How does staircasing work?

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If you are a Shared Ownership homeowner, you may be wondering how to increase your share in your property. Staircasing is the process of buying additional shares in your home until you own it outright. Each Housing Association may have a slightly different process, and we’d definitely encourage you to check your Housing Association’s website for more detailed information, but overall the process is similar in most cases. Here are the steps involved in staircasing:

1) Check what you can afford

Before you start staircasing, you will need to determine how much you can afford to pay for the additional shares in your home. You can do this by consulting with a financial advisor or using an online affordability calculator, we have built one for you to use, just click here.

It is important to factor in any associated costs, such as valuation fees (typically £300-500) and legal fees (around £1,500), when calculating your budget. Also, most Housing Associations will charge you an admin fee around £300 to staircase.

The great news is that your rent will come down proportionally to the additional shares you buy. However, if you are getting a mortgage, remember that you might still be paying more each month as you’ll have a higher mortgage to pay. Also, typically your ground rent will not change.

They key reason to check affordability before you go through the next steps is that often you can do this for free, everything else has a fee associated with it.

2) Get a RICS valuation

Once you have determined how much you can afford, the next step is to get a RICS valuation. This will determine the current market value of your home, which will be used to calculate the cost of the additional shares you wish to purchase. You can find a RICS registered valuer on the RICS website, or most likely your Housing Association will list a panel of surveyors that operate in your area.

Before instructing a surveyor it is advisable to have a good understanding about affordability, as a valuation will cost you around £350, and you can’t get that back.

Also, a RICS valuation is only valid for 90 days, after which you’ll need to pay extra to extend it. So make sure your application is in good order before you instruct the surveyors.

3) Choose your solicitors

As part of your staircasing application you will need to give the details of your solicitors, which means you need to find one before being able to apply. Your solicitors will handle the legal process of staircasing on your behalf. They will also ensure that all necessary documents are completed correctly and that the transaction is completed smoothly. Here are the steps to choose a good solicitor.

4) Submit your staircasing application

After you have received your RICS valuation report and chosen your solicitor, you can submit your staircasing application to your Housing Association. This application will include:

  • An independent RICS survey
  • The additional shares you wish to purchase and how you wish to fund the purchase (cash vs mortgage)
  • Details of your chosen solicitor
  • Supporting documentation (proof of ID, proof of Address, source of funds)

Typically this is application is submitted via a PDF form which you should have received from your Housing Association when you moved in, or you may find it on their website. Your Housing Association will then review your application and inform you if it has been approved.

5) Conveyancing and mortgage extension

Once your solicitors have been instructed, they will begin the conveyancing process. This involves transferring ownership of the additional shares from the housing association to you. For a more in depth overview of the legal process click here, but in short this is what happens:

  • Solicitors check there are no charges or restrictions on purchasing more shares
  • Solicitors draft a memorandum of staircasing outlining the transaction details
  • Transfer documents are drafted if this is a Final Staircasing transaction, i.e. you get to 100% ownership

Most staircasing transactions happen via a mortgage extension or a remortgage, which means that you’ll be borrowing more money to cover to cost of the additional shares. This happens in tandem with the conveyancing process.

6) Closing

Once your solicitors are in receipt of funds from your lender, they will agree a closing date with the Housing Association solicitors. On this day, all documents will be signed and funds will pass to the Housing Association. After this day you officially own those extra shares and can expect your rent to come down accordingly.

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