ownership home buys a share of the house with a mortgage at a level they can afford, which may range of 25% to 75% of the full value of the property. This is known as the first tranche sale. The remaining unsold equity is typically held by a housing association and the occupier pays an inflation linked rent on this share, at an initial yield of up to 2.75%. There is the option for the occupier to increase the share of the home that they own, which is known as ‘staircasing’.

Downward staircasing, where the landlord buys back additional equity from the occupier, is possible but only intended to be used where households are in financial difficulties and unable to sustain their level of ownership. This is rare and constitutes only in the region of 2% of all instances of staircasing, according to CCHPR 2012 research. It represents a unique option for a mortgage lender to mitigate losses in the event that an occupier can no longer afford loan repayments.

Legally, the occupier of a shared ownership property is a tenant and only becomes an owner when they have fully staircased out. The freehold or leasehold of a shared ownership home has usually been held and managed by a housing association, although all repairs and insurance are the responsibility of the occupier.

Find out more about how shared ownership can work for you