Last reviewed: June 2026
TL;DR- Shared equity involves a third party (typically the government or developer) providing a loan toward the purchase price, reducing the mortgage and deposit required from the buyer.
- The Help to Buy equity loan scheme in England closed to new applicants in March 2023 - shared equity options in 2026 are more limited.
- Some developers and housing associations offer their own shared equity schemes on specific developments.
- Shared equity is different from shared ownership - in shared equity the buyer owns 100% of the property from the outset; in shared ownership they own only the purchased share.
What Is Shared Equity?
Shared equity is a term covering arrangements where a third party contributes a portion of the property purchase price in return for a share of any future increase in the property's value (or a fixed repayment obligation). The buyer owns 100% of the property from the outset but the equity loan provider holds a financial interest in the property that must be repaid when the property is sold, the loan is redeemed, or at the end of the loan term.
The most significant shared equity scheme in England was the Help to Buy equity loan, which closed to new completions in March 2023. In its place, a more limited landscape of shared equity options exists in 2026.
Shared Equity vs Shared Ownership
These two terms are frequently confused. The key distinction is:
- Shared equity: the buyer purchases 100% of the property and receives an equity loan toward the purchase price. They own the property outright from day one. The equity loan is repaid later.
- Shared ownership: the buyer purchases a percentage share (typically 10-75%) of the property and pays rent on the remainder. They do not own the full property until they have staircased to 100%.
Under shared equity, the buyer is the outright owner and can sell the property on the open market. The equity loan provider is repaid from the sale proceeds. Under shared ownership, the housing association remains a co-owner until full staircasing is complete.
Shared Equity Schemes Available in 2026
With the closure of Help to Buy, shared equity options have become more limited and more developer-specific:
- Developer own-brand shared equity: some housebuilders offer their own shared equity products on specific developments to assist buyers who cannot access the full purchase price through standard mortgage and deposit. Terms vary significantly between developers.
- Local authority shared equity: some local authorities operate their own shared equity schemes in high-cost areas, targeted at local residents and key workers.
- First Homes: while not technically a shared equity scheme, First Homes provides a minimum 30% discount from market value that reduces the purchase price and therefore the mortgage required.
Developer shared equity arrangements should be reviewed carefully - the terms of the equity loan, the interest or sharing arrangements, and the restrictions on sale or remortgage should be understood fully before proceeding. Independent legal and financial advice is recommended.
Mortgage Assessment Under Shared Equity
Mortgage lenders are aware of shared equity arrangements and require disclosure of any equity loan forming part of the purchase. The equity loan is treated as a second charge or as a deferred obligation depending on its structure. The mortgage lender assesses affordability on the first charge mortgage amount. The equity loan affects the overall debt position and must be declared. Not all lenders accept all shared equity structures - lender acceptance of the specific scheme being used should be confirmed before proceeding.
Frequently Asked Questions
Is shared equity available for second home or buy-to-let purchases?
No. Shared equity schemes are generally designed for primary residence purchases by first time buyers or those who cannot otherwise access homeownership. The Help to Buy equity loan applied to new build first homes only. Developer shared equity schemes similarly target primary residence buyers. Buy-to-let and second home purchases are not eligible for government or most developer shared equity arrangements.
What is the difference between a shared equity loan and a second charge mortgage?
A second charge mortgage is a regulated loan secured against the property, with a fixed repayment schedule of interest and capital. A shared equity loan may be interest-free for an initial period (as the Help to Buy equity loan was for the first five years), with repayment calculated as a proportion of the property's market value at the time of repayment rather than as a fixed sum. The legal structure and regulatory treatment differ between the two.
Can I remortgage a property with a shared equity loan on it?
Yes, in most cases. Remortgaging a property subject to a shared equity loan requires the equity loan provider's consent to the new first charge mortgage (to ensure the equity loan's security position is maintained). The new first charge lender must also accept the presence of the shared equity arrangement. Specific processes vary by scheme - the equity loan documentation will set out the process for consent to remortgage.
What happens to the shared equity loan when I sell the property?
The equity loan is typically repaid from the sale proceeds. For most shared equity arrangements, the repayment is calculated as the same percentage of the sale price as the original loan represented of the purchase price. If the property has increased in value, the repayment will be higher than the original loan amount in cash terms. If it has fallen in value, the repayment will be lower.
