This approach makes homeownership more accessible, reduces the upfront costs, and provides a clear path to eventually owning the property outright. In this guide, we explain how part buy part rent works, who is eligible, and what you need to know about mortgages, rent, and Staircasing.
Eligibility for 'part buy part rent' properties
Part buy part rent, or Shared Ownership, is designed to make homeownership more accessible for first-time buyers or those who cannot afford a full mortgage. To qualify for a part buy part rent property, applicants typically need to meet the following criteria:
- Be a first-time buyer or previously owned a home but are now unable to afford a property suitable for your needs.
- Have a household income below a certain threshold, £80,000 outside London and £90,000 inside London.
- Be able to live in the property as your main residence.
Different housing associations may have slightly different rules, so it’s important to check each development individually. You can see Peabody’s full requirements on our Eligibility Page. Part buy part rent London properties often have tighter eligibility criteria due to higher demand.
Getting a mortgage for a 'part buy part rent' home
Obtaining a part buy part rent mortgage is slightly different from a standard mortgage because you are only buying a share of the property, usually from 25% to 75%. Some key points to remember:
- The mortgage only covers the share you are buying, so the deposit required is smaller. For example, if you buy a 25% share of a £300,000 property, you will need a mortgage for £75,000 plus a deposit on that portion or £7,500.
- Most major lenders offer part buy part rent mortgages, but it’s worth consulting a mortgage broker who specialises in Shared Ownership as some banks do not.
Are 'part buy part rent' homes always leasehold?
Most part buy part rent homes are leasehold, meaning the housing association or landlord retains ownership of the land and you lease the property for a fixed term.
When buying a new Peabody home, the lease length can be between 125 and 999 years. The length of the lease varies by development and is always clearly outlined in the development brochure.
Leasehold properties usually incur service charges and ground rent, which buyers need to budget for alongside mortgage and rent payments.
It’s important to carefully review the lease terms before purchasing.
New build vs resale Shared Ownership homes
When buying a part buy part rent home, it’s important to understand the difference between new build and resale properties.
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New build Shared Ownership homes are properties sold for the first time through a housing association, often coming with a brand-new lease and the latest energy-efficient features.
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Resale Shared Ownership homes are being sold by an existing Shared Ownership owner who has decided to move on. When buying a resale home, you take over their share and lease, meaning the remaining lease length may be shorter and there might be fewer options for customisation - but resale homes can sometimes offer better value and are available in established communities.
Both routes offer the same long-term benefits of Staircasing to full ownership, but the buying process, costs, and available shares can vary.
Benefits of 'part buy part rent' vs renting
Choosing a part buy part rent home offers advantages compared to renting. With Shared Ownership, you’re investing in your future home.
- Build equity over time: Each mortgage payment contributes to owning a share of your property, unlike rent which offers no long-term return.
- Greater stability: You have more control over your home compared to short-term rental agreements, with the option to eventually buy outright through Staircasing.
- Lower upfront costs: Deposits and mortgage requirements are smaller than buying outright, helping first-time buyers get on the property ladder sooner.
- Potential to reduce rent: As you increase your ownership share, the rent on the remaining portion decreases.
Learn more about the benefits of Shared Ownership and how it compares to renting privately.
How rent on the unowned share is calculated
When you buy a part share of a property, you pay rent on the remaining unowned share. The rent is calculated as a percentage of that share. At Peabody, the maximum rate is set at 2.75%.
For example, if you purchase a 25% share of a £300,000 home, you may pay rent on the remaining £75,000 share. Rent increases are usually capped and reviewed annually, but it’s essential to factor this into your monthly budget.
Understanding Staircasing in 'part buy part rent'
Staircasing allows you to gradually increase your share of the property until you own it outright. The main points are:
- The minimum amount you can Staircase is 10% and this can increase by 5%, for example you can purchase additional shares in these increments: 10%, 15%, 20%, 25% etc.
- Each time you Staircase, the purchase price is based on the current market value of the property, which may increase over time.
- Full ownership removes the need to pay rent on the unowned share and gives you full legal control of the property.
Staircasing can be a long-term route to full homeownership, but it requires careful planning.
Fees and costs associated with Staircasing
When Staircasing, there are additional costs to consider:
- Valuation fees: The property must be professionally valued to determine the price of the new share. (Around £300+)
- Legal fees: Solicitors are needed to update the lease and complete the transaction. (Around £450+)
- Mortgage arrangement fees: If you re-mortgage to fund the additional share, lender fees may apply (Discuss with a Financial Advisor).
These costs can add up, so it’s important to budget for them in advance.
Frequently asked questions about ‘part buy part rent’ schemes
First-time buyers, those who previously owned a home but cannot afford one now, and in some cases, key workers or local residents.
Yes. Typically, household income must be below £80,000 outside London and £90,000 within London, though some housing associations set lower thresholds.
The deposit is based on the share you purchase, often 5 - 10% of that portion. For example, buying a 50% share of a £300,000 property might require a £7,500 - £15,000 deposit.
