Staircasing - increasing your share in your Shared Ownership property
Posted 3 February 2016 by Keith Osborne
Riverside Home Ownership’s sales and new business manager, Jeanette Grady, answers your questions about staircasing – the process whereby you can increase your stake in a Shared Ownership home.
Many people in the UK aspire to owning their own property, and buying a home on a Shared Ownership basis is a great first step to achieving this.
As the shared owner of your home you are often able to buy more shares from the housing association and increase the share you hold in the property. This is known as ‘staircasing’ and enables you to own a greater proportion of your home over time.
The amount of shares you can buy in your property are stipulated in your lease. In many cases, you can eventually purchase 100% of the share value, making you the outright owner.
How is the cost of the shares determined?
Once you have contacted your housing provider requesting an application to staircase, you will have to obtain a valuation of your property. This will determine the price of the extra shares you are buying.
In most cases, you will need to have a valuation of your property carried out by a Royal Institution of Chartered Surveyors (RICS-) accredited surveyor. Many housing associations have a list of firms they can give you to choose from.
You should ask that the surveyor disregards any increase in the valuation of your property as a result of any home improvements you may have carried out. This is so you do not have to pay for the added value of any improvements that you have already paid for.
Is the legal process any different to a standard purchase?
As with any house sale you will need to instruct a solicitor to carry out the relevant conveyancing work. Although the process is similar to when you first bought, it is usually a lot quicker as there is less work involved for your solicitor.
Your housing provider will assist you and your solicitor throughout the legal side of the staircasing process and will be able to help you with any questions that you might have.
Do I need to apply for a new mortgage?
Most shared owners opt to extend their mortgage as their earnings increase, although it is possible to pay for your new share with cash if you come into a windfall.
Depending on your mortgage agreement, your lender may charge for changing your current mortgage, so do check with them first. It’s wise to speak to a mortgage advisor to see which options suit your circumstances.
What additional costs are involved in the process?
There are a number of costs involved in the staircasing process, which the shared owner is expected to meet.
You must cover the cost of having the property surveyed and there will be the usual conveyancing expenses form your solicitor, plus any additional legal or mortgage fees.
Your valuation will last for three months, so you must complete the staircasing process within that time, or you will need to have the survey carried out again.
As with buying any property, there may also be stamp duty to pay. This works differently for Shared Ownership, so make sure you talk to your solicitor about it.
Upon completion, you will pay any arrears of rent and any other sums due to your housing provider under the lease agreement.