Glossary: Shared ownership
Shared ownership is a form of tenure almost unique to the housing association movement whereby potential buyers part buy and part rent their home. Sharing owners buy a share in their home, usually 25% or 50%, and raise a mortgage from a bank or building society just as if they were buying a home in the normal way. The housing association owns the remaining share and the sharing owner pays rent on this remaining share to the association. Sharing owners can buy further shares in the property at the market price until they own the property outright, but are under no obligation to do so. Similarly, the sharing owner can decide to advertise and sell their share on the open market.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.