In this guide, we’ll explain how each option works, what the main differences are, and which route could be the better fit depending on where you are in your homebuying journey.
What is London Living Rent?
London Living Rent is where instead of paying full market rent, eligible Londoners can rent a home at a discounted rate. You can then save some extra money each month to go towards a home deposit for Shared Ownership.
It can be a useful option if you are working towards home ownership but are not quite ready to buy yet.
London Living Rent homes are also usually offered on stable tenancies, which can give you more breathing room than short-term private renting.
Rent levels vary depending on where the home is in London and the size of the property, but they are usually set below local market rents.
In order to qualify, you’ll need to live or work in London, meet the household income requirements, and be unable to buy a suitable home in your local area straight away.
What is Shared Ownership?
Shared Ownership is another affordable home ownership option, often described as part buy, part rent. This is because instead of buying a property outright, you buy an initial share of a home and pay rent on the remaining share to the housing provider.
This usually means paying a significantly lower deposit for the home. The total monthly outgoings can also be lower than renting in the same area.
With Shared Ownership, you are a homeowner from the start, but the monthly costs are split between your repayments, rent on the remaining share, and service charges.
You will also have the option to buy more shares in your home through a process known as Staircasing, which reduces the share of the home that you pay rent on.
London Living Rent vs Shared Ownership: what are the key differences?
The main difference between London Living Rent and Shared Ownership is where you are in your homebuying journey.
London Living Rent is mainly a renting option that gives you time and space to save, while Shared Ownership is a buying option that lets you purchase part of a home sooner than you might be able to on the open market.
Both can help make living in London more manageable, but they work in different ways.
One is about reducing rent while you prepare to buy; the other is about becoming a homeowner now, with the option to increase your share over time.
Renting first vs buying a share
With London Living Rent, you rent a home at a discounted rent rather than buying it straight away.
Shared Ownership works differently because you buy an initial share of the property from the start.
Monthly costs and deposits
London Living Rent is usually simpler month to month because your main housing cost is rent. The rent is set below average market levels for the area, so the aim is that you can save some of the difference.
You may still need to pay a tenancy deposit and other standard moving costs, but you are not taking on a mortgage.
With Shared Ownership, your monthly costs are usually made up of several parts:
- Mortgage repayments
- Rent on the unowned share
- Service charge
Eligibility and income limits
| Eligibility point | London Living Rent | Shared Ownership |
|---|---|---|
| Age | You must usually be aged 18 or older. | You must be aged 18 or older. |
| Household income limit | You must have a household income of no more than £75,000. | Your annual household income must be £90,000 or less if buying in London, or £80,000 or less outside London. |
| Buyer or ownership status | You must not currently own a property, and you should not already have enough savings to buy a home in the local area. | You will usually be a first-time buyer, an existing shared owner looking to move, or someone who used to own a home but can no longer afford to buy one that meets your needs. If you currently own a property, you must have sold it before completing your Shared Ownership purchase. |
| London connection | You must live in a London borough. | Eligibility can vary by development and local authority priorities. |
| Affordability | You must currently be renting or living with family or friends, and be able to show that you are working towards buying a home. | You should not be able to afford to buy a suitable home on the open market. |
| Financial history | You need a good savings track record, a current credit report showing you can obtain a mortgage, and the ability to pass money laundering and identity checks. | You must be able to show you are not in rent or mortgage arrears and demonstrate a good credit history. |
Eligibility may vary depending on property size, the development, and whether there are any criteria set by the local authority.
When London Living Rent might be the better option
London Living Rent could be the better option if you need more time to save before buying.
Because the rent is set below usual market levels, it can make your monthly costs more manageable and give you a clearer route towards building a deposit.
It may suit you if you are not quite ready to take on a mortgage, or if you want to improve your savings position before applying for Shared Ownership.
London Living Rent may also be a good fit if you are still deciding where you want to buy, or if you need a bit more flexibility before committing to home ownership.
When Shared Ownership might be the better option
Shared Ownership could be the better option if you are ready to buy now but cannot afford to purchase a suitable home outright on the open market.
You might have £10,000 saved which could be enough of a deposit for Shared Ownership, but not for buying on the open market.
It may also suit you if you are comfortable taking on the responsibilities of being a homeowner, including mortgage repayments, service charges and long-term maintenance considerations.
Unlike London Living Rent, Shared Ownership means you own part of the property from the start.
Can London Living Rent help you buy through Shared Ownership?
Yes, London Living Rent can help buyers move towards Shared Ownership.
It will not always mean buying the exact home you are renting, however it can be a useful step towards getting on the property ladder through Shared Ownership.
If you already know that Shared Ownership is your preferred route, London Living Rent can give you time to prepare properly.
Choosing the right Peabody buying option for you
Choosing between London Living Rent and Shared Ownership usually comes down to affordability and how ready you feel to buy.
If you need more time to save and want a more manageable way to rent in London, London Living Rent may be the better starting point.
If you have a deposit saved and feel ready to take on the costs and responsibilities of owning, Shared Ownership may be the more direct route.
Peabody offers a range of affordable housing options designed to support different stages of the homebuying journey.
Frequently asked questions about London Living Rent vs Shared Ownership
No, London Living Rent and Shared Ownership are different.
London Living Rent is to help you save towards a deposit for buying a home in the future through Shared Ownership.
Shared Ownership lets you buy a share of a home now and pay rent on the remaining share.
In some cases, London Living Rent can be a route towards buying through Shared Ownership, but it does not always mean you will be able to buy the exact home you are renting.
It depends on the property, the provider, and your eligibility when you are ready to buy.
London Living Rent will generally have lower monthly outgoings than living in a Shared Ownership home in the same area.
London Living Rent may also have lower upfront costs because you are renting rather than buying, and the rent is usually set below local market levels.
Shared Ownership often involves more costs, including a deposit, mortgage repayments, rent and service charges, but it also means you own a share of your home from the start.
The better option depends on how ready you are to buy.
London Living Rent may suit you if you need more time to save for a deposit, while Shared Ownership may be better if you already have some savings and are ready to take your first step onto the property ladder.
