7.6.2. Mutual home ownership

Mutual Home Ownership (MHO) is a community form of home ownership. There are detailed complexities to the MHO model, but the basic principles are straightforward.

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Basic principles

Basic principles of Mutual Home Ownership (MHO):

  • MHO society members and residents pay a collective mortgage rather than traditional individual ones.
  • MHO society members contribute financially on the basis of their income levels eg. 35% of net household income.
  • MHO society members build equity that they can potentially take with them based on a national income based formula rather than property values, ensuring that homes remain affordable for subsequent MHO society members.


The MHO scheme can be initially funded by a mix of member equity (each incoming member is required to pay at least 10% of the equity they can afford as a deposit) and loan funding, which could potentially be through public revolving loan funding or a housing association’s loan facilities.  A housing association may be able to grant a lease to an MHO society for a seven-year period after which time, the society can raise its own finance.

Scheme costs and shares

Scheme costs are divided into equity shares with an initial value of £1. The number of shares allocated to each household depends on their income and scheme costs relating to the size of their home. Reliant on recruiting founder (and subsequent) members who collectively will be able to pay for scheme costs, MHO societies can include an equity width (eg. between 90% and 110% of costs relating to each property) to enable affordability for some members. However, those buying or bringing lower equity need to be matched with those paying more. MHO society members moving out are required to find incoming members to buy their shares, and if they move out after three years, they receive 75% of the change in value of the equity shares – indexed to average national income changes.

Ownership and management

The homes are owned by the MHO society, a co-operative owned by the society’s members – the residents of the homes. The MHO society is responsible for day to day repairs and asset management, the latter funded through depreciation of members’ equity shares.

Benefits of mutual home ownership

The potential benefits of MHO are that member housing costs, including repairs and asset management, are constantly set to 35% of their income.  Members can access a form of home ownership without the need to obtain an individual mortgage and there are no transaction costs because no homes are bought or sold.  MHO societies can provide a range of affordability, but to do so requires a strong community component, including a common house, to ensure that some households are attracted who wish to buy more equity.  The MHO model also ensures permanent affordability.

Case studies

Examples of ‘Mutual Home Ownership’:

  1. Loftus Village Association, Newport
  2. Lilac, Leeds
  3. Accord Housing (approach which enables rental co-operative members to save equity alongside their rents)