Releasing Equity from a Shared Ownership Home

Can You Use Equity Release with Shared Ownership?

If you own a shared ownership property, you might be wondering if equity release can help you own 100% of your home and get rid of those monthly rent payments to your housing provider.

Shared ownership has helped many people get onto or move up the property ladder.

But if you’re now 55 or older, you might be thinking about buying out the remaining share of your home—and equity release could be one way to do it.

What Is Equity Release?

Equity release lets homeowners aged 55+ unlock tax-free cash from their property without having to sell or move. There are typically no monthly repayments because the loan and interest are repaid when you pass away or move into long-term care.

However, if you prefer, some plans allow you to make voluntary interest payments to stop the loan from growing over time.

Wondering what you can use the money for? Well, once any existing mortgage or secured loan is paid off, you can spend it however you like—including buying the remaining share of your shared ownership home.

But here’s the catch: to qualify for equity release, you must own 100% of your home at the time your plan is set up. This means you’ll need to have enough equity to buy out your landlord’s share.

Not everyone will qualify, as applications are reviewed on a case-by-case basis due to the complexities involved.

How Does Shared Ownership Work?

Shared ownership is a stepping stone to full homeownership. It allows you to buy a percentage of a property and gradually purchase more shares (a process called ‘staircasing’) until you own it outright.

Here’s how it works:

• You buy a share of the property—usually between 25% and 75% of its market value. Some schemes let you start with just 10%, though this is less common.
• You pay rent to your housing provider for the share you don’t own.
• You can buy more shares over time, reducing your rent as you go.
• You might also have to pay service charges and ground rent, depending on the property.

Once you reach 100% ownership, you stop paying rent, and the shared ownership scheme ends. At this point, you can apply for equity release if you meet the eligibility criteria.

Can You Release Equity from a Shared Ownership Property?

Yes—but only if you already own (or can afford to buy) 100% of your home.

Let’s say you currently own 70% of your shared ownership home. To be eligible for equity release, you’d need to buy the remaining 30% from your housing provider. If your equity release plan gives you enough cash to do this, then you may be able to proceed.

Who’s Eligible?

To qualify for equity release, you’ll usually need to meet these requirements:

• You must be at least 55 years old.
• Your property must be worth at least £70,000 (sometimes more for flats).
• You must have enough equity to buy the remaining share of your home.

Equity Release with Other Types of Ownership

Equity release isn’t just for shared ownership homes. You might also be eligible if you own a leasehold property, a jointly owned home, or a shared equity scheme. Let’s take a look at some of these situations.

Equity Release on Leasehold Properties

It’s possible to release equity from a leasehold property, but you’ll need a long enough lease. Most lenders require at least 90–120 years remaining.

When you apply, the lender will check:

• The remaining lease length
• Service charges and ground rent costs
• Any restrictions in the lease that could affect the plan

Equity Release on a Jointly Owned Property

If two people own a property together, you must apply for equity release jointly—as long as the youngest applicant is 55 or older.

If you want to add your spouse or partner to the deeds, this can be done as part of the application. This ensures both of you have the right to stay in the home for life.

Equity release can also help if you want to buy out a co-owner, such as in the case of a divorce or separation. If one person wants to keep the home but can’t afford to buy out their ex, equity release could provide a solution.

What If More Than Two People Own the Property?

Equity release plans are only available for homes owned by one or two people. If more than two people are on the deeds, you’ll need to remove additional names first. This can often be handled during the equity release application process.

Shared Equity Schemes and Equity Release

Shared equity schemes are different from shared ownership. They involve a loan to help you buy a home, usually as a top-up for your deposit.

• The loan is usually between 5% and 25% of your home’s value.
• It’s repaid in instalments or when you sell your home.
• Unlike a standard mortgage, it’s based on a percentage of your home’s value, so the amount owed increases if your property value rises.

One well-known example was the Help to Buy scheme, which stopped taking applications in October 2022.

If you’re over 55 and still have a small amount left to repay on a shared equity loan, equity release could help you pay it off—giving you access to a tax-free cash lump sum and more financial freedom.

Final Thoughts

Equity release can work for shared ownership homeowners, but only if you already own or can afford to buy the remaining share of your home.

Every case is different, so speaking to an equity release adviser is the best way to explore your options.