Victoria Galligan, Editor of Homefocus magazine, explains the term staircasing and how it means you can own ALL of your own home via shared ownership…
It’s understandable that the term “shared ownership” can make people wary at first – if you don’t own 100% of your property, it’s natural to wonder about the possibilities and have questions about what happens if your situation changes.
Shared Ownership offers buyers the opportunity to purchase a percentage share of a property (between 25% and 75% of the home’s full market value) paying a subsidised rent on the remaining share.
Staircasing is when you buy a larger proportion of your property after you have moved in – there are sometimes rules about how much you can staircase and when, and legal fees will also be incurred. Here, we run though some facts from Share To Buy – a national shared ownership property portal and online mortgage brokers with 15 years of experience in helping first time buyers get onto the property ladder…
1. Usually once you have lived in your home for a certain period of time as the shared owner (depending on the terms of your lease), you can buy further shares in your property. This process is known as staircasing, enabling you to own a greater proportion of your home. If you bought a resale property you can buy further shares too (depending on the terms of your lease).
2. The greater the share you buy in your home, the less rent you will pay to your Housing Association. If you staircase to 100% you become an outright owner, and you will no longer need to pay rent.
3. You may acquire additional shares in your property at a price equal to the relevant proportion of the current full open market value of the property. For example: if your property is valued at £200,000 and you want to buy an additional 25% share, the purchase price will be £200,000 x 25% = £50,000.
4. There are no restrictions in the majority of cases however we would recommend in the first instance that you refer to your lease. This may require assistance from your legal representative.
5. If you already own a Shared Ownership home and want to buy more shares – possibly right up to 100% outright ownership – Share To Buy can help. This Staircasing Calculator can help you work out if you have enough equity in your property to get a mortgage to buy more shares. It’s quick and easy to use and can be found on our website.
Nick Lieb, head of operations for Share to Buy, comments: “There is no doubt that home ownership is becoming increasingly out of reach for many in the capital.
“Our figures show that schemes such as shared ownership really are the most achievable – and perhaps only – route onto the housing ladder for many first time buyers.
“At Share to Buy, we are proud to be working with some of the sector’s largest home ownership providers, who are battling a challenging market to deliver truly affordable homes in sought after areas across the capital.”
For further Shared Ownership information and to use a Staircasing Calculator, visit sharetobuy.com.
Can’t find a suitable home? Try the Shared Ownership (Resale) option
If you are a first time buyer, live in England and are struggling to find an affordable home on the open market, you may be able to get help through the government’s HomeBuy shared ownership resales scheme.
The Home Owners’ Alliance advise: “HomeBuy shared ownership allows you to buy a shared ownership home that has previously been lived in and is being sold on via the same scheme (shared ownership). The homes vary greatly in terms of age, size and type.”
You would buy the previous owner’s share, and can do this in full or by applying for a mortgage to cover the cost of the share. The housing association will still own the remaining share and you take over payment of the rent on their share, as with any other shared ownership scheme.