When purchasing a property on a Shared Ownership agreement, you often have the choice of purchasing an initial share of between 25% and 75%. Staircasing, is the process of buying additional shares in a Shared Ownership property until the total share held is 100%.
There is no obligation to own 100% of the share, however, the more shares you hold in the property, the lower your costs will be. A Shared Ownership agreement works on the basis that rent is paid on the shares not owned. The combined total of the mortgage and rent should cost less than paying for a mortgage to own the property outright.
Read our Shared Ownership FAQ for more information.
What are the benefits of staircasing?
Aside from eventually owning 100% of your home, there are a number of other benefits that come with staircasing:
- Staircasing is an easier option to owning a home when funding and mortgage can be an issue. In certain situations, it may not always be easy to secure a larger mortgage to cover the total price of a home. Staircasing lets you incrementally purchase more of your home as and when money is available to you.
- When considering selling your home, the higher the share that you own, the more profit is available to you if the value of your home has increased
- Once you own 100% of your home, you are entitled to sell it on the open market to anyone who is interested. This avoids the restrictions placed on the buyer criteria. But be aware, there might be certain covenants in your agreement with the Housing Association that restricts the property from being sold on the open market.
- Buying more shares in your home reduces the amount of rent that is owed to the Housing Association, making it more affordable.
How many times can I staircase?
You can only purchase a new share a total of 3 times. Generally, when you first purchase a share in a Shared Ownership property, the lowest share available is 25%. Therefore, if you had to purchase more shares on your property, you have to do so in 25% pieces until you reach 100%.
What costs are involved with staircasing?
- A mortgage that you have taken in addition to your initial purchase
- Cost to survey the property
- A fixed conveyancing fee from your chosen Solicitor
- Stamp Duty
- Any rent in arrears on completion of your staircase purchase
- You can calculate the associated costs with this useful online calculator: https://www.sharetobuy.com/staircasing-mortgages/staircasing-calculator
How do I staircase?
When you have decided that you would like to purchase more shares in your property, you should firstly determine if you are eligible for a re-mortgage from your mortgage broker. You will also need to make sure that you have additional funds to cover any additional service fees.
In the first instance, contact the Housing Association to receive an application form for a valuation and to see if you are eligible to purchase more shares in the property.
The valuation will be arranged by the housing association and will only be valid for 3 months. It is essential that you have as much information as possible ready for the valuation to ensure it goes through.
Once the valuation has been completed, the Housing Association will set out a price for the remaining shares. At this point, a Solicitor or Conveyancer will have to be appointed by you to act on your behalf. We offer conveyancing servicers across our offices in Banbury, Bicester, Brackley and Buckingham. We are CQS accredited and offer expert advice at a fixed fee. All the relevant paperwork in the staircase is then drafted and approved by the appointed Solicitor.
If both parties are happy with the staircasing application and documentation, the staircase is complete and you now own more shares in your property. Your Solicitor will register the legal documents as evidence to your entitlement to the additional shares.
What happens when I own the property 100%?
If you own a flat:
If you are a flat owner, and have staircased to 100%, this will be placed on a leasehold agreement. This means that even though you are the lease owner of the flat, you will still be required to pay for a service charge and management fee for the grounds.
If you own a home:
Your purchase will be on a freehold agreement. This freehold will be transferred in your name once 100% of the share is owned.