Are you considering staircasing (i.e. buying more shares in your Shared Ownership home)? Maybe you’ve already staircased? If so, your Memorandum of Staircasing is a vital legal document.
Why is the Memorandum of Staircasing a vital legal document?
When you bought your initial share in your Shared Ownership home you signed a lease contract that included details of your percentage interest in the lease and the amount you paid for it. Say your initial share was 25% but you have since staircased to 40%… If you decide to sell your 40% share, any potential buyer (and their solicitor) will need legal evidence that you have staircased to 40%. Or perhaps you staircased to 100% and now you want to undertake a statutory lease extension. You may need evidence that you are entitled to a statutory lease extension, as this is not available unless and until you have staircased to 100%.
When you buy more shares, rather than the original lease contract being replaced with an entirely new lease, your Memorandum of Staircasing provides the additional information. The purpose is to provide legal evidence of your total interest in the lease.
What information is included in a Memorandum of Staircasing?
The Memorandum of Staircasing confirms and provides evidence of the percentage of the current market value of the property you have acquired and the percentage still held by your landlord (often a Housing Association). If you have acquired a share below 100% the Memorandum of Staircasing will also specify the rent payable on the reduced share still held by the landlord. (This article assumes the standard Shared Ownership model and not a variant such as Older Persons Shared Ownership (OPSO), which has different rent arrangements, or the new model for Shared Ownership, which has different staircasing and valuation arrangements).
Your Memorandum of Staircasing might look something like this:
MEMORANDUM OF PARTIAL STAIRCASING / MEMORANDUM OF FULL STAIRCASING (as applicable)
Premises: 99 Anyflat, Anycity, AA0 1AA
Date of lease: 1st January 2012
Leaseholder: Billy Noman
Landlord: So Housing Association
THIS IS TO RECORD THE FOLLOWING
On the 1st day of January 2021, on the payment of £100,000 (the ‘Premium’ being 50% of the Market Value of the Premises (as assessed by the Valuer on the 1st day of November 2022), the Leaseholder purchased a Portioned Percentage of 20%.
The total share in the Premises now owned by the Leaseholder is 45%.
The Specified Rent (the rent payable) as from the 1st day of January 2021 (date of payment of the Premium) is £3,600 per annum (subject to review).
Signed by the Leaseholder
Signed for and on behalf of the Landlord
Where do I find my Memorandum of Staircasing?
Your solicitor may already have given you your Memorandum of Staircasing. For example, you might find it stapled to the end of your lease contract. It is important that you have a final version that has been signed or sealed by your landlord. If not, you could ask your solicitor to send you their file on your property. It is better to do this sooner rather than later as legal firms do not keep paper documents indefinitely. (This would clearly be impractical! Though legal firms may keep residential property files for at least 15 years due to the provisions of the Limitation Act 1980). If your solicitor only has a scanned electronic version of your Memorandum of Staircasing, you can ask them to send you a certified printed copy.
Your landlord should have a Memorandum of Staircasing, but it is prudent not to rely on this.
Is my Memorandum of Staircasing registered with the Land Registry?
It is good practice for your solicitor to register your Memorandum of Staircasing with the Land Registry. But - unlike initial and final lease sale or transfers - there is no legal requirement to register interim staircasing transactions.
You can check your records using the Land Registry’s Search for Land and Property information tool. You can download the title register for your property via the Land Registry website for £3.00, and this may include information relating to your additional shares. Though you will need to investigate further if the title register doesn’t make mention of your Memorandum of Staircasing.
Does it matter if my Memorandum of Staircasing is not registered with the Land Registry?
If you lose your own Memorandum of Staircasing and your landlord has lost their copy too (unfortunately this does sometimes happen!) then the document registered with the Land Registry is your evidence that you have bought additional equity in your home. But if your Memorandum of Staircasing is not registered with the Land Registry, you could encounter unwanted complications, delays and costs when you come to re-mortgage, extend your lease or sell your share. For legal purposes, there would be no evidence that you have bought additional equity in your home.
Obviously, if you do have any concerns, it is preferable to discuss these initially with your landlord and/or with the legal firm who dealt with your staircasing transaction.
Top tip: You can use staircasing software such as Stairpay to make sure that a copy of your Memorandum of Staircasing is stored in the cloud and available for you to download whenever you need it.