Getting on the property ladder isn’t always easy, especially with rising house prices. Shared ownership is one way to make home ownership more affordable. It allows you to buy a portion of a home and pay rent on the remaining balance, helping you move in with a smaller deposit.
But what happens if your situation changes? Can you rent out a shared ownership property if you need to move temporarily or earn extra income? In this guide, we’ll explain how shared ownership works, the rules around letting your home, and what options are available, like staircasing shared ownership or subletting with permission.
What is a shared ownership property?
A shared ownership property is a home that you partly own and partly rent. You usually buy a share between 25% and 75% and pay rent on the rest to a housing association. This setup is designed to help people who can’t afford to buy a home outright. If you’re new to the idea, understanding shared ownership can help you see how the scheme works and whether it might be right for you.
The scheme allows you to step onto the property ladder with a smaller deposit and lower monthly costs. It’s important to know that while you are a homeowner, you must still follow certain rules set by the housing provider.
How does shared ownership work?
When you buy through shared ownership, you take a mortgage for the part you own and pay rent for the rest. For example, if you buy 50%, you pay rent on the other 50% owned by the housing association.
You’re responsible for 100% of the upkeep, including repairs and maintenance, even if you don’t yet own the full property.
Over time, you may want to own more of your home. This process is called staircasing shared ownership, where you gradually increase your share. The more you own, the less rent you pay. If you staircase to 100%, you become the full owner and stop paying rent altogether.
Renting out the entire property
Can you rent out a shared ownership property if you need to move for work or other reasons? In most cases, the answer is no, unless permission is given.
Shared ownership schemes are designed for people to live in the homes they buy, not to use them as rental investments. You can’t usually sublet the entire home unless you have a valid reason and get approval from your housing association.
There are some exceptions, like if you’re in the military or facing personal hardship. However, even in these cases, you must still request written permission. Renting out a shared ownership property without consent may go against the rules in your lease agreement and could lead to legal issues.
The dos and don’ts when subletting shared ownership properties
While you usually can’t rent out the whole property, there are some situations where partial subletting may be allowed. It’s important to follow the rules set by your housing provider, especially if you’re considering letting out a room.
The do’s
- Ask for permission: Always check with your housing association before subletting any part of your home. You’ll need written approval, even if you’re only letting out a room.
- Check your lease: Every shared ownership lease is different. Some may allow lodgers under certain conditions, while others don’t allow subletting at all.
- Use a written agreement: If you decide to take on a lodger, ensure that you have a clear, written contract. This helps avoid future disputes.
- Inform your mortgage provider: If you have a loan, such as a shared ownership mortgage, let the lender know. Some lenders have specific rules about tenants and lodgers.
The don’ts
- Don’t rent out the whole property without consent: This could be a breach of your lease and may result in legal action or even losing your home.
- Don’t ignore tax rules: Income from a lodger or tenant may need to be declared. Check if it affects your benefits or tax obligations.
- Don’t assume rules are the same everywhere: Each housing association has different policies. What’s allowed in one scheme might not be in another.
Following these guidelines helps you stay compliant while exploring the option of renting out a shared ownership property in a limited or approved way.
Are there any circumstances under which I can rent out my shared ownership property?
In most cases, subletting the full home is not allowed. However, there are exceptions. If your situation changes and you need to move temporarily, such as for a short work assignment, military service, or family emergency, you can request permission to sublet the property.
The housing provider will ask for details and assess your request. If approved, you’ll likely need to follow strict rules regarding the duration of the rental and the type of tenancy permitted. You’ll also remain responsible for the mortgage and rent payments.
So, if you’re asking, can you rent out a shared ownership property under special circumstances? The answer is yes, but only if you get formal approval and stick to the conditions set by the housing association.
What is staircasing, and how does it affect my ability to rent my shared ownership property?
Staircasing is the process of buying more shares in your shared ownership home, gradually increasing your ownership. Over time, this reduces the rent you pay to the housing association.
Once you reach 100% ownership, you become the full owner of the property. At that point, most restrictions on subletting are removed. You can then rent out the entire property without needing permission from the housing provider, although you may still need to inform your mortgage lender.
Understanding this process gives you more control over your home. It also opens up the potential to generate rental income if you decide to let it in the future.
What should I include in a rental agreement for a shared ownership property?
If your housing provider allows you to rent out part of your home, or you’ve staircased to full ownership, you’ll need a proper rental agreement. This helps protect both you and your tenant or lodger.
Here’s what to include:
- Names and addresses of both parties
- Start and end date of the tenancy or licence
- Rent amount, how and when it’s paid
- Deposit details and how it will be protected
- Responsibilities for repairs, bills, and house rules
- Any restrictions, such as smoking or pets
The section on what is staircasing becomes important here, as reaching full ownership through staircasing can give you more freedom in setting up a rental agreement. Until then, you should follow the guidelines set by your housing provider and ensure any letting arrangement complies with their rules.
Final thoughts
Renting out a shared ownership property can be tricky, especially with the rules around subletting. In most cases, you’ll need permission, and full subletting isn’t allowed unless you’ve staircased to 100% ownership.
If you plan to move or want to earn rental income, it’s worth looking into staircasing shared ownership. It gives you more freedom and helps you build long-term equity.
As with any decision involving property, make sure you understand your lease, speak with your housing provider, and get the right advice. That way, you’ll know where you stand before making any changes.