TL;DR: Yes, the Shared Ownership scheme is typically available to contractors, provided they meet specific income and eligibility criteria. Success often depends on finding a lender comfortable with self-employed or contract-based income models.

Is the Shared Ownership scheme available to contractors?

For many professionals working in the UK today, the traditional “nine-to-five” office job has been replaced by the flexibility of contracting. Whether you are an IT consultant, a healthcare professional, or a construction worker under the Construction Industry Scheme (CIS), you may wonder how your employment status affects your ability to get on the property ladder. One of the most common questions we hear is: is the shared ownership scheme available to contractors?

The short answer is yes. Shared Ownership is a government-backed scheme designed to help people who cannot afford the full market value of a home. Contractors are not excluded from this scheme, but the application process for a mortgage can sometimes be more complex than it is for salaried employees. Understanding how lenders view your income and what the scheme entails is the first step toward securing your new home.

How Shared Ownership works for contractors

Shared Ownership allows you to buy a share of a property (usually between 10% and 75%) and pay a subsidised rent on the remaining share, which is owned by a housing association. Because you only need a mortgage for the share you are buying, the deposit required is often much lower than it would be for a traditional purchase.

For a contractor, the challenge rarely lies with the housing association. Most housing associations are happy to accept contractors as long as they can demonstrate a consistent income that meets the eligibility caps. The main hurdle is usually the mortgage lender. Lenders generally prefer stability, and the variable nature of contracting can sometimes be seen as a risk. However, many specialist lenders and even some high-street banks have developed specific criteria to cater to the modern contractor.

Meeting the eligibility criteria

Before worrying about your mortgage, you must ensure you meet the general eligibility requirements for Shared Ownership in England. These include:

• Your household income must be less than £80,000 a year (£90,000 in London).
• You must be a first-time buyer, a previous homeowner who can no longer afford to buy, or an existing shared owner looking to move.
• You must have a good credit history.
• You must have enough savings to cover the mortgage deposit (usually 5% to 10% of the share you are buying) and the legal costs of buying a home.

As a contractor, your “household income” is calculated based on your average earnings. If you operate as a limited company, lenders may look at your salary and dividends or, in some cases, your share of retained profits. If you are a sole trader, they will typically look at your net profit.

Proving your income as a contractor

The way you are paid will dictate how you prove your income to a lender. This is the most critical part of answering the question: is the shared ownership scheme available to contractors? Lenders typically categorise contractors into three groups:

1. Limited Company Contractors

If you run your own limited company, lenders usually ask for two or three years of audited accounts. However, some specialist lenders may consider you if you have only been trading for one year, provided you have a strong history in the same industry. Some lenders will calculate your affordability based on your daily rate rather than your accounts, which can often result in a higher borrowing limit.

2. Umbrella Company Contractors

If you work through an umbrella company, you are technically an employee of that company. Lenders will look at your payslips, but they will also want to see the “contractor” nature of your work. They will look for consistency in your contracts and minimal gaps between roles.

3. CIS Workers

Construction workers under the CIS scheme are unique. Many lenders will treat CIS contractors similarly to employees, looking at their gross pay as shown on their CIS vouchers rather than waiting for their end-of-year tax returns.

The importance of your credit score

Regardless of how much you earn as a contractor, your credit history plays a vital role in your mortgage approval. Lenders want to see that you manage your debts responsibly, especially since your income might fluctuate between contracts. It is highly recommended that you check your credit report before starting the application process.

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Benefits of Shared Ownership for contractors

The primary benefit is affordability. As a contractor, you might prefer to keep more of your capital accessible for business purposes or as a “buffer” for periods between contracts. Shared Ownership requires a smaller deposit, which keeps your initial costs down. Additionally, the combined cost of the mortgage and the rent is often lower than the cost of a full mortgage or private renting in the same area.

Another benefit is “staircasing.” This is the process of buying more shares in your home as and when you can afford it. If your contracting business grows and your income increases, you may eventually be able to own 100% of the property.

Risks and considerations

While the scheme is a fantastic tool for getting on the property ladder, it is not without risks. Your property may be at risk if repayments are not made. If you fail to keep up with your mortgage payments or your rent, the housing association could take legal action, which may lead to repossession. This could also result in increased interest rates on future borrowing and additional legal charges.

Furthermore, as a shared owner, you are responsible for 100% of the maintenance costs and service charges for the property, regardless of how small your share is. You should always factor these costs into your monthly budget to ensure they are sustainable, even during weeks when you might not be on a contract.

Steps to apply as a contractor

If you are ready to proceed, follow these steps to improve your chances of success:

• Organise your paperwork: Gather your last two years of accounts, tax year overviews (SA302s), and your current contract details.
• Check your gap history: Most lenders prefer that you haven’t had more than an eight-week gap between contracts in the last 12 months.
• Find a specialist broker: Some brokers specialise in “contractor mortgages” and will know which lenders are most likely to accept your specific income structure.
• Get a Mortgage in Principle: This shows housing associations that you are a serious buyer and have the financial backing to proceed.

For more official guidance on how the scheme operates, you can visit the UK Government’s Shared Ownership page.

People also asked

Can I use a day rate to calculate my income for Shared Ownership?

Yes, many lenders will calculate your annual income by multiplying your day rate by five days, then by 46 or 48 weeks. This often allows contractors to borrow more than they could based on their salary and dividends alone.

How many years of contracting do I need to be eligible?

Typically, lenders prefer to see at least 12 to 24 months of contracting history in the same line of work. However, some specialist lenders may consider you with a shorter history if you have a continuous employment record in that industry.

Is the rent on a Shared Ownership home expensive?

The rent is usually set at a subsidised rate, often around 2.75% of the value of the share owned by the housing association. It is generally cheaper than private market rent, but it can increase annually based on inflation (usually RPI or CPI).

What happens if I lose my contract?

If your contract ends and you struggle to pay your mortgage or rent, you should contact your lender and housing association immediately. They may have hardship schemes or short-term solutions to help you avoid repossession.

Can I buy more shares if I am still a contractor?

Yes, you can “staircase” at any time, provided you can secure the additional mortgage funding or have the cash available. Your income as a contractor will be re-assessed at that time to ensure you can afford the higher mortgage payments.

Conclusion

In summary, being a contractor does not prevent you from accessing the property market. While the question “is the shared ownership scheme available to contractors?” is a common concern, the reality is that the scheme is widely accessible. By preparing your financial documents, maintaining a good credit score, and understanding the unique way lenders view contract income, you can successfully use Shared Ownership to secure a home. Always remember that homeownership carries significant financial responsibility, and you should ensure your income is stable enough to cover all associated costs in the long term.