“Boost Your Wealth: How I Made £110,000 Selling My Shared Ownership Flat”

Navigating the Shared Ownership System: A Personal Success Story

In this article, we delve into a personal journey through the shared ownership system, highlighting a significant loophole that can be utilized to maximize equity gains. This account details how one individual managed to walk away with over £107,000 from selling a shared ownership flat in London. The goal is to shed light on the shared ownership model, expose its flaws, and offer practical advice for those looking to navigate this complex system.

Understanding Shared Ownership

Shared ownership is a government-backed scheme designed to help individuals who cannot afford to buy a property outright. It provides an alternative path to homeownership by allowing buyers to purchase a percentage of a property, known as a share, and pay rent on the remaining portion. This makes it more accessible for those who may struggle with the high deposits and mortgage payments associated with buying a home in full.

How Shared Ownership Works

When you opt for shared ownership, you initially buy a share of a property, typically ranging from 25% to 75%. The remaining share is owned by a housing association or a similar organization, to whom you pay a reduced rent. For example, if you purchase a 50% share of a property worth £200,000, you will pay £100,000 upfront (either through a mortgage or savings), and pay rent on the remaining £100,000 to the housing association.

Staircasing: Increasing Your Share

One of the unique features of shared ownership is the ability to “staircase” up. This means you can gradually buy additional shares in your property over time, increasing your ownership stake. Staircasing can usually be done in increments, such as 10% or 20%, and each purchase will reduce the rent you pay proportionately.

However, staircasing can be financially challenging. Each additional share is bought at the current market value, which might be higher than when you initially purchased the property. Furthermore, costs such as valuation fees, legal fees, and possibly increased mortgage repayments can add up, making the process expensive. As a result, statistics suggest that only 5-8% of shared owners manage to staircase to full ownership. The high costs involved are a significant barrier for many.

Benefits of Shared Ownership

Lower Initial Costs: One of the main advantages of shared ownership is the lower initial costs. By purchasing a share of a property rather than the whole, the amount of money needed for a deposit and mortgage is reduced.

Affordable Rent: The rent paid on the remaining share is generally below market rates, making it more affordable than renting a property outright.

Opportunity to Own: Shared ownership provides a pathway to owning a home for those who might not otherwise be able to afford it. Over time, as financial circumstances improve, owners can increase their share and work towards full ownership.

Security: Unlike renting, shared ownership offers more security. As a part-owner, you have more rights and stability compared to a tenant.

Challenges of Shared Ownership

Staircasing Costs: As mentioned, increasing your ownership share can be costly, with various fees and potentially higher market prices.

Maintenance and Repairs: Shared owners are responsible for 100% of the maintenance and repair costs, even if they only own a percentage of the property.

Restrictions on Selling: Selling a shared ownership property can be more complicated. Housing associations often have the first right to buy back your share, and the process can take longer than selling a fully owned property.

Limited Supply: The availability of shared ownership properties can be limited, and not all areas offer a good selection of homes.

Eligibility for Shared Ownership

To qualify for shared ownership, certain criteria must be met:

Income Limits: Typically, your household income must be below a certain threshold, often set at £80,000 outside London and £90,000 within London.

First-Time Buyers: Generally, shared ownership is aimed at first-time buyers or those who do not currently own a home.

Local Criteria: Some schemes may have additional local criteria, such as giving priority to people who live or work in the area.

Shared Ownership vs. Other Buying Schemes

Shared ownership is one of several schemes designed to make homeownership more accessible. Other schemes include Help to Buy, which provides equity loans, and Right to Buy, which allows tenants to purchase their rented council homes at a discount. Each scheme has its benefits and drawbacks, and the best option depends on individual circumstances.

Shared ownership offers a viable route for those looking to get onto the property ladder but who are unable to afford a full purchase outright. While it comes with its set of challenges, particularly around staircasing and maintenance costs, the scheme provides an essential opportunity for many to gain a foothold in the housing market. As with any financial decision, it’s crucial to weigh the benefits and limitations carefully and consider seeking advice from a financial advisor or property expert.

The Initial Purchase

In 2019, our protagonist purchased a two-bedroom flat in London under a shared ownership scheme, owning a 40% share. The flat was valued at £567,000, meaning the initial investment for the 40% share was approximately £227,000. The shared ownership model appeared to be a viable solution for entering the competitive London property market with a smaller deposit.

The Decision to Sell

By 2022, the desire to move out of London and improve quality of life, coupled with the COVID-19 pandemic’s impact on the flat market, prompted the decision to sell the flat. However, the market conditions were challenging. The pandemic had significantly cooled interest in small flats within zones 1 and 2 of London, making it difficult to sell at a favorable price.

Navigating the Sale Process

When selling a shared ownership property, a RICS (Royal Institution of Chartered Surveyors) surveyor must value the property. The initial valuation came in at £575,000, only £7,000 more than the purchase price. Unhappy with this valuation, the seller successfully challenged it, raising it to £620,000. This increase was crucial, as the seller’s share in the equity increase is only proportional to their ownership percentage.

The Loophole Discovery

A significant discovery was made when the seller realized that properties valued too high could not be sold under the shared ownership model due to income restrictions. In London, shared ownership buyers must have an income under £90,000. Consequently, the seller received permission to sell the flat on the open market, bypassing the shared ownership constraints.

This permission allowed for a “simultaneous staircase and onward sale transaction.” Essentially, the buyer’s funds would be used to staircase the flat to full ownership and then sell it outright. This approach meant that the seller didn’t need to personally finance the staircasing process, thus avoiding substantial upfront costs.

Valuation Manipulation and Sale Strategy

To maximize profit, the seller sought multiple valuations, instructing surveyors to provide the lowest possible figures. The chosen valuation was £560,000, lower than the initial purchase price. This conservative valuation set the stage for a profitable open market sale.

Opting to avoid traditional estate agents and their high fees, the seller used an online estate agent, Strike, which offered zero fees for listing on major property websites like Rightmove and Zoopla. This decision saved thousands in potential estate agent fees.

The Successful Sale

Within three weeks, an offer of £620,000 was secured. This price was £70,000 higher than the valuation provided by Foxtons, a well-known London estate agent. The successful sale at £620,000 meant that the seller could utilize the buyer’s funds to complete the staircase process and sell the property in one transaction.

Financial Breakdown

Here’s a breakdown of the financial outcome:

Initial purchase price: £567,000 (40% share = £227,000)

Remaining share (60%) purchased at: £336,000 (valuation of £560,000)

Total purchase cost (full ownership): £563,000

Sale price: £620,000

Mortgage repayment: £177,000

Net Gain

After accounting for the purchase costs and mortgage repayment, the seller walked away with £107,000. This total includes the original £40,000 deposit, £10,000 from mortgage payments, and £57,000 from the difference between the purchase and sale prices.

Tax Considerations

The seller avoided significant stamp duty costs by utilizing “sub sale relief” (Relief 34). This relief applies when a sub-sale is necessary to enable the true sale, as in this scenario. Additionally, no capital gains tax was owed because the property was the seller’s primary residence.


This case highlights a significant loophole in the shared ownership system that can be leveraged to maximize equity gains. By understanding the rules, challenging valuations, and strategically navigating the sale process, shared owners can potentially walk away with substantial profits. This story serves as a valuable lesson for current and prospective shared owners on how to effectively manage their property investments within the constraints of the shared ownership model.


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