When a leaseholder wants to purchase additional shares in their Shared Ownership property, they can do so through a process called staircasing. Interim staircasing refers to the purchase of a specific percentage of shares between the initial purchase and full ownership. Any purchase of equity which doesn’t get you to 100% is known as interim staircasing.

If you are a leaseholder looking to undertake interim staircasing, it is important to understand the legal process involved. Here is a step-by-step guide to help you navigate through the process:

1) You apply for interim staircasing and appoint a solicitor

When you submit an application to interim staircase to your Housing Association, you typically have to let them know who your solicitors are who will represent you. We have also written a guide on how to choose your staircasing solicitors. The reason for this is that the Housing Association solicitors will produce a staircasing pack and send that over to your solicitors.

2) The Housing Association appoints their solicitors

The first step for the Housing Association solicitors is to review the Memorandum of Sale, essentially a simple document which outlines the financials of the transaction, how much you’re looking to purchase, what the value of the property is and how you’re looking to fund that purchase.

3) Housing Association solicitors check for charges or restrictions

Once they know about the transaction, the Housing Association solicitors will seek to obtain copies of the Leaseholder’s and Housing Association’s title from the Land Registry, from which they can determine whether there are any restrictions or charges on the property in favour of the Housing Association, their lender or the management agent.

If there are charges, the Housing Association solicitors will have to contact the third party with the benefit and get their consent for the transaction via a Certificate of Consent.

4) A Memorandum of Staircasing is produced and sent to the leaseholder solicitors

The next step is to put together a Memorandum of Staircasing, which is a formal document that contains all of the relevant information about the transaction and which will ultimately be signed and uploaded to the Land Registry. Once this is drafted it is sent to the leaseholder solicitors (What is a memorandum of staircasing?).

5) Leaseholder solicitors receives and reviews staircasing documents

The leaseholder solicitors will review the memorandum of staircasing, as well as any accompanying notes and title documents and raise any relevant enquiries. If there are no enquiries they simply approve the documents, otherwise they go through the same process as the Housing Association solicitors in having to seek permissions from third parties and having to get a certificate of compliance signed.

6) Leaseholder solicitors share mortgage offer with Housing Association solicitors

Most staircasing transactions involve a remortgage, unless they are fully cash funded. This will either be a “further advance” i.e. the same lender extends their loan or a “remortgage” where a new lender will pay out the original lender and take over. (Should I get a further advance or remortgage?). Either way, the lender will provide a mortgage offer, which needs to be approved by the Housing Association solicitors.

7) Memorandum of staircasing is circulated for signature and a completion date is set

Once the leaseholder solicitors have approved all the documents and the Housing Association solicitors have approved the mortgage offer, the memorandum of staircasing is circulated for signature to both the Housing Association and the leaseholder. At this point a completion date is set. To complete a transaction you need both parties to have signed the Memorandum of Staircasing and the Housing Association solicitors must have received the funds.

8) Completion day

On the date of completion, the lender will wire the funds to the leaseholder’s solicitors, who will then forward this onto the Housing Association solicitors. Both parties will also sign their part of the Memorandum of Staircasing and date the document in accordance with the completion statement. Finally, each set of solicitors will send their client’s signed Memorandum of Staircasing to the other party’s solicitor for safekeeping.

9) Documents are uploaded to the Land Registry

There is no legal obligation to register the Memorandum of Staircasing at the Land Registry, but a prudent leaseholder’s solicitor may wish to do so. This is because if you lose the Memorandum of Staircasing you have no legal proof of the fact you purchased an extra share in your Shared Ownership property. The leaseholder’s solicitor is responsible for registering the leaseholder’s charge if there is a mortgage.