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Guidance

Shared Ownership: guidance for lenders, landlords and conveyancers

Published 31 July 2026

Applies to England

© Crown copyright 2026

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This publication is available at https://www.gov.uk/government/publications/shared-ownership-guidance-for-lenders-landlords-and-conveyancers/shared-ownership-guidance-for-lenders-landlords-and-conveyancers

About this guidance

This guidance aims to improve the understanding of how grant-funded Shared Ownership operates, promote good practice, support continued collaboration between landlords [footnote 1] and lenders and widen the opportunities for potential purchasers to access home ownership.

Landlords who are a party to a Homes England grant agreement should also reference the funding conditions set out in their agreement and the Capital Funding Guide.

This guidance replaces the joint Shared Ownership guidance.

It provides information for:

  • mortgage lenders in England
  • registered providers offering grant-funded Shared Ownership
  • unregistered bodies [footnote 2] offering grant-funded Shared Ownership
  • conveyancers in England

It has been produced by:

It will be regularly reviewed and updated, particularly following legislative changes and statutory amendments. Reviews will be undertaken by these partners working with Homes England. You can email comments for consideration as part of these reviews. Email sharedownership@homesengland.gov.uk.

How to use this guidance

This guidance is presented in 4 sections:

  • an overview of Shared Ownership
  • an explanation of how the grant-funded Shared Ownership models and variants on the standard model operate
  • features of the Homes England Shared Ownership model leases, including the fundamental clauses
  • the importance of collaboration between landlords and lenders when a leaseholder is in arrears and at risk of possession

Further information and advice for landlords, lenders and, where applicable, applicants seeking a home, is signposted throughout.

Although this guidance is for Shared Ownership funded by Homes England grant, landlords and lenders are encouraged to follow it for non-grant-funded Shared Ownership to help ensure consistency and efficiency across the whole market.

Section 1 - Distinctive features of grant-funded Shared Ownership

Shared Ownership

Shared Ownership is designed to help people in housing need who cannot afford to buy a home outright.

How Shared Ownership operates

The purchaser buys an initial percentage share of the market value of the property and enters into a lease agreement with the landlord. This is a legal agreement setting out the rights and responsibilities of the ‘leaseholder’ [footnote 3] and the landlord.

As a purchase is usually funded by taking out a mortgage, buyers are encouraged to purchase as large a share as is suitable based on their individual circumstances and affordability, taking into consideration any known or foreseeable changes. This is decided by an affordability assessment completed by a qualified and experienced independent financial adviser, which alongside the eligibility check is part of the landlord’s application process.

As the leaseholder has paid for part of the value of the property, they then pay rent on the remainder. As more shares are bought (this is known as ‘staircasing’) the rent paid goes down in proportion to the landlord’s remaining share.

For both the initial purchase and any subsequent shares purchased via staircasing a valuation should be completed by a Royal Institution of Chartered Surveyors (RICS) accredited valuer in accordance with RICS’s Red Book requirements.

Alongside rent there may be other costs the leaseholder has to pay, for example:

  • a service charge
  • an estate charge
  • a management fee
  • building insurance
  • contributions into a repairs reserve fund

Further information for applicants

Read more about how Shared Ownership operates including how to apply, eligibility criteria, how staircasing operates and the costs.

Individual lenders may apply their own lending and product policies. Applicants are encouraged to check specific lending criteria and any additional requirements with their chosen lender, or broker.

Further information for landlords and applicants

Homes England has produced Key Information Documents that provide plain English descriptions to help potential shared owners understand what they are purchasing.

Read Key Information Documents (KIDs) for homes funded via the Affordable Homes Programme 2021 to 2026 and Social and Affordable Homes Programme 2026 to 2036.

Read KIDs for homes funded via the Shared Ownership and Affordable Homes Programme 2016 to 2021.

Further information for landlords and lenders

The Shared Ownership chapter of the Capital Funding Guide is also useful. This contains sections headed Overview, Applicant eligibility, Funding principles (which includes valuations), Affordability guidance and After-sales.

In a down valuation scenario, landlords may be able to obtain the mortgage valuation from the lender. If the lender agrees and the valuation has been carried out by a RICS-qualified valuer, it would meet Homes England’s requirement for a RICS valuation to establish the sale price.

In situations where it is not possible to obtain an updated RICS valuation, Homes England guidance does allow a landlord to exercise their discretion and accept the lender’s mortgage offer. However, landlords should ensure such an approach is operated on a fair and consistent basis and there is a clear audit trail of decision-making. In addition, landlords may wish to seek their own legal advice as to any potential implications of doing so.

Section 2 - The grant-funded Shared Ownership models

Shared Ownership in its current form was introduced in the Housing Act 1980. Since then, there have been variations to the Shared Ownership model.

In this section we explain how the Shared Ownership models operate as well as variants on the model targeted at specific prospective purchasers and local areas.

Shared Ownership models

The government introduced a new model for Shared Ownership of grant-funded homes built through the Affordable Homes Programme (AHP) 2021 to 2026. The features of the AHP 2021 to 2026 model have continued in the Social and Affordable Homes Programme (SAHP) 2026 to 2036.

The changes and differences compared to homes funded by the Shared Ownership and Affordable Homes Programme (SOAHP) 2016 to 2021 and earlier funding programmes are summarised here:

Shared Ownership model Older model Shared Ownership Standard model Shared Ownership [footnote 4] New model Shared Ownership [footnote 5]
Minimum initial share purchased 25% 25% 10%
Lease length Typically, leases were issued for 99 years from new Leases are for a minimum of 99 years from new but typically at least 125 years Leases will be for a minimum of 990 years from new
Initial repair period No No 10 years
Buying more shares - minimum purchase 10% or 25% 10% 5%
1% share purchase No No Yes
Landlord’s nomination period 8 weeks or 12 weeks 8 weeks 4 weeks

As the table shows, the major changes to the standard Shared Ownership model from 1 April 2021 that apply to homes funded through the AHP 2021 to 2026 and SAHP 2026 to 2036 are:

  1. The minimum initial share purchased has reduced from 25% to 10%.

  2. There is a new approach to staircasing. The minimum staircasing transaction has reduced from 10% to 5%. Shared owners also have the option to purchase an additional share of 1% per year alongside the minimum 5% staircasing transaction in the first 15 years. Unused options to buy 1% shares cannot be rolled over to future years. The landlord will give the shared owner an up-to-date valuation at least once a year in addition to when a request is made to buy a 1% share. There is no administration fee associated with purchasing an additional 1% share. However, a shared owner cannot buy shares of 2%, 3% or 4%. These provisions also apply to resales funded through the AHP 2021 to 2026 and SAHP 2026 to 2036.

  3. The introduction of a new 10-year period (known as the initial repair period) from the lease start date during which the costs of eligible maintenance or repairs are met by the landlord and not the shared owner. In addition, during this initial period the shared owner can claim costs up to £500 a year from their landlord to help with essential repairs or maintenance. If a shared owner does not claim the full £500 repairs allowance in 1 year, a maximum of 1 year’s allowance or the remaining balance will roll over into the following year.

  4. For resales the landlord’s period to nominate a purchaser has reduced from 8 weeks to 4 weeks. This means a leaseholder can pursue a sale themselves on the open market earlier if they wish to do so.

Further information for landlords

The government policy overview for the new Shared Ownership model.

Model leases for homes provided through the AHP 2021 to 2026 and SAHP 2026 to 2036 - read Schedule 6 of the model house lease and Schedule 9 of the model flat lease, headed ‘the initial repair period’.

Key Information Documents for the AHP 2021 to 2026 and SAHP 2026 to 2036.

Read the Shared Ownership chapter of the Capital Funding Guide, in particular, sections headed Overview, Leases and Model leases and Key Information Documents.

Landlords should publish policies on their websites concerning the sale and management of their Shared Ownership homes. They should be easy to find and in an accessible format. In some instances, for example, subletting, this transparency is a funding requirement in the Capital Funding Guide.

Shared Ownership model variants

There are variant types of grant-funded Shared Ownership that differ from the standard model such as:

  • homes in rural Designated Protected Areas (DPAs)
  • Older Persons Shared Ownership (OPSO)
  • Home Ownership for people with long-term disabilities (HOLD)

The features of these variants are explained in more detail here along with information on homes purchased via Key Worker schemes and Self-Build.

Designated Protected Areas

Designated Protected Areas (DPAs) are areas defined in legislation (presently the Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009), typically in rural areas characterised by a small scale housing market, limited land availability, justifiable planning controls in small settlements, and, or, house price inflation created by demand from non-local purchasers.

Landlords delivering homes in these areas are required to include provisions in the leases to do 1 of the following:

  • restrict the share a leaseholder can acquire to no more than 80% ownership of the property [footnote 6]

  • where the lease allows staircasing to exceed 80%, for the leaseholder to sell their share back to the landlord when they wish to sell the property [footnote 7]

The restrictions are aimed at mitigating the risk of early enfranchisement and to retain Shared Ownership housing stock in areas where this is hard to replace [footnote 8]. To achieve these requirements a grant-funded property in a DPA must contain 1 of Homes England’s Protected Area fundamental clauses in the Shared Ownership lease. Although the relevant government regulations only apply to houses, Homes England has extended the same requirements to grant-funded flats in DPAs.

Since 1 April 2011, if a local authority determines that a development within a DPA does not need protection to retain properties as Shared Ownership for future purchasers, it can apply to Homes England for a site-specific waiver of the 80% staircasing cap.

Designated Protected Area repurchase

The DPA repurchase scheme operates on the basis that when a shared owner wishes to sell the property, the landlord can repurchase it using grant (when all other funding sources for buyback have been exhausted) and then re-sell on a Shared Ownership basis. Homes England can consider applications for grant to fund the repurchase, subject to funding availability.

Further information for landlords

DPAs are listed in The Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009.

DPA maps referenced are available via Search for Designated Protected Area maps. Locations currently covered may be subject to review by Ministry of Housing, Communities and Local Government (MHCLG).

The Housing (Shared Ownership Leases) (Exclusion from Leasehold Reform Act 1967) (England) Regulations 2009 set out criteria that a Shared Ownership lease must fulfil that, where a shared owner cannot acquire 100% of the property, they cannot exercise their right to enfranchise under the Leasehold Reform Act 1967.

The Housing (Shared Ownership Leases) (Exclusion From Leasehold Reform Act 1967 and Rent Act 1977) (England) Regulations 2021. Under the regulations, a Shared Ownership lease is excluded from enfranchisement under the 1967 Act and from being classified as a protected tenancy under the Rent Act 1977 if it is a 10% minimum initial share (down from 25%), based on the value of the property or the cost of providing it.

If it is granted at a premium of at least 10% (previously 25%), based on the value of the property or the cost of providing it.

Briefing on section 106 restrictions from UK Finance and the Building Societies Association.

Key Information Documents for the AHP 2021 to 2026 and SAHP 2026 to 2036 - refer to Mandatory buyback and 80% Restricted Staircasing.

Key Information Documents for the SOAHP 2016 to 2021 - read sections on mandatory buyback and 80% restricted staircasing.

The process to request a waiver is explained on the Designated Protected Areas page along with the list of areas designated as ‘Protected Areas’ by the 2 statutory orders.

For further details on the Protected Areas Repurchase policy and eligibility criteria read the Capital Funding Guide Shared Ownership chapter, Designated Protected Area repurchase.

Older Persons Shared Ownership (OPSO)

Older Persons Shared Ownership (OPSO) operates on the same Shared Ownership principles but with some differences. It restricts the maximum share that can be purchased either initially or through staircasing to 75% [footnote 9] of the available equity in the property.

Other conditions attached to OPSO schemes include, for example:

  • purchasers must be 55 years or over
  • no rent is paid on the unsold share where the maximum share of 75% has been acquired
  • the homes must be specifically marketed for older people

The overall expectation remains that OPSO applicants will use much of their capital to fund the purchase of the property. However, they may need to retain a higher level of savings or investments than other applicants to provide ongoing income, or to cover ongoing and future living and care costs.

Further information for applicants

GOV.UK Older Persons Shared Ownership

Further information for landlords

The Shared Ownership chapter of the Capital Funding Guide, Overview - Older Persons Shared Ownership (OPSO)

Key Information Documents for the AHP 2021 to 2026 and SAHP 2026 to 2036 - read Older Persons Shared Ownership

Key Information Documents for the SOAHP 2016 to 2021 - read Older Persons Shared Ownership

Home Ownership for People with Long-term Disabilities (HOLD)

Home Ownership for People with Long-term Disabilities (HOLD) is designed to assist people with a long-term disability to purchase a home on the open market, which is suitable for their needs. It is normally for the purchase of a second-hand home selected by a landlord, but it is also possible to purchase a newly built home. The home is then sold on standard Shared Ownership terms. The property selected must be acceptable to the landlord and for mortgage loan purposes be in a reasonable state of repair, as evidenced by a homebuyer’s survey and valuation or equivalent.

HOLD can be purchased using a standard mortgage, a specialist mortgage, or with a cash lump sum.

HOLD is not offered by all landlords. It is voluntary and at their discretion.

Further information for applicants

Home Ownership for People with Long-term Disabilities (HOLD)

Further information for landlords

Read the Shared Ownership chapter of the Capital Funding Guide, Overview - Home Ownership for People with Long-term Disabilities (HOLD).

Key Information Documents for the AHP 2021 to 2026 and SAHP 2026 to 2036 - read Home Ownership for People with Long-term Disabilities.

Further information for lenders and landlords

The mortgage adviser carrying out the affordability assessment should have sufficient experience in the specialist mortgages which may be available for HOLD applicants who rely wholly or partly on benefit income.

Key worker sales via the Key Worker Living (KWL) initiative

Up until 31 March 2008 all public sector key workers accessing any of these specific products were subject to a ‘clawback’ fundamental clause in the KWL lease. In practice, this meant a key worker who left their profession had to sell their home within 2 years to another eligible key worker or agree to purchase the remaining share, that is by staircasing to 100%.

From 1 April 2008 clawback no longer applies to Shared Ownership and the standard model lease should be used. Key workers who purchased prior to 1 April 2008, who have the clawback clause in their lease, are not subject to clawback should they leave their qualifying employment.

Further information for landlords

Read the Shared Ownership chapter of the Capital Funding Guide. In particular, the After sales section about resales.

When making a request to vary the fundamental clauses landlords should first refer to this guidance document Procedures for varying grant-funded Shared Ownership leases.

Self-build Shared Ownership

Self-build Shared Ownership follows the same principles as the standard Shared Ownership model. However, the distinctive feature is that potential shared owners can reduce the cost of developing their property by contributing some of the construction labour themselves. In practice, the owner of the land and, or, property assigns a share in the equity to the self-builder equivalent to the value of their labour contributed during the construction process.

Further information for landlords

Read the Shared Ownership chapter of the Capital Funding Guide, Overview - Self-build Shared Ownership.

Other grant-funded routes into Shared Ownership

There are grant-funded products, such as Rent to Buy and the Right to Shared Ownership, which can help tenants move towards home ownership through Shared Ownership. These products are not within the scope of this guidance; however, further information is given here.

Information for landlords

Read the Rent to Buy chapter of the Capital Funding Guide.

Read the Shared Ownership chapter of the Capital Funding Guide, Right to Shared Ownership.

Information for lenders

Section 3 - Model leases

Shared Ownership leases

This section focusses on the Homes England Shared Ownership model lease and signposts further information and advice for landlords and lenders. It explains:

  • features of the model leases, in particular the fundamental clauses
  • the process to follow when a landlord seeks to vary a Shared Ownership lease
  • the fundamental clause requirement for landlords to work with lenders to try to remedy a breach in the lease before they start legal proceedings
  • how existing restrictions on older Shared Ownership model leases have or can be removed by landlords

Model leases

Landlords developing grant-funded Shared Ownership homes must ensure that the leases are acceptable to lenders, so the purchaser is able to obtain a mortgage to buy an initial share.

To assist landlords, Homes England has produced a suite of model leases with fundamental clauses. They ensure that the home continues to be offered as Shared Ownership.

The model leases are considered a widely accepted route to give the necessary protection and comfort to landlords, leaseholders, lenders, and others. Landlords considering the use of alternative leases that differ too much from the model leases in content and format may find it difficult to sell or re-sell their Shared Ownership homes.

Landlords can amend the model leases to suit circumstances without the consent of Homes England. However, consent is required if a landlord wants to vary one of the fundamental clauses as they are a grant funding requirement. Any such consent is only usually given on a very exceptional basis. This is explained further later.

The model leases (and related Key Information Documents) may be amended by Homes England to reflect changes in legislation and, or, policy. In most cases such changes will be prospective and therefore should not affect leases that were issued before a particular change was implemented.

Fundamental clauses

The model leases for grant-funded Shared Ownership homes completed on or after 30 April 2015 contain fundamental clauses, which must be included in all Shared Ownership leases. There are also some amendments or additions to the fundamental clauses for Shared Ownership homes funded by the AHP 2021 to 2026 and SAHP 2026 to 2036 compared to SOAHP 2016 to 2021, which are explained here.

The following fundamental clauses apply to all Shared Ownership homes funded through SOAHP 2016 to 2021, AHP 2021 to 2026 and SAHP 2026 to 2036.

Alienation provisions

These ensure a shared owner cannot sell part or all of the property except through the specified sales procedure. In addition, these provisions prevent shared owners from sub-letting or parting with possession of part of the property. This is to protect public funds and ensure that shared owners are not entering Shared Ownership for commercial gain. Read clause 3.18 and 3.19 in the model flat lease and 3.19 and 3.20 in the model house lease.

Although leaseholders do not have a right to sub-let their home, a landlord may agree to a sub-letting arrangement where there is a genuine need for it. Shared owners’ requests should be evaluated individually, and landlords must avoid a one-size-fits-all approach. The Capital Funding Guide lists some of the issues a landlord should consider when dealing with a sub-letting request including whether the leaseholder has the permission of their mortgage lender, and the rent to be charged. In addition, landlords should always accept sub-letting requests related to building safety issues. Though, in such instances, the shared owner should still have the permission from their mortgage provider and, if required, the building’s freeholder.

From 1 May 2026, the Renters’ Rights Act 2025 (RRA 2025) has the same implications for shared owners who are subletting as for other landlords letting properties under assured shorthold tenancies, that is, the banning of fixed term tenancies and the abolition of section 21 evictions. However, unlike other landlords, shared owners can rely on the exemption to the prohibition on reletting within a 12 month period after recovering possession under the selling ground (new Ground 1A of Schedule 2 to the Housing Act 1988). Non-statutory guidance has been published by the government to support shared owners who are subletting to comply with the requirements of the RRA 2025 which is available at Shared Ownership RRA 2025 Guidance. In addition, the government has published information for landlords about the impact of the RRA 2025 - information note for registered providers of social housing.

Mortgagee Protection Clause (MPC)

The MPC makes provision for the lender’s loss to be recovered from the landlord’s share should the lender have to take possession of the property on mortgage default or breach of the mortgage contract by the shared owner. The amount that lenders can claim under the MPC is defined as the ‘Mortgagee Protection Claim’. The MPC places liability for any amounts paid out under a Mortgagee Protection Claim to the lender by the landlord on the shared owner. Refer to clause 8 in the model flat lease and clause 6 in the model house lease.

The Mortgagee Protection Claim is capped as the aggregate of the following 4 sums:

  1. All loans advanced by the mortgagee to the leaseholder which are secured by a first-ranking mortgage over the property, provided the amount and other terms of each loan is approved in advance by the landlord.

  2. Up to 18 months of interest on the fixed amount in (1) calculated at the standard variable rate as referenced at the time of default.

  3. Amounts advanced by the mortgagee in protecting its security by discharging any arrears of rent and service charge under the lease.

  4. Fees and costs incurred in enforcing the mortgagee’s security capped at an amount equal to 3% of the market value of the leasehold interest at the time of enforcement, so this will amount to 3% of the 100% staircased interest.

Within this cap, the mortgagee can claim any sum due from the leaseholder under the loan agreement. This includes capital, capitalised arrears, interest, fees (administration, early redemption, other fees), repossession costs, capitalised rent, service charge arrears, and any other amount legally claimable under the mortgage contract.

To improve mortgageability, Homes England generally supports adding an MPC clause to older leases where one does not currently exist. Although this varies the lease, the addition does not vary an existing fundamental clause.

Homes England does not need to agree to the insertion of an MPC provided their own clause, as worded in its current model lease, is replicated without variation.

Rent review clause

This ensures that rent review provisions are in place to limit the scope for dispute. Refer to Schedule 5 of the model flat lease and Schedule 4 in the model house lease.

Staircasing provisions

This ensures the shared owner can staircase and buy further shares in the property until they own it outright. Refer to Schedule 6 of the model flat lease and Part 1 of Schedule 5 in the model house lease.

Designated Protected Areas (where appropriate)

For areas specifically designated by the Secretary of State as being protected areas, clauses either restrict staircasing to 80% or oblige the landlord to repurchase the full equity in the home when a shared owner wants to sell.

Right of First Refusal Clause (also known as a pre-emption right)

This requires shared owners who own less than 100% of their home, to make an offer of first refusal to their landlord when they wish to sell their home. For former shared owners who own their home outright, this clause does not apply (since April 2015). Refer to clause 3.19 and Schedules 7 and 8 in the model flat lease and clause 3.20 in the model house lease.

The fundamental clauses for new Shared Ownership homes provided through the AHP 2021 to 2026 and SAHP 2026 to 2036 also have some amendments or additions, which are:

  • the landlord’s period to nominate a purchaser or accept a surrender of the lease in the alienation provisions is reduced from 8 weeks to 4 weeks and the related new standard form restriction inserted in LR13

  • the 1% Staircasing schedule (Schedule 10 in the model flat lease and Schedule 7 in the model house lease) together with any associated cross references in the main body of the lease

  • the Initial Repair Period schedule (Schedule 9 in the model flat lease and Schedule 6 in the model house lease) together with any associated cross references in the main body of the lease

  • the mortgagee forfeiture notification proviso (clause 6.2.3 in the model flat lease and clause 5.2.3 in the model house lease) whereby the lenders receive prior notice before the landlord begins any proceedings for forfeiture of the lease. It also allows for the breach to be resolved within 28 days before such action commences

  • any transfer deed on final staircasing which creates an Estate Rent Charge must exclude section 121 of the Law of Property Act 1925 (part 2 of Schedule 5 in the model house lease only)

For ease of reference these amendments or additions are highlighted in blue in the model leases.

Service charge model clause

For leases issued on or after 22 October 2010, a landlord is permitted to make amendments to the service charge model clause (and the related definitions) to reflect the requirements of the individual development.

Landlords can make this change without Homes England’s consent, but they must first seek legal advice to ensure the service charge clause included in the relevant lease is compliant with the relevant statutory and regulatory requirements relating to service charges. This change provides an appropriate mechanism to enable the landlord to recover its service charge costs.

Variation of Shared Ownership leases on grant-funded schemes

It is recommended that landlords do not significantly vary the terms of the model lease. However, they can make amendments, without the need to first request Homes England’s permission, where these do not restrict the operation of the fundamental clauses.

There may also be certain exceptional circumstances where an amendment to one of the fundamental clauses appears to be the only practical option. In such instances a landlord must first request Homes England’s permission. When making a variation request the landlord should understand that Homes England will only agree them in very limited and exceptional circumstances.

Remedying a breach in the lease

To ensure mortgage lenders have a reasonable opportunity to remedy a breach of the lease, lenders require landlords to provide a written undertaking to give reasonable notice before starting legal proceedings.

For AHP 2021 to 2026 and SAHP 2026 to 2036 funded Shared Ownership homes this is covered by a fundamental clause (the mortgagee forfeiture notification proviso clause 6.2.3 in the model flat lease, clause 5.2.3 in the model house lease). Therefore, an undertaking may not be required.

Removing restrictions on older Shared Ownership model leases

From 1 October 2008, Homes England Shared Ownership model leases have not required the parties to enter a restriction on the property title at His Majesty’s Land Registry (HMLR) in favour of Homes England. Instead, reliance is placed on adherence to both the conditions set out in the grant agreement and the Capital Funding Guide, which includes provision for grant recovery.

HMLR has instructed its local offices to identify and remove from the register all existing restrictions on title. However, HMLR’s process may not have identified all of them. For example, if the restrictions departed from the standard wording or were combined with others. In such instances, if a lease variation is acceptable, Homes England will give consent and recommend the landlord apply on form RX3 (or such replacement HMLR Form as relevant) to the HMLR to cancel the restriction. It is not necessary for Homes England to approve or join in such applications by the landlord to HMLR.

Information for landlords

Information for lenders and landlords

Section 4 - Collaboration between landlords and lenders when a leaseholder is in arrears

This section explains how landlords and lenders should collaborate to:

  • secure landlord consent for a mortgage
  • manage leaseholder arrears (rent or mortgage) to prevent the loss of their home through forfeiture
  • recover possession of a Shared Ownership home where necessary

In addition, this section concludes with 2 potential options for landlords that can, in some scenarios, be an alternative to forfeiting the lease and recovering possession of the Shared Ownership property.

Renters’ Rights Act 2025 and application of the Housing Act 1988

Following commencement of provisions in the RRA 2025, the assured tenancy regime of the Housing Act 1988 (HA 1988) no longer applies to Shared Ownership leases. This means that possession of a home subject to a Shared Ownership lease cannot be recovered by the landlord serving a section 8 notice of seeking possession under grounds in Schedule 2 to the HA 1988. Where it is necessary for a landlord to recover possession of a Shared Ownership home, this will need to be via forfeiture, in the same way as any other long, residential lease (which in essence is a lease that is granted for a period of over 21 years).

Transitional provisions may apply - refer to Information note for registered providers.

Before a Shared Ownership sale can be completed, the landlord must be shown a copy of the mortgage offer and, or, terms being taken out by the purchaser and consent to these terms in writing.

The landlord’s consent is required because, under the Mortgagee Protection Clause (MPC), they will underwrite some of the lender’s loss if the shared owner subsequently defaults on the mortgage repayments. By reviewing the mortgage terms (often achieved by looking at the mortgage offer documentation), the landlord can assess their overall risk.

The landlord can also check that the purchaser is borrowing only enough funds to buy the share and is not taking out any additional debt for which they could be partially liable under the provisions in the MPC. In addition, this procedure can act as an anti-fraud measure, allowing the landlord to double-check that the borrower and purchaser are the same person.

Lenders should retain a copy of the landlord’s consent for later reference.

In practice, it is very rare that landlords are unable to agree to the mortgage terms being offered and consent is withheld. The conveyancer acting for both the purchaser and their lender will usually obtain the landlord’s consent to the mortgage. This requirement on the conveyancer to obtain consent is included in the UK Finance Mortgage Lenders’ Handbook for Conveyancers. This sets out exactly what checks a conveyancer must undertake when dealing with the purchase of a property with mortgage finance. Conveyancers should check with the lender whether they do have separate conveyancing instructions for use when lending on a Shared Ownership property.

Under the terms of leases entered into from 30 April 2015 onwards, consent shall be deemed to be given if the landlord receives any amounts advanced by the lender which are applied in protecting, preserving, or enforcing its security over the lease. This includes any amounts advanced by the lender and applied in discharging any arrears of rent and, or, service charge under the lease.

Should the conveyancer fail to obtain the landlord’s consent to the mortgage, they are not obliged to comply with the terms of the MPC. This has significant implications for mortgage lenders as their protection in the event of default is effectively lost. Where conveyancers have not obtained the landlord’s written approval to the mortgage, the lender may be able to sue the conveyancer for negligence.

In cases where consent has not been obtained, landlords and lenders should continue to collaborate to find a workable solution. For example:

Lenders should check whether their Shared Ownership loans do have the necessary consents and, if not, seek consent retrospectively from the landlord. Where consent would have been granted if requested at the appropriate time, landlords are expected to provide retrospective consent to the mortgage and honour the MPC, provided the shared owner is complying with the terms of both the lease and the mortgage.

Additional borrowing

As a first step a leaseholder wishing to borrow additional funds should contact their landlord and lender to discuss the options and implications.

Homes England’s Shared Ownership model lease does not prevent a leaseholder from increasing their borrowing under their mortgage secured against the share owned by the leaseholder. However, it is subject to conditions contained in the lease, and particularly the MPC. Further advances will only be covered by the MPC, where they are approved by the landlord. In addition, only certain loans are protected under the MPC and additional borrowing can only be permitted if the premium and any further borrowing does not exceed the market value of the leaseholder’s share in their home.

Information for landlords

Capital Funding Guide Shared Ownership chapter, After sales.

UK Finance Mortgage Lenders’ Handbook for Conveyancers.

Rent and mortgage (if applicable) arrears

All landlords should have their own policies in place to deal with rent arrears, which have been formally approved by their governing body. All policies should be published in a clear and accessible format for leaseholders to find on the landlord’s website.

Consideration should be given to ensuring that rent and, if applicable, mortgage arrears are dealt with as quickly as possible and with a view to ensuring that, wherever possible, the leaseholder is assisted to avoid losing the property to repossession.

Requirements in arrears cases

What lenders and landlords require from one another will vary in detail, but the information here aims to outline areas to consider in arrears cases and where improvements could be made in handling them.

Communication

It is important that communication between lender and landlord is effective so that the parties understand each other’s needs and how the other party may behave. While working relationships between lenders and landlords will vary depending on the scope of the engagement, there are some specific actions that should improve communication:

  1. Lenders and landlords should put in place service level agreements clearly setting out expectations. This should include agreement on areas such as the acceptable period for responding to a query or notification, making a formal decision, and when a formal notification of legal proceedings will be issued. An example of an acceptable period to respond to a query regarding the sale of a Shared Ownership property (including those in possession) could be within 10 working days.

  2. To support effective collaboration and ensure best practice, lenders and landlords should have a clear data sharing agreement in place. This should ensure all required data is available to the parties, including up-to-date contact information for customers and details about their circumstances. For example, temporary or permanent changes to their mortgage, and any vulnerabilities or support needs. Customers should understand this information will be shared and General Data Protection Regulation issues should be resolved so that information can flow freely between lenders and landlords.

  3. Personal working relationships are important but reliance on them can lead to a breakdown in communication if staff members leave organisations or are unavailable during periods of leave or illness. Lenders and landlords should create general email inboxes for arrears management to facilitate continuity of communications and take steps to ensure that each is aware of such inboxes.

Data

Both lenders and landlords should collect key performance data including the number of accounts in arrears or forbearance, levels of arrears and any communications between the parties on such matters. Forward-looking data should also be made available, such as future rent or service charge rises and the impact of these on specific customers.

Rent arrears

A shared owner experiencing payment difficulties may be highlighted in a variety of ways such as communications with the lender or landlord about financial concerns or unpaid mortgage payments or rent arrears. It is important that lenders and landlords take a co-ordinated approach to arrears to ensure that the best support can be provided to the shared owner. There are specific actions which could support this:

  1. If rent is in arrears by 2 months or more, the landlord should tell the shared owner that it intends to inform their mortgagee of the position. If there is no subsequent reduction in the level of arrears, the landlord should inform the mortgage lender of the shared owner’s arrears status. This will ensure that the lender has all relevant information to enable better outcomes for the shared owner.

  2. Landlords should only seek to recover rent arrears from the lender as a last resort. The MPC in the model lease should discourage landlords from automatically recovering rent arrears from lenders. Prior to acting, the landlord should inform the shared owner of the consequences of doing so. For example, compounded interest being charged on the arrears by the lender, breaching mortgage terms and conditions and so on.

  3. The shared owner’s mortgagee should only consolidate rent arrears when there is a joint agreement with the landlord and shared owner that is beneficial for all parties. Landlords should avoid seeking to initiate forfeiture of the Shared Ownership lease for rent arrears without first having explored and exhausted other options to enable arrears recovery with the shared owner’s mortgagee.

  4. As early as possible, the landlord and the shared owner’s mortgagee should agree the course of action to be taken in each case. They should consider the shared owner’s circumstances and Financial Conduct Authority (FCA) regulatory requirements on lenders under the Consumer Duty. This is to ensure good customer outcomes and to avoid foreseeable harm for customers.

  5. Under the terms of the MPC landlords and lenders are authorised by the shared owner to share information with each other in relation to arrears of rent, service charges or mortgage payments (refer to clause 6.6 of the house lease and 8.6 of the flat lease). Landlords and lenders should keep each other regularly updated on developments. Both parties should also ensure communications with shared owners are timely, clear and meet their needs.

Lender forbearance

Lenders have well-established processes in place for supporting customers in financial difficulty, such as temporarily reducing payments, establishing interest-only arrangements and, offering payment holidays or mortgage term extensions. It is important that landlords are familiar with these so that they can take them into consideration during their own shared owner’s arrears recovery processes.

Mortgage arrears

Each lender will have its own policies, framed against FCA regulation, guidance and the Mortgage Conduct of Business rules in the FCA Handbook.

Possession is a last resort. Landlords should be familiar with lenders’ policies so that they can take them into consideration during their own arrears recovery processes.

Landlords should also try to come to an informal arrangement whereby the shared owner’s mortgagee will notify them when a shared owner’s mortgage repayments are in arrears by more than 2 months.

Lenders aim to deliver a number of outcomes for all customers experiencing payment difficulties. These include making sure that borrowers:

  • receive appropriate forbearance that is in their interests after consideration of their individual circumstances
  • are supported through a period of payment difficulties and uncertainty, including consideration of their rent costs, other debts and essential living costs
  • receive responses tailored to their needs where they have vulnerabilities
  • are supported in managing their finances, including through self-help and money guidance, and are signposted or referred to debt advice services if this meets their needs and circumstances
  • are given a reasonable period of time to consider any proposals for dealing with their payment difficulties
  • are provided with adequate information for them to understand the implications of any proposed arrangement
  • that may be at risk of payment difficulties are identified, using data, to inform communications that encourage early contact and support

Mortgage charter

Landlords should encourage their shared owner to notify their landlord when they access Mortgage Charter support and detail whether they are either:

  • taking temporary interest only
  • extending their mortgage term and by how many years

If the shared owner has not reverted to their mortgage term after 6 months, then lenders will notify the landlord to confirm the extension has been made permanent. Consent for permanent variations to the mortgage contract should be requested of the landlord, and granting of consent should not be unreasonably delayed. The landlord must inform the leaseholder of any notification requirements regarding changes to their mortgage terms, including those arising from the use of the Mortgage Charter.

Changes to mortgage terms

The landlord must inform their shared owner of any notification requirements regarding changes to their mortgage terms, including changes to their standard mortgage terms, or changes made in connection with accessing the Mortgage Charter.

Shared Ownership arrears and possessions

Possession by the lender

If a shared owner defaults on their mortgage, the mortgage lender may enforce their security over the property by applying to the courts for an ‘order’ granting them possession.

The process for taking possession of a Shared Ownership property is the same as for any other residential property other than the fact that the rights and responsibilities of the lender in possession will be subject to the terms of the Shared Ownership lease.

Possession by the landlord

As set out in Renters’ Rights Act 2025 and the application of the Housing Act 1988, Shared Ownership leases are no longer assured shorthold tenancies for fixed terms of 99 years which are governed by the HA 1988. Under the assured tenancy regime of the HA 1988, a landlord could serve a section 8 notice of seeking possession of Shared Ownership properties under any of the grounds set out in Schedule 2 to the HA 1988, including mandatory Ground 8 in respect of rent arrears. A possession claim could then follow the service of a section 8 notice, with an order in consequence of such a claim bringing the Shared Ownership lease to an end and removing the lender’s security.

The law of forfeiture now applies to Shared Ownership leases in the same way as to other long residential leases, allowing the landlord to recover possession and terminate the lease following a breach by the shared owner, including non-payment of rent.

Any action by the landlord to bring a Shared Ownership lease to an end places the lender’s security at risk. However, forfeiture is a discretionary remedy: the court decides whether it is appropriate to make an order ending the lease in each case. This contrasts with certain possession claims under the HA 1988, such as Ground 8, which are mandatory. In those cases, the court must make a possession order if the ground is established.

Despite its discretionary nature, forfeiture can still result in the landlord recovering possession of a Shared Ownership property. As such, lenders must take steps to mitigate the risks associated with accepting these properties as security. As with possession claims under the HA 1988, this risk can be managed through the use of undertakings and notices.

The paragraphs that follow illustrate how the use of undertakings and notices can provide assurance to lenders in situations where forfeiture is to be progressed by the landlord, so as to mitigate the lender’s risk. As explained above, possession is a last resort when all alternative arrears management actions have been exhausted.

Standard form of undertaking to provide notice of proceedings ensures a lender has a reasonable opportunity to remedy a breach of the lease, before legal proceedings commence, by requiring a landlord to issue a written undertaking. This is covered by the mortgagee forfeiture notification proviso clause 6.2.3 in the model flat lease, and clause 5.2.3 in the model house lease for AHP 2021 to 2026 and SAHP 2026 to 2036 funded homes.

The model form of undertaking is included in Annex B to this guidance.

Notice to the lender of intention to take action is a separate landlord notice informing the lender about possible forfeiture proceedings.

All new Shared Ownership leases issued by landlords must grant the leaseholder’s lender at least 28 days’ written notice of their intention to commence forfeiture.

Landlords are encouraged to work closely with lenders to give them time to remedy a breach of the lease. This approach does not prevent a landlord bringing proceedings if the breach cannot be resolved within the period agreed but it does support a collaborative working relationship.

In forfeiture proceedings, the shared owner and the lender have the right to apply for relief from forfeiture upon the court granting a possession order. This is different from the position where possession proceedings were brought by the landlord under the HA 1988, where there was no right to relief against the court granting a mandatory possession order. Whilst the application of forfeiture means the implications of a mandatory possession order under the HA 1988 are avoided, forfeiture claims can be costly, uncertain and complex. It is therefore in the interests of both the landlord and the lender to agree an appropriate course of action before any legal proceedings to forfeit are started by the landlord.

Voluntary sale

The shared owner may wish to sell voluntarily before arrears have built up to the extent that the shared owner’s lender takes possession, or the landlord applies for forfeiture of the lease.

Voluntary surrender

A defaulting shared owner may also wish to voluntarily surrender their lease to their landlord. If the shared owner has mortgaged the lease, it is not possible for a surrender to take place without the consent of the lender. As it is unlikely that this consent will be given the landlord should liaise directly with the lender and jointly agree the action to be taken.

If the shared owner has not mortgaged the lease, it can be surrendered to the landlord. Normally, a deed will be drawn up whereby the shared owner formally surrenders the lease. This may be for an agreed sum or for no consideration. If the shared owner abandons the property without having completed such a deed the landlord should obtain legal advice as to whether any further legal action is required.

Post-possession

Having obtained vacant possession, the lender will be free to dispose of the Shared Ownership lease. It has 3 options:

  • sell the existing lease;

  • staircase to an intermediate level and sell the lease

  • staircase fully and sell at the full value of the property (in the case of houses this option may allow for the mortgagee to obtain the freehold)

Alternatives to possession

In some instances, there may be an alternative option to forfeiting the Shared Ownership lease and taking possession where a landlord operates a Recycled Capital Grant Fund (RCGF) that can be spent on priority and permitted uses.

Downward staircasing (also known as flexible tenure)

This is a last resort option when a shared owner is experiencing severe financial difficulties and other options for avoiding forfeiture and possession have been explored and exhausted. Downward staircasing enables a shared owner to remain in their home either by selling some or all their shares back to their landlord. Where all shares are sold back to the landlord, and the Shared Ownership lease is surrendered, the shared owner becomes a tenant under a tenancy granted instead. Some, but not all, of the key features of downward staircasing include:

  • downward staircasing is a priority use of recycled grant, which means it can be spent without prior consent from Homes England

  • there is no right or entitlement to downward staircasing. Any offer of downward staircasing remains at the discretion of the landlord

  • downward staircasing should be to a level the shared owner can afford and sustain

  • the landlord must ensure that any offer is acceptable to the shared owner’s lender and the landlord’s own lender

  • where a landlord offers downward staircasing, its policy and procedures should be published and be accessible to their shared owners

Equity repurchase

Equity repurchase enables the landlord to repurchase a shared owner’s equity in their home. Similar to downward staircasing there is no ‘right’ to equity repurchase with any decision being at the landlord’s own discretion. For example, to support their asset management strategy.

However, unlike downward staircasing, equity repurchase is a permitted use of RCGF requiring Homes England’s consent before recycled grant is spent.

It can also include the repurchase of properties affected by building safety challenges where the shared owner wishes to move but cannot do so due to the issues associated with selling their home.

Where a landlord operates an equity repurchase policy, it should be published and made accessible to shared owners. If no such policy exists, this should also be clearly stated.

Information for landlords

Downward staircasing is explained in the Capital Funding Guide Shared Ownership chapter After sales and Grant Recovery chapter, Permitted uses.

The approval process for a landlord to use recycled grant held in its RCGF as a permitted use for equity repurchase is explained in the Capital Funding Guide Grant Recovery chapter, under “Permitted uses”.

There is no reference to downward staircasing in the model Shared Ownership leases. Landlords can provide for individual instances of downward staircasing without the need for any variation to be issued on the terms of the existing lease.

Lenders should be contacted in advance before an equity repurchase is completed by the landlord.

If a landlord decides to offer downward staircasing and, or, equity repurchase, the policy explaining how it works must be easy to find, for, example, published on the landlord’s website in an accessible way.

Information for lenders and landlords

The information contained above is general. Landlords and lenders should seek independent legal advice before acting against a defaulting shared owner. All parties (lenders and landlords) are expected to work together to resolve default issues swiftly.

The Mortgage Conduct of Business (MCOB) rules are in the FCA Handbook and MCOB 13 Payment difficulties and repossessions.

Read Annex A, Mortgage Protection Clause.

The Financial Conduct Authority Consumer Duty.

Annex A - Mortgage protection clause

An extract from clause 8 of the model flat lease is shown here. Also read clause 6 in the model house lease.

Lender protection

8.1 If a Mortgagee enforces its security in respect of the Loan then (subject to the other provisions of this clause 8) the Mortgagee is entitled to deduct the amount of the Mortgagee Protection Claim from monies that would otherwise be paid to the Landlord as the price for the Final Staircasing. There is no obligation on a Mortgagee to accomplish Final Staircasing.

8.2 The deduction under clause 8.1 is conditional upon the Mortgagee agreeing simultaneously with the deduction under clause 8.1 that upon such deduction or, if later, promptly upon the Mortgagee recovering the whole of its Loss, the Mortgagee shall assign to the Landlord any guarantees, insurance policies and any other collateral security given to the Mortgagee or secured by the Mortgagee in respect of the Loan together with all other rights to enforce the same and all sums payable under them.

8.3 A claim may only be made to the extent:

8.3.1 the Mortgagee has made a Loss; and

8.3.2 the Mortgagee has obtained the Landlord’s consent to the terms of each and every Loan; and

8.3.3 the disposal of the Leaseholder’s interest in the Premises was made on an arm’s length basis at the best price reasonably obtainable in the market at the time of sale. For this clause 8.3.3 the onus of proof is on the Landlord to show the sale was at an undervalue; and

8.3.4 the Leaseholder has not, prior to any default occurring under the Loan, accomplished Final Staircasing.

8.4 When applying for the Landlord’s consent under clause 8.3.2 the Mortgagee must provide full details of the terms of the proposed Loan. The Landlord must respond promptly to any request for consent and give its decision within 28 days. If such consent is given it must be given in writing, and must be retained by the Mortgagee. In addition, such consent shall be deemed to be given in the event that the Landlord receives any amounts advanced by the Mortgagee which are applied in protecting, preserving or enforcing its security over this Lease (including any amounts advanced by the Mortgagee and applied in discharging any arrears of rent and, or, Service Charge under this Lease).

8.5 If the Landlord makes a payment to the Mortgagee or a deduction is made by the Mortgagee the Landlord shall be entitled to claim against the Leaseholder for any such amount together with interest on such sum calculated in accordance with the provisions of clause 3.2.

8.6 The Leaseholder hereby authorises:

8.6.1 the Landlord to disclose to any Mortgagee of the Leaseholder from time to time personal information relating to the Leaseholder or to the provisions of this Lease (including details of any rent or service charge arrears); and

8.6.2 any Mortgagee from time to time of the Leaseholder to disclose to the Landlord such information as the Landlord may request regarding the Leaseholder and the Loan (including details of any arrears).

Annex B - Model form of undertaking

Leaseholder

Borrower

Landlord

Property

Lease

Lender

Mortgage account number

In consideration of the Lender granting the Borrower a mortgage on the property, the Landlord undertakes not to commence any proceedings to forfeit the lease of the Property without:

a) giving the lender not less than 28 days’ notice in writing of their intention to commence proceedings; and

b) if within such a period of 28 days (or within such other period specified in the notice period, if longer) the Lender indicates in writing to the Landlord that it wishes to remedy such breach, or is going to take such action as may be necessary to resolve the problem complained of by the Landlord, giving the Lender such time as may be reasonable (in view of the nature and extent of the breach/problem) to take such action.

Signed

Dated

Address for subsequent service of any notice.

Footnotes

  1. In this guidance landlords are typically housing associations (for profit and not for profit) and local authorities who are registered with the Regulator of Social Housing as registered providers of social housing. However, unlike the position for private rented homes, organisations that are not registered with the Regulator of Social Housing (that is to say, unregistered) can be landlords of grant-funded Shared Ownership. ↩

  2. An unregistered body is not on the register of providers of social housing maintained by the Regulator of Social Housing pursuant to section 111 of the Housing and Regeneration Act 2008. ↩

  3. In this guidance the use of the words leaseholder and shared owner mean the same. ↩

  4. This model refers to homes developed using the 2015 model lease and rules. ↩

  5. ‘New Model Shared Ownership’ refers to grant-funded homes built through the AHP 2021 to 2026 and SAHP 2026 to 2036 ↩

  6. Where staircasing is restricted to 80%, rent remains payable on the remaining 20% not owned. ↩

  7. Read the Designated Protected Area repurchase scheme for further information. ↩

  8. Early enfranchisement means the tenant under a lease acquires the freehold under statutory enfranchisement rights before acquiring 100% equity. Due to a previous anomaly in the law relating to leasehold enfranchisement and Shared Ownership leases of houses, the Housing (Shared Ownership Leases (Exclusion from Leasehold Reform Act 1967) (England) Regulations 2009 (2009 Regulations) were made to prevent enfranchisement rights arising in respect of houses subject to Shared Ownership leases where the shared owner has restricted staircasing rights. The 2009 Regulations provide that where a shared owner cannot acquire 100% of the property, they cannot exercise enfranchisement rights under the Leasehold Reform Act 1967, such as acquiring the freehold of their house. ↩

  9. OPSO is exempt from Designated Protected Area regulations requiring Shared Ownership leases in protected areas to allow leaseholders to staircase to at least 80%. ↩

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