You may have been in your shared ownership home for a little while and be considering buying additional shares. This is exactly what’s meant by ‘staircasing’.
As outlined in the terms of your shared ownership property lease, you can choose to buy further shares of your home. This is beneficial as it means you will be owning a little more of the property you live in and effectively paying less rent on the remaining shares that you do not own. Most shared ownership properties are set up so that you can eventually own 100% of the shares and be the sole owner of the property, however if you aren’t sure, your lease will have the answer, or your landlord.
If you eventually end up staircasing to 100% shares of the property, you will still need to pay a mortgage, but you will no longer be paying any rent. There are some real positives to staircasing to 100% as it means you’ll have more options for a standard mortgage rate, rather than a Shared Ownership mortgage.
If you initially purchased 30% share of your home and then later go on to buy an additional 20%, you will then own 50% of the property as opposed to the original 30%.
The process of owning more shares of your shared ownership house is called staircasing. If you buy more shares as per the example above, this is called Interim Staircasing and if you buy up to 100% this is called Final Staircasing. There are some leases where there is a cap placed at the amount that you can buy. This is due to specific planning permissions meaning that the property is to be retained for local people and does not become a second home. If you are unsure how much you can staircase to, it would be best to check with your landlord.
There is no requirement to staircase. It is an optional arrangement for those who may find themselves in a position where they have more finances available to them and who wish to put it into their house. For those who do plan on staircasing, it is important to try and set some extra capital aside to factor in payments to a surveyor to value the property, to appoint a solicitor to deal on your behalf and potentially paying Stamp Duty.
If you’re not planning on using your own personal savings to purchase more shares, there is an option to do so by remortgaging your home and extending your mortgage term. There isn’t usually a restriction on the number of times you can buy more shares of your home, though it is important to check your own personal terms.
Chat to the Author, Jo Buck-Marshall
Solicitor, Residential Property, Bishop's Stortford officeMeet Jo