Shared ownership homes: buying, improving and selling
Paying rent
For a shared ownership home, you need to pay rent to your landlord for the share you do not own.
You may lose your home and the money you put into it if you do not pay your rent or you break the terms of your lease.
The landlord usually reviews the rent each year so your rent may increase. There are limits to how much rent the landlord can charge you.
Rent limits
If you buy a new-build shared ownership home, the rent limit is 3% of the value of the share the landlord owns. Most landlords charge 2.75%.
For ‘resale’ homes, the starting rent will be set at the same level as the previous shared owner was paying.
Example
The table shows how much the rent might be for a home valued at £400,000 and a home valued at £200,000.
| Home 1 | Home 2 | |
|---|---|---|
| Total value of the home | £400,000 | £200,000 |
| Your share (40% of the total) | £160,000 | £80,000 |
| Remaining share (60% of the total) | £240,000 | £120,000 |
| Rent for the first year (2.75% of remaining share) | £6,600 | £3,300 |
| Your monthly rent | £550 | £275 |
Rent review
The landlord will review your rent at the times set out in your lease. This is usually once a year.
Your rent may go up when it is reviewed. It will not go down.
How much your rent can go up depends on the date you signed your lease.
If you signed your lease before 12 October 2023
The most your rent can go up by is the percentage increase in the Retail Prices Index (RPI) for the last 12 months plus 0.5%. This means that if the RPI increase for the 12 months is 0% or negative, the most your rent can go up by is 0.5%.
Example
Your rent is £360 a month. On your rent review date, the RPI increase over the last 12 months is 4% so your rent could increase by 4.5% (4% plus 0.5%). This means your rent could go up to £376.20 a month.
If you signed your lease on or after 12 October 2023
Check the terms of your lease to see how much your landlord can increase your rent by. It will be either:
- the Retail Prices Index (RPI) plus up to 0.5%
- the Consumer Prices Index (CPI) plus 1%
If your rent increases in line with the CPI, the most your rent can go up by is the percentage increase in the CPI for the last 12 months plus 1%. If the CPI increase for the 12 months is -1% or below, your rent can be held at 0%.
Example
Your rent is £550 a month. On your rent review date, the CPI increase for the last 12 months is 2.1%, so the most your rent could increase by is 3.1% (2.1% plus 1%). This means your rent could go up to £567.05 a month.
If you buy more shares
The amount of rent you pay will be based on the landlord’s share. If you buy more shares, you’ll pay less rent.
Example
You own a 40% share and pay £800 a month in rent on the 60% the landlord owns. You buy another 30%, so now you own 70% of the home and the landlord owns 30%.
Because the landlord owns half as much as they did before, your rent is also half as much as it was - £400 instead of £800.