Knowledge Guides

Shared Ownership Staircasing Guide

Posted October 8, 2023
Shared Ownership Staircasing Guide

In this guide, we will explore Shared Ownership staircasing which is the process for existing owners to buy more shares in a Shared Ownership property.

From addressing frequently asked questions to providing a detailed roadmap for navigating staircasing, we’re here to make your path towards increased home ownership clearer and more manageable.

What is Shared Ownership Staircasing?

Staircasing lets you buy more of your home over time under the Shared Ownership scheme.

The major benefit?

  • As you buy more of your home, you pay less rent. Plus, as house prices go up, so does the value of what you own.
  • Every time you buy more shares (staircase), your stake in the property could grow.

Before deciding, it’s wise to get advice from a legal professional who understands Shared Ownership well.

How Do I Start Staircasing?

Staircasing means buying extra shares in your shared ownership home. After getting your first share, you can buy more, usually 10% at a time. The price for these shares depends on how much your home is worth now – something an independent surveyor will figure out.

This gives you flexibility: Buy more when you can afford it and aim for full ownership in the future. Owning more means paying less rent to the housing association.

Though starting may seem tough if it’s new to you, breaking it down into steps helps:

  1. Check Your Budget – Know what buying extra shares costs, including legal fees and valuation charges.
  2. Get Your Home Valued – An independent expert must set a current price for your home.
  3. Tell Your Housing Association – With the valuation done, let them know about wanting to staircase; they’ll help with paperwork and advice.
  4. Seek Legal Help – It’s important not just because it saves trouble but also time.
  5. Arrange Financing – Talk about staircasing with whoever gave you a mortgage or look into other finance options like loans or savings.
  6. Buy More Shares – Once money matters are sorted, increase how much of your home belongs to you.

Considerations Before You Buy More Shares

There are several factors you need to consider before deciding to buy more shares:

Before you decide to buy more shares in your home, there are a few important things to think about:

Can You Afford It?

Ask yourself if you can handle the ongoing costs like maintenance, insurance, and mortgage payments.

To start staircasing, first look at your finances. This includes how much of your home you already own (your equity), which could help pay for more shares. Also consider your income, spending, and any other money obligations to see if you can afford it.

How Long is Your Valuation Good For?

Remember that the valuation of your home only lasts three months. Try to finish buying within this time.

Are There Any Rules on Buying More Shares?

Your lease might have rules on how often or how much you can buy at once.

Staircasing has its upsides but also challenges such as costs – think valuation fees and legal charges – and possibly higher mortgage payments later on. To manage these challenges:

  • Make sure you understand all the costs involved.
  • Plan your budget carefully.
  • Staircasing can take time. Having all needed documents ready can make it quicker.

Potential Staircasing Restrictions and Limitations

Before you decide to buy more shares in your home, keep these points in mind:

  • Restrictions: Your lease might limit how often and how much you can buy at once.
  • Extra Costs: Some housing associations charge fees for the paperwork.
  • Selling Limits: In certain rural areas, who you can sell to may be restricted because of a ‘local connection criterion‘.
  • Lease Terms: Always check your lease for any rules about buying more shares or other conditions.

Getting advice from a legal professional is wise. They can help make sense of your lease and guide you through staircasing.

Step-by-step guide to help with the staircasing process

A Simple Guide to Staircasing

Staircasing is your path to owning more of your home, and eventually, the whole property. Here’s how you can navigate this process with help from your housing provider.

  1. Talk to Your Housing Provider: Start by getting in touch with them (this could be a housing association or developer). They’ll explain their specific rules and what you need to do next.
  2. Check If You’re Eligible: Make sure you fit the criteria set by your provider. This might include being up-to-date on payments, earning over a certain amount, or having lived in the property for a certain time.
  3. Get Your Home Valued: To buy more shares, find out what your home is currently worth. You’ll need an approved valuer to give you this figure.
  4. Apply for More Shares: With your valuation ready, fill out an application form from your provider and submit it along with any required documents.
  5. Sort Out Your Mortgage: If you need extra borrowing to buy these shares, talk to mortgage lenders for an agreement in principle. Look around for the best offer that suits your situation.
  6. Handle the Legal Side: Once approved, choose a solicitor who knows about Shared Ownership deals well enough they will take care of all legal work involved.
  7. Complete the Purchase: After finishing all legal steps successfully purchase additional shares! Your housing provider will then update their records; remember there are fees associated with increased ownership which should have been outlined at each step of planning.

Although staircasing might appear daunting at first glance, it is often possible to effectively manage concerns such as unexpected costs or lengthy processes through careful planning and understanding each stage.

Shared Ownership Staircasing FAQ

Can I purchase an additional share in my property at any time?
This varies depending on your lease and housing association, though generally, you can staircase a year after the initial purchase.
Will I need a new mortgage?
If you cannot afford the new share with savings, you’ll need to re-mortgage. Speaking with a financial advisor, mortgage broker or your housing association, as they might suggest the best course of action.
What are the benefits of staircasing in a shared ownership?
The benefits of staircasing include the opportunity to reduce the rent you pay, increase your share, and sometimes, you may completely do away with rent payments if you owned 100%. It also gives you the option of selling your shared ownership home at open market value if you staircase to 100%.
How much does staircasing usually cost and what does it involve?
The cost of staircasing usually depends on the current market value of your home, the price of the share you wish to buy, and other costs such as your shared ownership mortgage application fee, valuation fee, and solicitor’s costs. The staircasing process will normally involve a new valuation, which must be done by a RICS certified surveyor and applying for a mortgage.
Do I have to pay stamp duty on staircasing transactions?
The requirement to pay stamp duty when you buy more shares in your shared ownership property depends on the staircasing transaction and total value of your home. For instance, if you staircase to 100% share of your home in one transaction, you may need to pay stamp duty.
Can I use a solicitor to help me staircase?
Yes, it is advisable to use a solicitor for all conveyancing transactions including staircasing. The solicitor will ensure all the legal paperwork is done correctly and help guide you through the process.
Do I need to staircase to 100% ownership?
You do not necessarily need to staircase to 100% ownership. This is known as interim staircasing, where you increase your share of the property gradually. The decision should be based on what is most affordable and beneficial for you.
What is the purpose of interim staircasing transactions?
Interim transactions for staircasing are for owners who want to increase their shares in a shared ownership property gradually instead of buying all at once. This can be more affordable and can still decrease the amount of rent you need to pay.
How do I determine the share of my home I can buy?
The share of your home that you can purchase through staircasing will depend on what you can afford. This will be determined by a new valuation of your home, your earnings, expenditure, and the terms of your shared ownership agreement.