Managing Monthly Costs for Shared Ownership Homeowners

Once you own a home, you may need to pay additional charges beyond the mortgage. These charges can include:

Rent
Service charges

Understanding each of these costs and how they may change over time is essential for budgeting effectively and maintaining financial stability as a shared ownership homeowner.

Rent Payments for Shared Ownership Homes

Shared ownership properties are sold on a leasehold basis. As the owner of a share in the property, you must pay rent to the landlord for the share that you do not own. The landlord usually reviews the rent each year, which may result in an increase.

How Is Rent Calculated?

For new-build shared ownership homes, the starting rent is capped at 2.75% per year of the value of the landlord’s share. For example, if the property is worth £250,000 and you own a 40% share, the landlord’s share is worth £150,000. At 2.75%, your annual rent would be approximately £4,125, or about £344 per month.

For resale shared ownership homes, the starting rent will typically be set at the level the previous owner was paying, which may have increased from the original starting rent over the years.

✅ If you buy more shares (staircase), you will pay less rent because the landlord’s share decreases.

⚠️ If you purchase a new-build home, the starting rent limit is 3% of the value of the share that the landlord owns. Typically, it starts from 2.75%.

⚠️ For resale homes, the starting rent will be set at the same level as the previous owner was paying.

⚠️ Keep in mind that your rent may go up when it is reviewed, and it will not go down.

How Do Annual Rent Increases Work?

Most shared ownership leases include a rent review clause that allows the landlord to increase rent once a year. The increase is usually linked to a formula, commonly RPI (Retail Price Index) + 0.5% or CPI (Consumer Price Index) + 1%. This means your rent could increase faster than general inflation in some years.

It is important to check your lease for the exact rent review mechanism before purchasing, so you can plan for future increases. Over a 10-year period, even small annual increases can add up significantly.

Understanding Service Fees and Their Coverage

Typically, you will need to pay a service charge to the housing association for the services they provide. This charge covers the cost of cleaning, building insurance, and maintenance of communal areas.

Service charges vary considerably depending on the property type and location. Flats and apartments in managed developments tend to have higher service charges than houses. Annual service charges typically range from £1,000 to £3,000 for flats, though they can be higher for properties with extensive communal facilities such as lifts, gyms, or concierge services.

⚠️ Ask the landlord for a summary showing how the charge is calculated.

⚠️ Be aware that the charge may vary from year to year without any limit.

✅ You have the right to challenge service charges if you believe they are unreasonable — seek advice from the Leasehold Advisory Service (LEASE) if needed.

Possible Additional Fees for Some Shared Ownership Homes

For some homes, there may be additional charges that are not covered in the service charge, such as:

Estate charge — for the maintenance of roads, paths, and landscaping on a private estate
Management fee — a separate fee for the day-to-day management of the development
Repairs reserve fund (sinking fund) — a pot of money set aside for major future repairs like roof replacement or lift refurbishment

Ask the housing association to provide a full breakdown of all charges before you commit to purchasing.

Budgeting Tips for Shared Ownership Homeowners

To maintain financial stability, consider the following:

Create a monthly budget that includes your mortgage payment, rent, service charge, and all additional fees.
Set aside a contingency fund of at least three months’ worth of total housing costs for unexpected expenses.
Review your annual rent and service charge notices carefully each year and query any increases that seem unreasonable.
Factor in rent increases when planning your long-term finances — use the formula in your lease to estimate future costs.

Key Considerations for Financial Stability

It’s important to note that failure to pay rent or breaking the terms of your lease can result in losing both your home and the money you have invested in it. If you are struggling with payments, contact your housing association as early as possible — they may be able to offer support or adjusted payment arrangements.

To understand exactly how your rent may change each year, read our guide on shared ownership rent increases: RPI and CPI explained.