The Lodestone Guide to Shared Ownership: Staircasing

Staircasing

If you are the owner of a shared ownership property, and you don’t own 100%, then you are allowed to buy additional shares in that property, and this is known as staircasing. The more shares you buy, the less rent you pay, and if you buy up to 100%, you become the outright owner and pay no rent at all!

Of course, this is only an option. You don’t have to staircase, and you can just continue with the number of shares you hold if that’s your preference.

Generally speaking there are no restrictions on staircasing, but its always best to speak with your housing association rep or by checking your lease.

Staircasing does have many benefits, including:

  • The more shares you own, the less rent you pay
  • If you own 100%, eventually you will have no mortgage to pay and no rent either!
  • If you have staircased to 100% and you choose to sell, you can do so on the open market and choose any estate agent you wish.
  • If you have made any improvements to the property, you will benefit from these when you sell.
  • If you sell, the more shares you own, the more profit you will make.

Before you buy a shared ownership property, you should consider if you will want to staircase in the future, as there are costs involved in doing so. To try and keep these costs to a minimum when you do staircase its worth buying as large a share as possible. Some of the costs are as follows:

  • Mortgage fees – if you are purchasing additional shares with the funds from a mortgage then there are potentially going to be fees that need to considered. Some of these may be added to the mortgage to reduce your initial outlay. You should speak with your broker who will be able to advise you accordingly.
  • Valuation fee – The housing association will need to establish how much your property is worth, and as such what the cost of your shares are going to be, and so will carry out a valuation. This will need to be carried out by a RICS qualified valuer, and the cost could be in the region of £150 – £250.
  • Legal costs – purchasing additional shares, is just like when you purchased your initial shares, and you will again need a solicitor to act for you. Speak to them about the costs involved. Why not ask them when you buy your initial shares to get an indication of future cost.
  • Stamp Duty – It is possible that you may have stamp duty to pay, discuss this with your mortgage broker or solicitor.

As a rough estimate, if you were staircasing to 100%, you may expect to pay around £2,500.

How do you Staircase?

  1. Speak with your housing association and tell them you want to staircase.
  2. Decide what size additional share you want to purchase and complete the application form.
  3. The housing association will check your affordability, and may introduce you to their financial representatives. You are also able to speak with your own to complete the application paperwork for a mortgage (if that’s how you are purchasing).
  4. The valuation will be carried out for the housing association. You will need to pay for this.
  5. Once they’re happy, the housing association will provide you with an offer letter confirming they have approved you to purchase the additional share.
  6. Now is the time to start your mortgage application (if that’s how you are purchasing). Your broker will handle all the paperwork for you and get you through to the point of formal mortgage offer.
  7. Once your offer is approved, you are almost there. Now its over to your solicitor, who will hopefully have done a lot of the legal work already.
  8. The process is now complete, and the additional share is yours. Your rent will reduce!

Staircasing is a rewarding process, as each step means you are closer to 100% ownership. As we said earlier though, staircasing isn’t compulsory, you don’t have to do it if you don’t want to. Indeed not everybody can afford to. Regardless of this, you have your foot on the property ladder, and as property values increase, so does your share, generating profit for you.

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