April 7, 2023

Renting Shared Ownership: Guidelines & Restrictions

Can You Rent Out a Shared Ownership Property?

If you’re looking to buy or already are part of a Shared Ownership Scheme, you may be wondering “can you rent out a shared ownership property?” Here we take a look at what is involved with a Shared Ownership Scheme, the rules surrounding eligibility to join, and whether it’s possible to rent out a property purchased under the scheme.

What is a Shared Ownership Scheme?

The Shared Ownership Scheme was designed to help first time buyers and those who couldn’t afford to buy a home in the regular way to get a start on the property ladder.

The scheme gives people the chance to buy a share in a property, and pay rent on the remaining share. As the buyer, you have an option to increase the amount that you own over time. This is known as “staircasing”. If you’re a part owner, you can eventually staircase all the way to 100% ownership.

As a member of the Shared Ownership Scheme, you will only need a mortgage for the share that you’re buying. Therefore, the deposit is usually lower when compared to a standard purchase where the property is bought outright. You’ll also usually pay less rent compared to a regular let. The larger the share you own, the lower your rent.

What are the rules about Shared Ownership Scheme?

There are criteria to meet for the Shared Ownership Scheme. These are:

  • You must be at least 18 years old.
  • If you live in London, your annual income must be less than £90,000. Outside of London, it must not exceed £80,000 per year.
  • If you already own another home, you must be in the process of selling it.
  • You must not be behind with your mortgage or rent.
  • You must show that you have a good credit history.
  • You will need to be able to afford the deposit required. This will vary, but will usually be between 5% and 10% of the share that you are buying.

Can you rent out a Shared Ownership property?

If you’re wondering “Can you rent out a shared ownership property?” The answer is that it is possible in certain situations. These are:

Subletting a room

It is possible to sublet a room within a Shared Ownership property, but the owner must live there at the same time.

When you own the entire property

You can rent out a Shared Ownership property once you have staircased to 100% and own the entire property.

Exceptional circumstances

In exceptional circumstances, you can seek permission from the landlord or housing association from which the property was part purchased to request a sublet.

An example of exceptional circumstances might be if you’re a member of the Armed Forces and are serving away from the area where you live for a certain period. 

Do bear in mind though that many landlords will now completely prohibit subletting on a Shared Ownership property until 100% staircasing has been achieved.

Renting out a property after staircasing to 100%

We’ve established that Shared Ownership homes should be treated as a main place of residence unless there are exceptional circumstances.

Once you have staircased to 100% and completely own the property, you are entitled to rent it out to whoever you like. Be mindful though that you will still need to let your housing association and mortgage lender know, as it may affect the terms of your mortgage.

How to guarantee rent when letting out a Shared Ownership property?

A guaranteed rent scheme removes the uncertainty of the lettings process and ensures you will receive your rent every month, even when the property is untenanted or the tenants are defaulting on their rental payments.

A rent guarantee scheme will also usually include a professional property management service without additional fees. Everything from tenant queries to dealing with maintenance and repairs, plus quarterly property inspections, will be covered.

Can you rent out a shared ownership property?

Unless there are exceptional circumstances, the only way you can rent out a shared ownership property is once you completely own the property.

A guaranteed rent scheme such as that offered by City Borough Housing can help bring peace of mind once you fully own the property by ensuring you receive a guaranteed rental monthly income for the duration of the agreement, which can be anything from three to seven years.

Backed by a full service promise and fully comprehensive professional property management, as well as a guarantee that your property will be returned to you in its pre-let condition at the end of the agreement less fair wear and tear, the scheme will allow you to take a back seat with your investment, with the peace of mind of continuous rent.

Get in touch with our friendly, knowledgeable team to learn more about the benefits of a guaranteed rent scheme and to request your free rental valuation.

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