19 August 2019

Staircasing with Shared Ownership

If you're looking for a Shared Ownership home, you've probably stumbled across the term 'staircasing'. We know just how confusing home buying jargon can be to get your head around, which is why we've put together some answers to your most frequently asked questions around staircasing.

What is 'staircasing'?

Lets start with Shared Ownership - The scheme designed to help buyers who are struggling to afford a mortgage or save a huge deposit. Shared Ownership enables you to buy your home in stages. You can take out a share of no more than 75% and buy more shares as and when you can afford it.
The process of buying more shares of your home is known as 'staircasing'.

So, once you’ve purchased the initial share of your Shared Ownership property, this is when you can start to think about staircasing.

Does the rent decrease when I buy more shares?

With Shared Ownership, you pay monthly rent on the reminaing share that you haven't purchased.

The more shares you buy, the less rent you pay. If you staircase to 100%, you don’t pay any rent on your property. (T&Cs may apply depending on your property).

How long do I have to wait before I can staircase?

Here at Space Homes, you have to wait a year after completion until you can buy more shares of your property. After the 12 month period, you can staircase up to 100% if you like.

What are the costs of staircasing?

When you staircase and buy more shares of your property, there are certain costs you will incur. Although, it shouldn’t cost as much as buying your first share. Costs to consider are as follows:

Valuation fees - You’ll need to order a RICS valuation to confirm the current market value of your home. A valuation on a Shared Ownership home lasts 3 months and if you don't purcahse additional shares within three months of your valuation, you'll need to get your property re-valued. 
Legal fees - A conveyancing solicitor will need to be instructed.
Share price - It’s important to work out the cost of the percentage you’re buying. (Eg. If you’re going from 50% to 75%).

What are the advantages of staircasing?

Staircasing comes with many advantages that you may not get with other home buying options.

1. You can staircase as and when you choose to.

There are no time limits on staircasing. Once you’ve taken out your initial share, you can choose a time that’s right for you to buy more shares.

2. There is no obligation to staircase.

You don’t ever have to staircase if you don’t want to. Although it’s advised to staircase and own your property outright, you don’t have to.
It’s completely your choice if you want to own more shares or not.
3. The more you staircase, the lower your monthly rental payments will be.
4. If you decide to sell your home, the greater the percentage you own, the more profit you can make from any increase in the value of your home.

5. If you own 100% and you decide to sell your property, you can sell your home on the open market using an estate agent of your choice.

The scheme allows you to buy additional shares throughout your period of ownership or sell your existing share to another buyer.

If you'd like to talk about shared ownership in more detail with a member of our team, you can contact us here.