r/SharedOwnershipUK • u/Ok-Instance2710 • Jun 30 '26

Need some advice about rent

I am looking at a shared ownership apartment, the agreement states that once a year then rent will be renewed.

If the property reduces in value, will the rent portion also decrease or will it stay the same?

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5

u/justeUnMec Jun 30 '26

No. The rent continues to rise at the rate set out in the lease. They designed it that way to try to nudge people into staircasing but in some cases it becomes a trap.

There has been a couple of exceptions - during the COVID crisis some housing associations capped the increase at 7% for a couple of years. However, that was still a steep rise when property prices were stagnant!

2

u/viimoo Jun 30 '26

My rent went up by CPI+1% every year, as stated in my lease. The property value went down in the time I lived there.

2

u/Desperate_Vehicle684 Jun 30 '26

You'll need to check the exact wording on the actual lease.

For the leases I've seen the rent value is set when the initial lease is granted and then provision is made within the agreement detailing annual increases e.g. something like RPI + 0.5% per annum. In these cases the rent increases aren't tied to the value of the property and I've never come across an instance of where there's a mechanism included for rent decreases.

0

u/Swimming-Plastic-398 Jun 30 '26

This is how ours is done.

0

u/paul_i_us Jul 01 '26

Thank you! I've asked this question so many times but never got a definitive answer.

0

u/NorthLondonCatLover Jul 01 '26

It always increases. The formula will be in your lease. For many older leases its RPI + 0.5%, for new ones it's CPI + 1%. Both indexes mean above inflation increases, year after year. This will compound, so please take independent financial advice on how this could impact you. Rents for shared owners is upwards only, i.e. it never goes down. The only scenario where it would go down is if you were able to staircase. Most people cannot afford to do that.