Shared ownership staircasing
When you purchase a shared ownership home, you buy a share in the property and pay rent on the remainder to a housing association. The share you can buy usually varies between 25% and 75%, although it can be as low as 10%. This allows buyers to get their foot on the property ladder with a smaller deposit, with the opportunity to buy more of the property when their finances allow. This process is called ‘staircasing’.
How does the staircasing process work?
After you have been living in your shared ownership property for a certain amount of time (as specified by your lease), you may be able to purchase additional shares in your home. How many additional shares you can buy will depend on your financial situation. There are two options for financing your purchase – you can either use (1) savings, or (2) remortgage your property to borrow more money. Most leases allow you to staircase up to 100% ownership, but in rare cases, this may be limited to 80% to ensure the property can still be sold on as an affordable home to local buyers.
Please feel free to read our helpful roadmap of the staircasing process to help you understand how staircasing works at a glance.
Recently, the government introduced new staircasing rules that currently only apply to newer buyers of shared ownership homes who purchased their property after 1 April 2021. Existing homeowners must staircase according to the previous rules that applied when they bought their property.
Owners who bought their property before the new rules came into force must contact their housing provider and notify them that they want to staircase. Under the previous rules, the minimum you can staircase by is normally 10%. Depending on the lease, you may also only be permitted to staircase three times up to 100% ownership.
Firstly, as with selling a shared ownership property, you’ll need to pay for a valuation performed by a RICS Chartered surveyor and instruct an experienced solicitor with a good track record for shared ownership conveyancing and staircasing cases. You must pay these fees each time you want to staircase. Most valuations last for three months so if you don’t staircase within this time you may have to pay for another valuation.
If you bought your property under the new rules, you will have the option to staircase your ownership by 1% every year for 15 years after completing your purchase. You won’t need to have any independent valuations conducted during this process and, although there will be some legal fees, these will likely be significantly less than staircasing under the previous rules.
If you want to staircase by more than 1%, then you must do so by at least 5% under the new rules. This would be done in the normal way and require an independent valuation and other associated fees.
Frequently asked questions
When we help our clients with staircasing, we find that some questions are asked more than others. Please read on to find the answers to these commonly asked questions or, if you can’t find the information you’re looking for, please feel free to contact us via the form at the bottom of the page.
Why do I need a solicitor to staircase?
Just as with buying or selling a shared ownership property, staircasing is a property transaction and as such the law (and your lender if there is one) requires you to appoint a solicitor or conveyancer to deal with it.
Each time you staircase, your solicitor will need to complete a Memorandum of Staircasing on your behalf and liaise with your housing association’s solicitors to move the transaction through to completion. Once the process is complete, they will register the Memorandum of Staircasing with the Land Registry. Depending on how many additional shares you have purchased, they may also need to pay Stamp Duty on your behalf.
Do I have to staircase?
Absolutely not – staircasing is a completely optional process if you’d like to buy more shares in your home. There is no obligation to do so, however.
Do I have to pay Stamp Duty when staircasing?
If you have already paid your Stamp Duty, then you will not need to worry about it when staircasing. If you are staircasing to 80% ownership or more, then you will have to pay any Stamp Duty owing. If you staircase to under 80% ownership, however, you won’t have to pay any more Stamp Duty.
What is the minimum/maximum amount I can staircase by?
This depends entirely on your lease. As we mentioned earlier, some newer leases allow you to staircase by 1% every year for 15 years following your purchase, or by as little as 5% in the normal way. Older leases may only permit you to staircase by a minimum of 10% each time, while others still will only allow you to staircase a maximum of three times in total, with the final time achieving 100% ownership.
If you aren’t sure, please do get in touch with our friendly team, who will help you make sense of the terms of your lease so you can move forwards with your transaction with confidence.
Why can’t I staircase to 100%?
In rare circumstances, shared ownership homes are sold according to a ‘Designated Protected Area’ (DPA) – Mandatory Buyback’ lease. These leases are designed to retain homes as part of the affordable housing stock when sold, so that they can be purchased as shared ownership homes to local residents. A DPA lease will usually restrict your ownership percentage to 80% so that you can’t own the property outright, while a Mandatory Buyback clause will give the housing association the right to purchase the house back and prevent it from being sold on the open market.
If you have a shared ownership property under a DPA lease, you should have been informed by your solicitor at the time.
Professional staircasing solicitors
At Attwaters Jameson Hill, we have helped hundreds of satisfied clients to buy, sell and staircase shared ownership properties. Our specialist lawyers know the process inside out and can help you overcome any obstacles you may face on your journey to full homeownership.
To get in touch and start your staircasing journey, please do get in touch at 0330 221 8855 or email the team at email@example.com.