What Is Shared Ownership Staircasing?
Staircasing means increasing your ownership of the shared ownership property – usually through buying extra shares, normally from a Housing Association or other social landlord, in a property which was originally bought through a shared ownership scheme. Depending on your Housing Association, you may have the right to buy shares in as small a chunk as little as just 10% or 20% at a time [although buying such small further shares does have costs implications – see below].
The leases of most shared ownership properties contain a clause which gives the tenant the right to keep buying extra shares until they finally own 100% of the lease.
Tenants who own less than 100% still have to keep paying rent for the percentage of the property which they do not own. As more and more shares are bought, the proportion of the property owned by the Housing Association decreases, and the rent also decreases.
Using staircasing is an easy way of eventually owning a property without the need to invest a large sum of money all at once.
How our Panel Recommended Solicitors can help you
Our property team have plenty of experience of shared ownership and staircasing. We are on the recommended solicitors panel for Radian Homes. We also regularly a
ct for clients in property transaction in a wide range of housing associations including Sovereign, Aster and VIVID (formed from a merger of First Wessex and Sentinel Housing Association).
Radian describe us as
“highly experienced in dealing with the various schemes that we have available and will ensure your purchase goes as smoothly and quickly as possible.”
What’s more highly experienced property team handle staircasing and shared ownership conveyancing not just locally in Wiltshire, Hampshire and Dorset, but for clients throughout England and Wales – from our four offices in Salisbury, Fordingbridge, Andover and Amesbury.
Need help with staircasing? Call our specialist solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice and your conveyancing quote – with no strings attached.
Click here to read some reviews of our conveyancing lawyers from satisfied clients
Do I Have an Automatic Staircasing Right?
Not necessarily. Some leases restrict your right to buy a 100% interest in your property.
It is crucial to check whether your particular lease actually has an automatic staircasing clause or not. You could have a look at your lease – or alternatively check it with the Housing Association. Our solicitors specialising in shared ownership properties can help you with this.
Final Staircasing
The act of buying the final share which takes ownership to the full 100% outright ownership is called final staircasing. It is usually possible to staircase up to 100% ownership [though you will need to check your lease to see if your is one of the relatively small number of shared ownership properties, where 100% ownership is not permitted].
When you take the final step of buying the last shares and increase your ownership to 100% ,the Housing Association stops having any financial interest in your property and you no longer have to pay them rent. You are now the sole owner of your property, subject to your mortgage arrangements.
If the property which you have bought through staircasing is a house, then when you make the final payment you become the freehold owner. If it is a flat, you will still be a leaseholder even though you have paid off the shared ownership part of the lease.
Click here to find out about the differences between leasehold and freehold ownership.
So, if your property is a flat, despite final staircasing, you will still need to pay ground rent, service charges and property insurance – like any other flat owner.
Can I Staircase in Stages?
Again it depends on what your particular lease says, but most housing association shared ownership leases allow you to “staircase” as often as you want, gradually increasing your share in the property and reducing your rent.
There are however financial costs involved with each staircasing transaction. It could work out cheaper to buy the remaining share in your property in as few chunks as possible – instead of staircasing regularly.
Staircasing – your first steps
• The first thing to do is to get in touch with your housing association. It’s worth double checking with them that you are able to staircase, although it’s best to have a look at your lease first to see what it says. Some housing providers impose limitations on staircasing – for example that you can’t buy any further shares in your property in the first 12 months of ownership, or setting a minimum level of the increased share you can buy, often 10%.
It’s also quite common for housing associations to forbid you from buying any further share of your property if you’re currently in arrears with rent or any service charge.
However, provided you are permitted to staircase, you can then give the notice of your wish to buy a further share of your house or flat.
• The next stage is for your housing provider to make a booking for an independent surveyor to value your home – although sometimes they can provide you with a list of surveyors approved by them for you to arrange that valuation. The reason for this is that the price you will need to pay for your increased share depends on the current full market value of your home. So, for example if your home is worth £200,000 and you want to buy a further 50%, then the price would be at £100,000 – plus legal costs etc.
NB most valuations only last three months – so don’t delay instructing your solicitors once you have that valuation,
• The third step is to get in touch with your solicitor, agree legal fees and instruct them on your behalf.
• Fourthly, the housing association will then instruct their own solicitors who, once they have received the valuation from the surveyor will send what is known as a “Memorandum of Staircasing”
• Last of all, your shared ownership solicitor will then finish the legal work and set a completion date. On completion, the contract is completed and you then own an increased or 100% share of your home
Staircasing – how to pay for it
There are broadly three ways to buy additional shares in your property.
- agreeing an extension of your current mortgage
- remortgaging
- using any savings you may have.
So, if you are thinking about staircasing, you will have to find a lender or mortgage provider who will give you another mortgage, unless you have readily available cash. The funds which are available to you will help determine the number of shares which you are able to buy.
If you are thinking about switching mortgage companies, check first about whether any redemption penalties apply.
A good mortgage broker or independent financial advisor, or IFA, should be able to help you with these issues – we can introduce you to one of the IFAs we work with regularly.
Staircasing – How We Can Help
The staircasing process is even more complex than buying into shared ownership in the first place.
That’s why you need a specialist solicitor with plenty of experience of buying property from Housing Associations and staircasing. You can rest assured our team have that experience.
The staircasing process includes liaising with the Housing Association, dealing with the mortgage lenders, arranging for the property to be valued and preparation of the Memorandum of Staircasing. All of this can be made a lot more straightforward with the help of one of our expert team.
Costs involved in staircasing
Don’t forget the following additional costs in addition to the cost of actually buying an additional share of your property;
· Your Housing Association’s administration fee
· The Surveyor’s fees – who give you the full current market valuation of your property – and which is called a “staircasing valuation”
· Your own legal costs
In addition, you may have to pay a fee to any mortgage broker or IFA who helped to arrange your loan.
Depending on your particular circumstances, you may also have to pay Stamp Duty Land Tax – which is a tax on land transactions
What is downward staircasing?
Downward staircasing, also referred to as reverse staircasing or de-staircasing, is when the housing association buys back a portion of shared ownership property.
This may be an option if you are struggling financially and finding it difficult to pay your rent or mortgage payments. Housing providers do not generally offer this automatically, so if it is something that you want to do, you will need to contact your housing provider and ask if they are prepared to agree to downward staircase.
Standard model shared ownership leases do not contain downward staircasing provisions, but some providers are prepared to buy back some or all of a shared owner’s portion of their property. This is usually only agreed on in cases of extreme financial hardship.
Reverse staircasing needs the mortgage lender’s consent and the owner will need to cover the costs of the process, including valuation fees.
