Do shared owners pay service charges on 100% of the property?

Yes. A shared owner pays the full service charge on the property, not a share of it. The service charge covers the building and its shared areas, and it is not divided according to how much of the home you own. A shared owner is the leaseholder of the whole property, so the lease makes them responsible for all the repairs and maintenance in the home, including major structural works and major repairs¹.

What does change with your share is the rent. The rent in the lease covers the landlord's cost of financing the percentage of the property you have not yet paid for, so it falls as you buy more shares and stops when you own 100%³. The service charge does not follow that pattern. Even if you own 100% of a shared ownership house, you are likely to still have to pay service charges⁵.

Most shared owners start by buying between 25% and 75% of a property and paying rent on the remainder⁶. Each month that usually means a mortgage payment, rent and a service charge for things like cleaning shared areas⁷.

Rent falls as your share grows, but the service charge does not

The two costs behave differently because they pay for different things. Rent is the landlord's return on the part of the property you have not bought. The service charge is the cost of running and maintaining the building, and it is the same whether you own a quarter of the home or all of it.

There is no requirement to increase your share at all, and a shared owner can continue paying rent on the landlord's share for as long as they wish¹⁰. Where a shared owner does staircase, the rent falls in step with the share they buy. Under the Right to Shared Ownership, buying more shares means paying less rent on the rest of the property³.

Some schemes bend the rent rule. Under Older Persons Shared Ownership, once you own 75% of the home you do not have to pay rent on the remaining 25% share¹¹. Under the Home Ownership for people with a Long-term Disability scheme, a shared owner still needs to pay the service charge while the home is in the initial repair period¹².

The service charge itself can move in either direction, but not because of your share. For leaseholders covered by the Right to Buy rules, there is protection from unexpected costs for the first 5 years, during which the landlord must give an estimate and increases are limited to inflation; after 5 years the service charge can rise to reflect actual costs¹³.

What a shared owner pays each month: mortgage, rent and service charge

Three payments usually leave a shared owner's account each month, and only one of them shrinks as they buy more of the home.

The rent figure is set out in the lease. Under the Right to Shared Ownership, an official worked example shows rent for the first year of the lease set at 2.75%, giving £4,950 for the year, or £413 a month, on a home valued at £300,000 with a 40% stake¹⁴. A separate official example for the same scheme gives £6,600 for the first year, or £550 a month; the two documents disagree and it is not resolved which applies¹⁴.

Shared ownership has been offered on shares between 10% and 75% in official statistics¹⁵, and some providers might let a buyer take a 10% share¹⁶. The share a buyer takes affects the rent, not the service charge.

Repairs and maintenance: the up to £500 a year contribution in the first 10 years

Repairs are the shared owner's responsibility, but a new shared ownership home comes with a period of help. Under the national model for shared ownership, the cost of repairs and maintenance is met by the landlord for the first 10 years after purchase of a new property, with some limits⁸. Housing associations contribute up to £500 a year towards certain repairs and maintenance costs in the first 10 years of ownership⁹.

That £500 is aimed at specific items. A shared owner can claim up to £500 a year from the landlord to cover repairing, replacing (if faulty) and maintaining fixtures and fittings that supply water, gas or electricity, or heat the home¹. The allowance can roll over: in an official example, a shared owner claims £1,000 in year 2 (£500 plus £500) and rolls £250 over to the next year¹.

Outside that period, the position is firmer. A shared owner will need to pay for repairs and maintenance no matter what share they own¹. In a flat, if the reserve fund does not cover the cost of external repairs, the cost is divided between the shared owner and the other flat owners in the building¹.

Staircasing to 100%: what changes and what stays the same

Staircasing is the process of buying more shares until the home is fully owned. After becoming a shared owner, a buyer can buy more shares in the property, usually increasing to up to 100%⁹. New shared owners can buy additional shares in 1% increments for up to 15 years, with heavily reduced fees⁸. Other staircasing transactions are reduced to a minimum of 5% rather than 10%¹⁷.

What changes at 100% is the rent. If a shared owner buys the remaining amount, they own 100% of the property and will not pay any rent¹⁶. What usually stays is the service charge. Even at 100%, a shared ownership house is likely to carry service charges⁵.

Staircasing carries its own costs. In Scotland, a buyer increasing their share under the Open Market Shared Equity scheme pays all the valuation and legal costs as well as the administration costs of the organisation handling the request¹⁸. The same applies under the New Supply Shared Equity scheme¹⁹.

Help with housing costs: how benefits treat rent and eligible service charges

Benefits can help with some of a shared owner's housing costs, and the split between rent and service charge matters here too.

Universal Credit has a housing element that can help with rent and some service charges²⁰. It can cover service charges such as cleaning or maintenance of communal areas²¹. If a shared owner has a shared ownership tenancy, their housing costs payment can also include an amount for rent²⁰. The service charges Universal Credit can help with include using shared facilities such as rubbish collection or communal lifts, using essential items in the home such as domestic appliances, and window cleaning of upper floors²².

Housing Benefit works alongside this. A shared owner might be eligible for Housing Benefit to help with rent and/or a service charge, whether or not they are eligible for help with mortgage costs²³. Housing Benefit can help with rent, some service charges and also with rates²⁴. It is also possible to get help with some types of service charges, such as communal heating or cleaning bills²⁵.

There are limits. Housing Benefit and the Universal Credit housing element can pay some service charges, for example the fees for cleaning communal areas, but not personal care and support charges in supported housing²⁶. In Northern Ireland, Support for Mortgage Interest is available to homeowners, including leasehold properties for some service charges, and shared ownership properties alongside help with rent²⁷.

Leasehold rules that come with shared ownership

Shared ownership is a leasehold arrangement, and the lease is what sets the cost sharing. The sharing of cost is stipulated in the lease, as with all leasehold properties². A shared ownership lease usually has an initial fixed term equal to the term of the lease, usually 125 years for a shared ownership lease²⁹.

The lease also carries the enforcement machinery. If a shared owner falls behind, any cost incurred by the lender in recovering the position will be added to the monies owed by the shared owner to its mortgage lender³⁰. A shared owner who is struggling should contact their housing association as well as their lender, because failure to pay rent or service charges can result in forfeiture of the lease³¹.

The rules differ across the UK. In Wales, Help to Buy schemes let a buyer purchase an initial share of 25% to 75% of a property with rent paid on the remaining share³². In Scotland, shared ownership lets a buyer with a low income buy a share and pay an occupancy charge to the housing association that owns the rest⁴. In Northern Ireland, Co-Ownership works on a different model again³³.

If a service charge looks wrong, the first step is the housing association that sets it. A leasehold shared owner who cannot resolve a dispute can use the formal complaints route for leaseholders, and keep paying while the dispute runs, because arrears can lead to forfeiture³¹.