Navigating the path to homeownership can be daunting, especially in today's property market. Shared Ownership offers a viable route for many, allowing individuals to purchase a share of a property and pay rent on the remainder. This arrangement not only makes owning a home more accessible within budget constraints but also presents the opportunity for future expansion through a process known as Staircasing. Our latest blog, written by Louise Wootten, explores what Shared Ownership entails, the benefits of Staircasing, and essential considerations for those looking to increase their stake in their home.

Shared Ownership

Buying a Shared Ownership property is a way of getting onto the property ladder and being able to purchase your home within your own budget. With Shared Ownership properties you are buying a share of a property (which is dependent on both the terms of the Lease you will be entering into and your personal affordability). You will usually fund the purchase of your share with a Shared Ownership mortgage and then pay rent on the remaining share which is owned by the Shared Ownership Provider (the Landlord). 

Staircasing

If you have purchased a property in this way, the Lease will likely allow you to be able to purchase more of your property when the circumstances are right for you. This allows you to increase the shares/value that you own.

Staircasing is the term that refers to the process of increasing the share in the property.

The main benefit of staircasing is that you will be increasing the percentage of the property that you own, in turn, increasing your benefit in the value of your home and reducing the rental cost to the Landlord.  

Until such time as you staircase up to owning 100% of your home, you will own the property as a Leaseholder (Tenant) and will need to ensure that all rental and service charge payments to the Landlord are kept up to date (along with your mortgage payments, of course).

Depending on the clauses within your Lease, you may be entitled to purchase up to the full 100% value of your home.

In addition to the purchase price for purchasing the additional share there will also be other fees you may need to factor into your affordability and below are some of these considerations:

• On your request to the Landlord to start the staircasing process, they may ask you to have a valuation report carried out, at your expense, to confirm the current value of the property to be able to consider the value of the additional share that you are intending to purchase.

You will likely need to use further mortgage funding to purchase the additional share by asking your existing lender or taking out a new mortgage and you will need to pay lenders fees as well as any mortgage broker fee.

You may also want to consider any SDLT liability that may be payable on any increased share (this is dependent on whether you dealt with SDLT at initial purchase on the basis of Market Value Election or to pay the SDLT in stages). The following website gives further details (Stamp Duty Land Tax: shared ownership property - GOV.UK) to consider any additional expenses that may be incurred in purchasing additional shares.

Whilst the Shared Ownership provider will have their own legal representatives, you will be required to instruct your own legal team to deal with the Staircasing process on your behalf.

How we can help

Whether you are just stepping onto the property ladder or planning to increase your stake in your home, understanding the process and its implications is key to making informed decisions. If you are considering purchasing a Shared Ownership property or embarking on the Staircasing journey, our residential property experts are here to guide you every step of the way. Contact us today to learn more and take the next step toward securing your dream home.