For aspiring homeowners in England who struggled to save a large deposit, the government introduced several schemes to make buying more accessible. Two of the most prominent were Help to Buy and Shared Ownership. While both aimed to help people onto the property ladder, they work in fundamentally different ways and suit different financial circumstances.
Although Help to Buy closed to new applicants in March 2023, Shared Ownership remains available. Understanding how the two compare is still valuable for existing Help to Buy borrowers considering their options, and for prospective buyers exploring alternatives.
How Each Scheme Works
With Help to Buy, the buyer purchased 100% of the property from day one. The government provided an equity loan of up to 20% (40% in London), the buyer put down a 5% deposit, and a mortgage covered the remaining 75%. The equity loan was interest-free for five years, after which interest charges began and increased annually. The scheme was limited to new-build properties only.
Shared Ownership works differently. The buyer purchases a share of the property, typically between 25% and 75%, and pays rent on the remaining share to a housing association. The buyer takes out a mortgage on their share and pays a deposit based on that share's value rather than the full property price. For example, buying a 40% share of a £250,000 property means you need a mortgage and deposit based on £100,000, while paying rent on the other £150,000.
Over time, Shared Ownership buyers can purchase additional shares in a process called staircasing, gradually working towards owning the property outright. Unlike Help to Buy, Shared Ownership applies to both new-build and resale properties that are part of the scheme, and is not restricted to first-time buyers in all cases.
Key Differences in Costs and Ownership
The ownership structures create very different financial obligations. Help to Buy borrowers own 100% of their home from the outset, meaning they benefit fully from any increase in property value (though the equity loan repayment also increases proportionally). With Shared Ownership, you only benefit from price growth on the share you own, and you have the ongoing obligation of rent on the housing association's share.
Monthly costs differ significantly too. A Help to Buy homeowner pays their mortgage plus a £1 monthly management fee during the first five years, then mortgage plus escalating interest charges from year six. A Shared Ownership buyer pays their mortgage plus rent on the unowned share, plus potentially a service charge. The rent is usually set at around 2.75% of the housing association's share value per year, and increases annually, typically by CPI plus up to 1%.
When it comes to flexibility, Shared Ownership has some restrictions. Selling can be more complicated because the housing association typically has a nomination period during which they can find a buyer before you can sell on the open market. Home improvements may require permission from the housing association, and subletting is generally not allowed without consent.
Help to Buy properties, by contrast, can be sold on the open market at any time, though the equity loan must be repaid from the proceeds. You have full control over improvements and maintenance decisions, as you are the sole owner.
Which Scheme Suits You Best?
For buyers who could afford the monthly mortgage payments on a full property but simply lacked a large deposit, Help to Buy was often the better choice. The interest-free period provided breathing room, and full ownership meant complete control over the property. However, the restriction to new-build homes meant buyers sometimes paid a premium compared to equivalent existing properties.
Shared Ownership tends to suit buyers with lower incomes or those in areas where even a 5% deposit on a full property is out of reach. By purchasing a smaller share, the mortgage is much smaller and more manageable. The trade-off is the ongoing rent payment and the complexities of partial ownership.
Household income limits also differed. Shared Ownership currently has an income cap of £80,000 per year (£90,000 in London). Help to Buy did not have a specific income cap in its final phase, though regional price caps effectively limited the scheme's reach.
For those who currently hold a Help to Buy equity loan and are exploring ways to manage their costs, it is worth understanding that remortgaging or making early repayments can significantly improve your financial position. Use our Help to Buy Calculator to model different scenarios. If you are a prospective buyer, visit gov.uk for current information on the Shared Ownership scheme.