Ricky ProtaOct 21, 2025 11:32:17 AM6 min read

How Viable Is Shared Ownership in the Current Market?

Shared ownership (SO) remains central to delivery and affordability in England, but the 2025 reality is different from the pre-2022 playbook. Interest-rate whiplash, service-charge scrutiny, and evolving grant and regulatory expectations mean viability needs a firmer hand on assumptions, a clearer narrative on risk, and better stress testing across the asset life.

The market reality: demand is high, affordability is stretched

Affordable supply remains elevated but tight: England delivered 62,289 affordable homes in 2023/24 (-2% YoY; second-highest since 2014/15). Of these, 65% were for rent, and 9,866 were for social rent, the highest since 2013/14. SO continues to play a material role in the ownership offer mix. ¹
The Shared Ownership asset base is now large and maturing: The UK SO stock passed a quarter of a million homes by 2023/24, underlining its permanence in providers’ portfolios. ²
Buying pressures persist: Even after 2025 rate cuts chatter, average fixed mortgage rates in September 2025 hovered around ~4.5–4.6% (5-year fixes), materially above 2020–21 norms; some “best” deals have dipped below 4% at points, but averages remain higher than the last decade’s lows. Affordability therefore stays tight for first-time buyers and shared owners.³
Macro affordability headwinds are real: Wider analysis shows the majority of adults living with parents can’t afford to buy solo in their local area, a signal that shared ownership’s role remains vital but must be priced and modelled cautiously. ⁴

Implication for appraisals: Revenue lines (initial share values and onward staircasing receipts) must reflect slower sales absorption and tighter mortgage affordability than historic norms.

Policy and product shifts to reflect in assumptions

New model features are now standard for AHP 2021–26 homes: Initial shares can be 10%–75% and early staircasing can occur in 1% increments during the first 15 years. These design choices aid affordability but flatten the timing and quantum of staircasing cashflows versus legacy models. ¹
Service charges and rent setting are under a harsher spotlight: For 2025/26, registered providers flagged the CPI (Sept 2024) + 1% cap translating to ~2.7% rent uplifts from April 2025; service-charge transparency and protections are also in active consultation. Build headroom for variance and disputes. ⁵
Regulatory focus on sector resilience: RSH’s 2025 quarterly survey underscores persistent liquidity/cash-flow discipline expectations, especially where sales risk is material. ¹

Implication for appraisals: Replace single-path rent and service-charge lines with scenario bands and explicitly model 1% micro-staircasing take-up to test downside cases.

Sales and staircasing: separate signal from hope

Completions trend: Sector reporting shows SO completions rose strongly through 2022/23 (peaking ~4,243) with a slight fall to ~3,973 in 2023/24. Treat the 2021–23 uplift as non-repeatable without favourable rates and grant conditions. ⁶
Staircasing data is improving: Since April 2021, central datasets have begun collecting more reliable staircasing information (PRPs and LAs). Use it. Move away from legacy blanket assumptions (e.g., “x% reach 100% within y years”). ¹
Product type still matters: In 2023/24, 65% of SO sales were houses and 33% flats, use differentiated resale velocity and maintenance/service-charge trajectories by typology.¹

Appraisal stance:

Model lower, later staircasing (timing risk > quantum risk).
Use typology-specific sales rates and discount rates.
Stress test deposit/mortgage criteria (e.g., if rates sit at 4.5–5% vs a sub-4% best-case).

Revenue realism: the cross-subsidy question in 2025

Shared Ownership has long been part of the cross-subsidy machine, but with private-sale softness, affordability caps, and service-charge sensitivity, margins are tighter. Some providers are recycling capital via stock rationalisation, where SO’s tradability has doubled its share of homes traded since the early 2010s and now accounts for ~21% of traded homes over the last five years. That market liquidity supports exit options, but it’s also a signal that cash creation is a priority, not a luxury.

Appraisal stance:

Treat Shared Ownership as steady-state mixed-tenure rather than a profit centre.
Build conservative sales rate and modest initial share assumptions to enhance affordability and reduce abortive marketing cycles.
Keep NPV and gearing impacts visible in your board paper, with sensitivity around delayed disposals.

Cost realism: Opex and lifecycle pressures

Service-charge scrutiny is rising: Ombudsman casework and consultation emphasis indicate a higher bar for evidence and communication of charges, particularly in blocks. Expect more disputes and potential write-offs where scope, standards or procurement aren’t watertight. ⁷
Capex and inflation drift: Construction tender inflation has eased from peaks but hasn’t returned to 2010s lows. Keep whole-life cost allowances healthy, especially for blocks (M&E, cladding/FA compliance, lifts).

Appraisal stance:

Bake in block-level reserves and indexed service-charge ranges (not point estimates).
Use componentised lifecycle profiles that link to service-charge narratives shared with buyers at reservation.

Governance: from numbers to narrative

Boards and funders want clarity on affordability, risk transfer, and social value as much as residuals and IRRs. A strong paper links the model to lived-reality risk: mortgage eligibility at current rates, deposit constraints, service-charge headroom, and credible exit routes.

Make the appraisal “board-ready” by:

Showing three cases: Base, Affordability-Stretch (higher rates, slower absorption), and Service-Charge Stress (higher Opex/voids).
Explaining the new model SO features (10–75% initial share; 1% micro-staircasing) and their impact on cash-flow timing. ¹
Disclosing key assumptions (typology mix, lender criteria proxy, deposit ranges) and mapping them to market evidence (rates, delivery stats). ³
Setting decision thresholds (e.g., minimum DSCR at scheme and portfolio level; maximum exposure to sales timing).

Practical checklist for 2025 Shared Ownership appraisals

Affordability-first pricing: Calibrate initial shares to clear lender tests at ~4.5–5% rate scenarios; evidence with current-market comparisons. ³
Micro-staircasing ready: Replace legacy lumps with gradual 1% staircasing sensitivity for AHP 2021–26 homes. ¹
Service-charge headroom: Present a range with narrative; reference consultation direction of travel and resident protections. ¹
Typology-specific assumptions: Houses vs flats, different maintenance, charges, and sales velocity. ¹
Sales risk diversification: Portfolio view of exposure to SO + private sale; use stock rationalisation options to protect liquidity if markets turn. ²
Evidence pack: Attach a short annex of sources (AHS 2023/24, RSH QS, current-rate snapshots) so scrutiny is quick and confidence is high. ¹

The conclusion

Shared Ownership still does what it says on the tin: it opens the door for households shut out of full ownership while de-risking delivery for providers. But 2025 rewards disciplined realism, pricing for affordability, modelling for volatility, and communicating like an investor. If you update your appraisal logic to reflect current rates, micro-staircasing, service-charge scrutiny, and typology-specific behaviours, you’ll present schemes that are not just technically viable but operationally resilient and socially credible.

Key sources used in this article:

1 GOV.UK

Affordable Housing Supply 2023–24

Homes England Housing Statistics Dec 2024 technical notes (new model SO)

RSH Quarterly Survey Q1 2025

Social Housing sales & demolitions 2023–24

Social Housing sales and demolitions 2023-24: Shared Ownership

Social Housing Tenant Service Charges

2 Savillis

Savills - A Key Piece in the Housing Puzzle

Savillis - Stock rationalisation: unlocking sector capacity?

3 Nerdwallet