Staircasing FAQs

Shared ownership schemes are becoming an increasingly popular way to get on the property ladder. Staircasing is the process that enables homeowners to purchase a larger percentage of their shared ownership property. But what is staircasing, and what do shared ownership homeowners need to know about it? Here are some frequently asked questions about shared ownership staircasing.  

What is shared ownership? 

Shared ownership is a scheme designed exclusively for first time buyers to help them get on the property ladder. It’s backed by the government, and involves a ‘part buy, part rent’ format, where first time buyers buy a certain percentage of a property and rent the rest from a housing association.  

It’s usually a more affordable option to buy a first home, as it typically involves a lower deposit and lower monthly mortgage payments (although monthly rent payments on the part you do not own must also be taken into account).  

What is staircasing? 

Staircasing is the process that enables owners of a shared ownership property to buy a larger share of the property. For example, if you initially purchased a 25% share of the home, then use staircasing to buy an additional 15%, you would own a total share of 40% of the property and the housing association would own 60%. 

How does staircasing work? 

Staircasing works slightly differently depending on whether you bought the property under the original or the new shared ownership scheme, which was launched in April 2021. 

Under the original scheme: 

• Contact your housing provider and let them know you want to staircase. 
• The minimum increase in share you can buy is 10% of your home’s value. 
• You’ll need to arrange (and pay for) an independent surveyor to assess your home’s current market value. This valuation usually only lasts three months, so it pays to get your finances sorted as soon as possible to avoid paying for a new one. 
• The price of the shares you are buying will be set at the current market rate. So, if property prices have gone up since you initially purchased the property, expect to pay more for that extra ownership percentage. 

If you bought under the new scheme, you may have some more flexible options: 

• You can staircase by 1% each year for the first 15 years you own the property, if you are paying for the increase in share in cash (i.e. without a mortgage). 
• The price of that 1% share is based on the original purchase price of the property, adjusted for changes in the House Price Index (so it takes inflation into account, but not rises in house prices above this). 
• You don’t have to pay for a valuation under this scheme (although you or your housing association can choose to get one, but whoever asks for it must pay). 
• The fees are also much lower compared to the original scheme, although some legal costs still apply. 
• If you are using a mortgage to pay for the staircasing (rather than cash), there is a lower minimum increase in share of 5%, compared to a minimum of 10% under the original scheme. 

No matter which scheme you’re under, always start by contacting your housing association to let them know and get things started. 

How is the value of the shares calculated? 

Again, this depends on whether you purchased the property under the original or new shared ownership scheme. Under the original, you will need to get the property valued by a qualified surveyor. The price of the additional shares you are purchasing will be based on the current market rate – so they may be worth more than they were when you initially purchased the property. 

Under the new scheme, the price of the increase in shares is based on the original price of the property, adjusted for inflation in the form of the House Price Index. So, you don’t need to get your home valued before you staircase.  

What are the benefits of staircasing? 

There are several potential benefits that can come with staircasing. For example: 

• If you own more of your home, you will pay less rent. 
• The larger share of the property you own, the more you will benefit if there is an increase in house prices and you wish to sell. 
• If you staircase up to 100% of your home, you will be able to choose from a larger selection of mortgage products, as you won’t be limited to just shared ownership mortgages, which may have higher rates. 
• Shared ownership properties come with restrictions like not being able to let the property out, but once you own 100%, those restrictions fall away. 
• There are also benefits when you want to sell. If you own less than 100% of the property, the housing association will have the right to nominate someone to buy your share, before you can market and sell the property yourself. Some housing associations run waiting lists of potential applicants. However, once you own 100%, you typically have the freedom to sell the property how you wish – although check your lease, as in some cases the housing association may still have first refusal. 

How often can I staircase? 

In most cases, there are no restrictions to the number of times you can staircase – however you must check your lease, and bear in mind that staircasing can incur costs such as conveyancing and surveyor fees each time. 

Some properties may have further restrictions placed on them, often via the planning process when they are initially built. For example, you may only be able to staircase up to a certain share to ensure that the property remains with people who have ties to the local area. These can be difficult to get a mortgage on so make sure you know the deal with staircasing before you agree to buy a shared ownership property. 

How long do I have to wait before staircasing? 

After purchasing a shared ownership property, in most cases you can staircase at any time you wish. However, you must check your lease in case this states that you do have to wait a certain amount of time. 

Does staircasing increase my monthly mortgage payments? 

By staircasing, you own a larger percentage of the property. If you use a mortgage to pay for the additional shares, your monthly mortgage payments will increase. However, you will be paying off more of the mortgage in the process, which is typically beneficial in the long term.  

Does staircasing decrease my monthly rent payments? 

With staircasing, you are renting a smaller percentage of the property, so your monthly rent payments will decrease in line with this. If you staircase to 100%, you will no longer need to pay rent to the housing association as they will no longer own a percentage of the property. However, if the property is leasehold there may still be other charges. 

Do I still need to pay service charges after staircasing to 100%? 

Some properties may incur additional charges such as ground rent or a service charge to pay for maintenance of the building and facilities. Even if you staircase to 100%, you will still be required to pay these charges, as all residents must pay them regardless of whether they rent, own, or have shared ownership.  

Do I need a solicitor for staircasing? 

Yes, you must appoint a conveyancing solicitor for staircasing. There is legal work involved in the process, and your chosen solicitor will carry this out for you. At Setfords, we have conveyancing solicitors who are experts in staircasing. Please get in touch below to discuss how we can support you.  

How long does staircasing take? 

Each case is different, so there is no firm answer to this question. However, for most straightforward staircasing transactions, you can expect it to take between one and three months overall. 

How much does staircasing cost? 

There are a few different costs to bear in mind when considering whether staircasing is the right option for you. These include: 

• The cost of buying the additional shares themselves. The cost can vary depending on how much you are staircasing and whether you own the property under the original or new shared ownership schemes. 
• Your legal fees, that your chosen conveyancer will charge for the work they carry out to ensure that the transaction runs smoothly and successfully.  
• Surveyors’ fees, if a survey is required for your staircasing transaction.  
• Stamp Duty, if applicable.  
• Mortgage fees, if applicable.  
• An administration fee from your housing association may also be charged. 

Are there any restrictions on staircasing? 

In certain circumstances, there may be restrictions that prevent you from staircasing to 100%. This is usually to ensure that the home remains occupied by a local person and cannot, for example, be sold and turned into a holiday let. You must check your lease to see if any restrictions apply to your property. 

Do I pay Stamp Duty when staircasing?  

Most first-time buyers are eligible for a reduced rate of Stamp Duty, so if the property’s value is below this, you will not have to pay any. However, if the transaction is eligible for Stamp Duty, shared ownership buyers can choose to pay it all at one on the property’s full market value, or in stages as they staircase. Paying in stages means a lower payment at the time of buying, but does mean another cost is incurred when staircasing.  

However, Stamp Duty does not have to be paid on any staircasing transactions until you reach ownership of 80% or more. Stamp duty regarding staircasing and shared ownership can get complicated, so your conveyancing solicitor will be able to advise you further.  

What happens when I own 100% of my home? 

If you reach 100% ownership, you will no longer have to pay any rent to the housing association, as they will no longer own any of the property. However, if there is any ground rent or service charges associated with the property, you will still have to pay these. Charges such as these are most commonly found in leasehold flats but sometimes there are also service charges on freehold developments. If the property is a house, once you have staircased to 100% the housing association may still own the freehold, which you may be able purchase from them. It’s important to check your lease to assess your individual situation. 

Can I still sell my home if I haven’t staircased to 100%?  

Yes – you can sell your home at any time, no matter how much you may or may not have staircased. In most cases, your lease will state that the housing association must be permitted to try and sell the property first, even if you have staircased to 100%.