How to buy more shares in your Shared Ownership home?

Posted 31 July 2017 by Helen Christie

The WhatHouse? team has put together a guide to tell you all you need to know about increasing your share of a Shared Ownership home...

If you are the owner of a Shared Ownership property and are looking to purchase further shares including up to outright ownership, it is known as the process of "Staircasing".

Buying further shares of your home is called 'staircasing' and you can do this to increase the proportion of your home that you own, and reduce the rent that you are paying. The greater the percentage of ownership then the more profit you will make when you sell your home, if the value of the property has increased.

With the help of Riverside Home Ownership’s sales and new business manager, Jeanette Grady, we’ve put together a helpful guide to staircasing your mortgage…

How does the staircasing process work?

If you decide you want to increase your share in your home you should normally contact the 'landlord'. In the case of Shared Ownership, this is the housing association. You should also speak to a mortgage broker or to your lender about borrowing the money that you need to buy the additional share. There are normally two ways of raising the funds to buy an additional share in your home, a further advance or remortgaging:

  • A further advance - Your existing mortgage lender may be able to advance the money you need to staircase. They will need to value your home to establish that there is sufficient equity and you will normally have to pay the valuation fee. They are likely to want to see proof of your earnings in order to conduct an affordability assessment and to ensure that you can meet your total repayments. They may also offer you a fixed- or variable-rate deal on the further advance.
  • Remortgage - If you need to borrow extra money to fund the staircasing you may want to consider moving your mortgage to another lender. A remortgage allows you apply for a larger loan with a new lender, meaning you can repay the mortgage to your existing lender and have enough cash to pay for the additional share.

Many lenders have very good fixed- and variable-rate deals for remortgage borrowers. Some even offer a 'remortgage package' where they will meet the valuation and legal fees involved in the remortgage.

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.

How do you find a qualified surveyor?

A new valuation of your property should be carried out by a surveyor who is qualified. This means someone who is a member of the Royal Institute of Chartered Surveyors. This is important or else the valuation will be void. To find a qualified surveyor, your housing association may have a list of suitable valuers or else you can find one by clicking here. Once you have your chosen surveyor, contact your housing association to verify this is someone who is agreeable to them.

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.

What additional costs are involved in the staircasing process?

There are a number of costs involved in the staircasing mortgage 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 from 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.

How many times you are allowed to staircase?

You are usually allowed to staircase up to three times, and the third time will take you up to 100% ownership.

Case study

Jamie Blake had a deposit of £36,000 but his income meant he was unable to get a mortgage to cover the cost of a property. After registering his interest in Greenwich Square, Greenwich, Jamie was talked through the Shared Ownership scheme by an L&Q representative.

Using his deposit and current income, Jamie secured a mortgage for 60% of the property and was moved in within a month.

His financial circumstances changed after purchasing and was therefore eligible for a larger mortgage and able to purchase the remaining shares in his home through staircasing.

Jamie says: “I bought the remaining 40% of the property and the process only took around a month to do. In the end, it worked out that the stamp duty was pretty much half of what it would have been if I had purchased the property in one go.”

Staircasing gave Jamie the chance to own a property in an area he aspired to live in. 

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