Buying a Shared Ownership property can be a great way to get onto the property ladder without having to purchase 100% of a home from the outset. But what happens when your circumstances change and you are in a position to buy more of your property? Shared Ownership staircasing could be the next step.
Staircasing gives many Shared Ownership homeowners the opportunity to increase the percentage of their home they own. Depending on your lease, this could mean purchasing another share now and increasing your ownership gradually over time, or potentially buying the remaining share and owning your home outright.
At Bennett Oakley, we regularly help Shared Ownership homeowners through the staircasing process. Here are some of the key things to consider before getting started.
What is Shared Ownership staircasing?
When you purchase a Shared Ownership home, you buy a percentage of the property and pay rent to a housing association or landlord on the remaining share.
Staircasing is the process of buying additional shares in that property.
For example, if you currently own 40% of your home, you may decide to increase your ownership to 60%, 75% or potentially 100%.
As the percentage you own increases, the rent you pay on the remaining share will usually reduce.
Why might you consider staircasing?
There are several reasons why homeowners decide to buy a larger share of their Shared Ownership property.
Your income may have increased since you first bought your home, you may have built up savings or your mortgage circumstances may have changed.
For some people, the attraction is simply being able to own more of their home. For others, reducing the amount of rent they pay each month is an important consideration.
If your lease allows you to staircase to 100%, owning the property outright may also give you greater flexibility in the future.
However, staircasing is a significant financial decision. It is important to consider the costs involved and whether increasing your share is right for your individual circumstances.
How much can you staircase by?
This is an area where it is particularly important not to assume that every Shared Ownership property works in the same way.
The amount you can staircase by will depend on the terms of your lease and the Shared Ownership scheme under which your home was purchased.
Some leases allow additional shares to be purchased in relatively small increments, while others require a larger minimum percentage.
There may also be restrictions on the maximum percentage you can own.
Before starting the process, it is therefore sensible to have your lease checked so you understand exactly what you are entitled to do.
How much will the additional share cost?
The price you pay is generally based on the current market value of your home, not the price you originally paid for it.
Your housing association will usually require an independent valuation before confirming the amount you need to pay for the additional share.
As a simple example, if your home is valued at £350,000 and you want to purchase an additional 10%, that share would generally be valued at £35,000.
Remember that the purchase price is not the only cost to consider. You may also have valuation fees, housing association administration charges, legal fees, mortgage costs and Land Registry fees. Stamp Duty Land Tax may also need to be considered depending on your circumstances.
Do you need to remortgage to staircase?
Not always.
Some homeowners use savings to purchase their additional share. Others may borrow more from their existing mortgage lender or remortgage with a different lender.
If you do need to remortgage, the remortgage and staircasing can often take place alongside one another.
This means your solicitor will need to deal not only with the housing association and the staircasing documentation, but also with the requirements of your mortgage lender.
Can you staircase to 100%?
In many cases, Shared Ownership homeowners can eventually staircase to 100%, sometimes referred to as final staircasing.
Once you own 100%, you will normally stop paying Shared Ownership rent, although service charges, estate charges or other property-related costs may still apply.
However, not every Shared Ownership lease allows 100% ownership. Some properties and schemes have restrictions on the maximum share you can purchase.
This is another reason why checking the terms of your lease at the beginning of the process is so important.
What if you have improved your property?
Have you renovated your kitchen, replaced a bathroom or made other significant improvements since buying your home?
Make sure you mention this when you begin the staircasing process.
Depending on the terms of your lease, the housing association’s requirements and whether the necessary permission was obtained, improvements you have made may need to be considered as part of the valuation.
Keep hold of any written permissions and paperwork relating to significant improvements, as these could be useful when you decide to staircase.
Do you need a solicitor for staircasing?
Staircasing involves a legal change to your ownership of the property, so there is conveyancing work that needs to be completed.
Your solicitor will check the terms of your lease, deal with the legal documentation, liaise with the housing association and its solicitors and, where necessary, work with your mortgage lender.
Shared Ownership has its own requirements and procedures, so using a solicitor with experience in this area can make the process much easier to navigate.
Is staircasing right for you?
There is no single answer.
For some Shared Ownership homeowners, staircasing is the natural next step towards owning more – or all – of their home. For others, remaining at their existing percentage may make more sense.
Before making a decision, consider your finances, mortgage options, the costs involved and your longer-term plans for the property.
And importantly, check what your particular Shared Ownership lease allows.
Thinking about buying more of your Shared Ownership home?
At Bennett Oakley, our Residential Property team regularly helps clients with Shared Ownership purchases, staircasing and remortgages.
We understand that the process can initially appear complicated, particularly when housing associations, valuers and mortgage lenders are all involved. Our role is to make the legal side as straightforward as possible, explaining what is happening and what you need to do at each stage.
If you are considering staircasing, get in touch with Bennett Oakley today to speak to a member of our Residential Property team and find out how we can help you take the next step.
