How To Staircase Shared Ownership?

As you know shared ownership property allows you to own a specific percentage of the house. The control you have as a shared owner is limited to your property share. If you want to increase your stake in the property, you can staircase shared ownership.

What is Staircasing in Shared Ownership?

In shared ownership, staircasing refers to the process of buying more shares in your property to own a greater portion of the property. Depending on the terms of your lease, you are allowed to staircase after living in the property for a specific duration. This allows you to have more ownership in the property by buying more shares.

Staircasing allows property owners to build their property shares up to 100%. By staircasing, you can become the absolute owner of your property over time.

Work with your mortgage broker and advisor to check if you have enough equity in your property to staircase shared ownership or you will need to have deposit from saving. They will also help you calculate the estimated cost of the new mortgage after staircasing the property.

Are There Any Restrictions on Staircasing?

The restrictions on staircasing depend on your lease’s terms and conditions. Ensure that you read your lease carefully before staircasing your shared ownership.

In most cases, the restrictions limit your maximum property share. For example, your lease may limit your maximum property share to 80%. Under such circumstances, you cannot staircase shared ownership over 80% of the property. In other words, you cannot assume absolute ownership of your property.

However, most of leases allow shared owners to buy 100% equity in the properties they live in.

What is the Process to Staircase Shared Ownership?

Let’s understand how staircasing works,

1   Contact your housing association to let them know you wish to buy additional share.

• You will then need to hire an independent surveyor who will visit your property and calculate its current value. Most valuations are valid for three months. After the valuation, you will receive a copy of the same, asking you if you want to continue with staircasing.
• Your housing association will do affordability assessment if you are not buying 100% shares. Once the assessment is done then you will know maximum share you can purchase.
• Find your self skilled Mortgage Broker near you. Mortgage broker will help you with mortgage application.
• Find yourself a conveyancer who will work on the legal side of purchasing additional share. Your mortgage broker may help you with this one.
• Staircasing is lengthy process which take longer to complete compare to freehold purchase.

What are the Existing Staircasing Rules?The new shared ownership model does not apply to the existing shared owners. If you are already a shared owner and want to buy more shares in your property, you need to approach your housing association and give them a notice about your intent. What are the New Staircasing Rules? According to the new rules, shared property owners have an option of staircasing by 1% every year for 15 years from the purchase date. However, it is important to note that there will be a transition period between 2022-23, where some new properties will have leases as per the existing staircasing regulations. The others will be in sync with the new rules. Shared owners willing to take up the option of staircasing by 1% every year do not need to pay for an independent property valuation. Moreover, their fees will be considerably reduced. If an existing lease has been transferred to a new owner, the 1% option will still apply to staircasing.

How Much Does Staircasing Shared Ownership Cost?

Along with the obvious price of the additional shares you want to purchase, some other costs are involved in staircasing your  property. It is advisable to have around £2,000 for the entire legal process, it may vary depend on the lease and the property price. Mortgage broker may charge fees of £495. But you can find Free Mortgage broker who would guide you through without charging broker fees.

Most of the time staircasing is done while remortgage is due to save on early repayment charges if you must change the lender. You may need to have deposit towards the purchase of additional share if you do not have equity in the property.

while the exact amount will vary for different owners.

Always ensure that you have your expenses mapped and arranged before going ahead with staircasing.

What Are the Benefits of Staircasing?

There are many reasons why a current shared owner would want to increase the percentage they own in their home.

Some of the benefits of the staircasing shared ownership are your mortgage will increase while your rental payments will decrease at the same time.

In most instances, you can purchase up to 100% of your home, in which case you would no longer pay any rent, just your mortgage along with any outlined service charges and ground rent.  This means you will pay off the mortgage quicker than paying rent.

Another benefit is you keep the whole share from increased property prices. If you go on to buy 100% of your home, price increase will only benefit the homeowner not a housing association.

If your staircase to 100% ownership, you will likely have access to a wider selection of mortgage lenders as you would be eligible for a standard mortgage, rather than a Shared Ownership mortgage from limited lenders.

How Will Staircasing Affect My Mortgage?

Unless you can afford to pay for the additional shares from your savings, staircasing will normally involve borrowing more on existing mortgage or remortgaging altogether to new lender. Many owners choose to contact a expert mortgage broker with experience in Shared Ownership like MariannaFS  in staircasing process to help them find the best deal that suits their needs.

Will I Pay Stamp Duty If I Choose to Staircase Shared Ownership?

At the time of purchasing your Shared Ownership home, you will have the choice of making a one-off Stamp Duty payment based on the total market value of the property, or you can choose to pay the Stamp Duty in stages, like paying what is owed on the initial share you buy and then again for any additional shares purchase in future.

However, if you choose to pay in stages, there will be no Stamp Duty to pay until your own share reaches 80% and above of the property price.

How do I pay for additional shares of my shared ownership property when staircase?

If you’re considering shared ownership staircasing, you’ll need to think about how you’ll fund the purchase of the additional shares. Many mortgage borrowers choose to borrow on existing mortgage by additional borrowing or Remortgaging to new lender.

Very few would use the savings to pay for staircasing.

Do I Need A Deposit To Staircase Shared Ownership?

On many occasions you don’t need a deposit to staircase. You can use the equity you’ve built up in the share you already own to act as a deposit when applying for your mortgage. But if property price has gone down which means negative equity or you may want to buy bigger share then you may need a deposit while staircasing shared ownership property.

How Many Times Can I Staircase Shared Ownership?

Before housing association allowed staircases three times but after changes were made to this policy in 2022 many properties no longer restrict number of times you can staircase. However, always check this information with your housing association regarding shared ownership staircasing. Given that you’ll pay admin fees, valuation and mortgage change every time your staircase it makes sense to buy as bigger share which you can afford.

Can I Sell My Shared Ownership Home?

Yes is the answer but if you own less than 100% of your home, you’ll need to contact housing association to inform them and you’ll also need to organise a valuation of your property to know its value. Your provider will have usually 4 to 12 weeks when they can exclusively market your property. If your property doesn’t sell, then you can sell the property through an estate agent.But if you own the property 100% then you can sell it in open market.