Shared Ownership vs Rent to Buy: Everything You Need to Know

For many first-time buyers, starting their journey towards owning a home can feel daunting. Rising prices and the challenge of saving a large deposit mean that buying a home outright isn’t always possible right away. But that doesn’t mean homeownership is out of reach. Affordable housing options such as Shared Ownership and Rent to Buy offer two flexible pathways designed to make your move more achievable. 

If you’re weighing up your options, here’s a simple, helpful guide to how each scheme works. 

Shared Ownership allows you to buy a percentage of a home, usually between 25% and 75%, while paying a subsidised rent on the remaining share. Because your deposit is based only on the share you purchase, the upfront costs are much lower. For example, buying a 25% share of a £300,000 home means your deposit is based on £75,000, not the full price. Many buyers put down as little as 5% of their share, making the move into homeownership far more accessible. 

Monthly costs typically include your mortgage payments on the share you own, a subsidised rent on the rest, and service charges. As most Shared Ownership homes are leasehold, these charges support building maintenance and communal areas. 

One of the key benefits of Shared Ownership is the ability to increase your share over time, a process known as staircasing. You can buy additional shares when it suits you, and some residents eventually staircase to full 100% ownership. 

Rent to Buy takes a different approach. This scheme offers homes to rent at around 20% below the usual market rent for a set period, often five years. The idea is simple: the lower rent gives you room to save for a deposit while living in the home you might later purchase. 

When the rental period ends, you may have the option to buy the property, either outright or through Shared Ownership. During the rental phase, your monthly payment is rent only, which can be helpful if you need time to build savings or strengthen your financial position. 

There are some limitations to keep in mind. You do not build any equity during the rental period and there is no guarantee you will be able to buy the property later, as your circumstances or the market may change. Additionally, Rent to Buy is a scheme available across England but excludes London, which has its own initiative called London Living Rent. To learn more about London Living Rent, check out our buying guides.  

Shared Ownership: Pros

• Lower deposit compared to buying outright 
• You build equity from the beginning 
• Flexibility to staircase overtime 
• Long-term stability and security 

Shared Ownership: Cons 

• You pay mortgage, rent and service charges 
• Leasehold rules apply 
• Staircasing includes valuation and legal fees 

Rent to Buy: Pros 

• Lower rent gives you space to save 
• Helpful if your deposit savings are low  
• Lets you try the home before committing 

Rent to Buy: Cons 

• No equity is built while renting 
• You may not qualify for a mortgage at the end 
• Buying the home is not guaranteed 

Shared Ownership could be ideal if you’re ready to take your first step into homeownership and want a stable, long-term option you can build on over time. 

Rent to Buy may suit you if you need additional time to save, want to strengthen your financial position, or prefer to settle into a home before making a commitment. 

How Shared Ownership with Southern Housing New Homes Works 

At Southern Housing New Homes, we’ve helped many first-time buyers unlock the door to their new home through Shared Ownership. With homes across London and the Southeast, our homes offer excellent value and flexibility with deposits starting from just 5%.  

When the time is right, you can staircase at your own pace, allowing you to increase your ownership when it fits your financial journey. 

If you’re exploring what might work best for you, our range of Shared Ownership homes is a great place to start. You can discover all our Shared Ownership homes today on our website.