Mortgage question
Shared ownership rent and service charges — how much do they go up each year?
Rent rises annually per your lease’s review clause — CPI+1% on new-model 2023+ leases (capped) or RPI+0.5% to RPI+2% on older leases (uncapped in practice). Service charges are separate, uncapped and reflect actual building costs: many UK flats have seen 8–15% annual rises in 2023–2026 driven by insurance and cladding. Ground rent on post-June 2022 leases is a statutory £0.
How your rent rises — and which lease you’re on
Shared-ownership rent is charged on the share you don’t own, usually at 2.75% a year of the unowned market value at purchase. The review clause in your lease then uplifts that starting rent every year on the anniversary. Which formula applies depends on when your lease was granted:
- New-model leases from the 2023 reforms onwards (AHP 2021–2026 homes): rent rise = CPI + 1%, applied annually, with a hard cap if CPI spikes. The MHCLG consultation response in 2023 built this in as standard across Homes England grant-funded homes.
- Leases granted 2010–2022: typically RPI + 0.5% (common social housing model), though some housing associations used RPI + 2% which compounds much faster.
- Older leases (pre-2010): variable — read your schedule carefully; some use fixed-percentage uplifts that have looked steep during low-inflation years.
With ONS February 2026 CPI at 3.0% and RPI at around 3.9%, a new-model tenant this April sees rent rise 4.0%; an old-model RPI+2% tenant sees 5.9%. On a £180,000 unowned share that’s £20/month vs £30/month extra — noticeable, compounding, and locked in for the next 12 months.
Worked example — a 40% share on a £300,000 flat
You completed in 2023 on a new-model lease. Starting rent was 2.75% of the £180,000 unowned share = £4,950/year (£413/month).
| Year | Formula (CPI+1%) | Assumed CPI | Annual rent | Monthly |
|---|---|---|---|---|
| 2023 (start) | — | — | £4,950 | £413 |
| 2024 | +6.7% (CPI 5.7%) | 5.7% | £5,282 | £440 |
| 2025 | +5.2% (CPI 4.2%) | 4.2% | £5,557 | £463 |
| 2026 | +4.0% (CPI 3.0%) | 3.0% | £5,779 | £482 |
| 2027 (est.) | +3.5% (CPI 2.5%) | 2.5% | £5,981 | £498 |
Four years in, that first-year £413 has become £482 — a 17% increase. On an RPI+2% lease the same span would be closer to 24%.
Service charges — the bit that really bites in 2026
Service charge is not capped. Your landlord (freeholder) recovers the actual cost of running the building: lifts, cleaning, communal heating, insurance, reserve fund, estate management. Post-Grenfell the insurance and remediation line has exploded. Across England, ARMA-registered managing agents reported building insurance premiums rising 200–400% on buildings with any cladding concern, and many shared-ownership leaseholders have seen total service charges climb from £1,800 to £4,500+ between 2022 and 2025.
The 2024 Leasehold and Freehold Reform Act gave leaseholders new rights to challenge service charge demands at the First-tier Tribunal (Property Chamber) and to request detailed cost breakdowns within 30 days. Use them — managing agents will refine estimates when pushed.
Ground rent and the 10-year repair warranty
Two recent reforms have quietly improved shared-ownership economics:
- Statutory £0 ground rent on any new residential lease granted after 30 June 2022 under the Leasehold Reform (Ground Rent) Act 2022. If your SO lease dates from then, ground rent is zero — if your landlord is still demanding it, check the lease date and challenge it.
- 10-year landlord repair warranty on essential repairs (boiler, roof, structural) for new-model AHP 2021 leases. This is a real saving — it shifts the risk of early-years major failures back to the housing association.
Older (pre-2022) SO leases may still carry ground rent, typically £10–£295 a year — annoying but usually minor compared with the service charge.
What to do before you sign (or before your next review)
- Read the rent review schedule line by line. RPI+2% compounds painfully; CPI+1% is the gentlest new-model default.
- Ask for the last three years of service-charge accounts before exchange. A rising trajectory is a red flag; a flat one with a healthy reserve fund is a green flag.
- Check the EWS1/FRAEW status on any flat above 11 metres — unresolved cladding means insurance premiums will keep rising.
- Diary your review date and budget the increase each April.
Model the full cost against a 100%-ownership alternative using our shared ownership vs 95% LTV calculator, and read our staircasing guide if you are considering buying more equity to reduce the rent bite.
Common misconception: “The landlord can only raise my rent by inflation”
On old-model leases that is the floor, not the ceiling: RPI+2% has historically beaten CPI by 2–3 percentage points a year. And service charge is a completely separate bill that can and does rise faster than any inflation index — it is whatever the real cost of running your building turns out to be. Budget for both, and read both lines of your annual statement separately.
This is information, not regulated legal or financial advice. If a review looks wrong, raise it in writing with your landlord and, if unresolved, consider the First-tier Tribunal (Property Chamber).
Sources
Information, not regulated advice. Mortgage Notes is not an FCA-authorised mortgage adviser. For a recommendation on your specific circumstances, speak to an FCA-authorised broker.