If you bought your house through a shared ownership program, staircasing maybe something you’re thinking about. This is where you purchase additional shares in your property so that you may have a greater degree of control. If this is something you are looking into, you are likely considering the cost of shared ownership staircasing. How does purchasing shares work? How do I avoid common mistakes? And how do I get started? Moving Sorted have created this article to provide you with all the information you’ll need surrounding shared ownership staircasing.
Shared Ownership Scheme
The purpose of the shared ownership scheme is to enable first-time buyers to access the property market from a financial position that may be inaccessible without additional support. The scheme exists within the UK with around 150,000 shared ownership homeowners across the country today.
Properties that are purchased using the shared ownership scheme are broken down into shares. A portion of the shares are owned by the purchaser and rent is paid to the housing association for the remaining amount of shares in the property. Shared ownership properties can be purchased in shares amount starting from 25%. Further shares of the property can be purchased through staircasing. Many homes included within the scheme allow you to own up to 100% of your home.
How do I get a shared ownership property?
To access the shared ownership scheme within the UK, registering with Share to Buy will grant you access to the properties available across the country. There are several eligibility requirements for individuals or parties looking to purchase a shared ownership property. These include:
- Being aged 18 or older
- If living outside of London, your annual income must be less than £80,000
- If living within London, your annual income must be less than £90,000
- Many participants of the scheme are first time buyers, however, if you have previously owned property, you must be in the process of selling or have sold your property.
- You should not be able to afford to purchase a property within the existing open market on your own
- You must provide evidence that you are not in mortgage or rent arrears
- Evidence of good credit history will be required as well as proof that you can afford the regular payments associated with a mortgage or purchasing a house.
Conditional to meeting these eligibility requirements, you will need to provide a deposit of around 5-10% of the equity share that will be borrowed in a mortgage, as well as around £4000 to cover the cost of purchasing a house.
What is Shared Ownership Staircasing?
If you’ve recently purchased, or are thinking about buying a shared ownership scheme property, you’re probably wondering what it means to staircase your ownership. To put it simply, shared ownership staircasing allows you to buy more of your property from the housing association.
For example, you may have initially invested 25% of the property, which means you are renting the remaining 75% from the housing association since they own the final shares. After a set amount of time in your contract, you will be entitled to purchase further shares in your property. Increasing the amount you own and reducing the amount of rent you pay. You could purchase 25% additional shares to mean that you own 50% of the property and the housing association owns the remaining 50%. This process is known as staircasing.
How does staircasing work?
After spending some time in your property, you may decide to increase your shares in the property. Whilst each housing association might have slight variations in their staircasing process, most will follow the same procedure.
- Before purchasing shares in your property, you must arrange an RICS accredited surveyor to visit the property to provide an up to date valuation of the house. This information remains valid for 3 months. After this time you must have another survey completed to purchase shares in your property.
- After discovering the current market value of your property, you can contact your housing association with the results of the valuation survey. You should inform them of your shared ownership staircasing intentions.
- During this process, you will likely need to hire a conveyancing solicitor to carry out the legal proceedings of the share purchase
- The housing association will use the information from the valuation survey to calculate their premium and send you their calculations. They will ask what size share you want to purchase and request the details of your solicitor.
- If you choose to purchase 100% of your shares. You will no longer pay rent and will no longer receive communication from the housing association
- If you staircase your ownership in intervals, your records will be updated and your rent payments will be adjusted in accordance.
How much does Shared Ownership Staircasing cost?
Whilst the purpose of staircasing is to increase your share in the property, it is important to consider the cost of this process, rather than just the cost of the share of the property. On top of the purchase price for the additional shares, you also need to consider the following costs:
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Surveys
To have the property valued, you are obligated to pay for the services of an accredited surveyor. The housing association will likely provide you with a list of approved surveyors to select from. It is important that you stick to this list when considering purchasing more shares, otherwise you may have to pay twice.
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Conveyancing Fees
During staircasing, a solicitor is required for the purchase of additional shares. Their fees will need to be paid by you and are not paid by the housing association. During the process of conveyancing, there are several processes your solicitor will need to complete. Your solicitor will perform tasks such as ID checks and financial verification. They will also need to acquire the Register Title from the land registry to make changes to the deed.
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Stamp Duty
Depending on your decision when first purchasing a shared ownership property, you may or may not have to pay stamp duty on each additional share purchased in the property. There are two choices when you first pay stamp duty for the property. You may either pay a full amount of stamp duty on the value of the property at purchase. Or, you can pay an updated amount of the portion of the property you are buying. This occurs each time you purchase shares in the property.
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Mortgage Fees
Depending on your payment arrangements, increasing the shares you have in a property may mean you need to increase your mortgage amount. You may have to pay additional fees to your lender depending on their policies for adjusting your loan.
Final Thoughts
Shared ownership properties are an effective way for getting individuals onto the property market that may not have been otherwise able to without assistance. Even if you don’t purchase additional shares in the property, you can still benefit from reduced rent, accumulated equity and a home that you get to call your own. For individuals that do partake in shared ownership staircasing, there are costs to consider. However, it is a handy way to increase your share in the property as the finances become available.
During the process, you require several services such as those of accredited and professional surveyors and conveyancing solicitors. To tackle this process with one solution, Moving Sorted are here to help. Moving Sorted is an all in one moving home platform. With all the services you could need at an affordable rate, our professional network of surveyors and solicitors can ensure you experience hassle-free staircasing. Check out our services for home surveys and conveyancing solicitors to find out more!
