What is staircasing?

Staircasing is the term used to describe the act of buying more shares in your shared ownership property allowing you to increase your property ownership percentage at any point.

Normally the minimum extra percentage you can buy is 10% at a time. Most people try to buy them in larger chunks as there are fees that you have to pay each time, so it can become quite expensive if you just buy 10% at a time. When you have staircased to 100% you will no longer have to pay any rent to the housing association.

How does staircasing work?

In order to staircase you will need to get an up-to-date valuation and you will buy the additional percentage at the current value. This may be higher or lower than when you first purchased the property. You will also have to cover all the legal fees as well as any Stamp Duty. It is advisable to talk to your conveyancer who will be able to explain what you need to pay and when.

Whilst you can only currently buy in 10% increments, housing secretary Robert Jenrick has recently announced a change to this system:

“My mission is to increase the number of homes that are being delivered and to get more young people and families on to the housing ladder, particularly those on lower incomes. That’s why I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy their own home.”

Robert Jenrick

To better understand how this works, the example given during this release, was based on a family in a shared ownership property with a property value of £450,000.

Assuming they could buy a 25% stake in their shared ownership property taking out a mortgage for £112,500, and paying subsidised rent on the remainder. Currently they would then have to pay £45,000 to increase their share of the property, referred to as staircasing earlier on this.

The proposed new plans would mean that an increased share in your shared ownership property could be as little as £4,500 each time, due to being able to buy lower shares.

Kush Rawal, Director of Residential Investment at Metropolitan Thames Valley announced his plans around this announcement with his organisation’s Shared Ownership Plus product.

Shared Ownership PLUS enables SO Resi’s homeowners to buy an additional share of their home each year for 15 years – at a fixed priced – without the cost and hassle of arranging a solicitor each time they want to buy a new share.

 “We believe in making home ownership possible for more first time buyers, and are the only housing association already offering  one per cent equity increases through our Shared Ownership PLUS scheme. We see great potential for this successful approach to be rolled out nationally by housing associations to make increasing equity quicker, cheaper and more hassle-free to shared owners. We stand ready to work with the government to share our experience on this, and other measures that need to be taken to help more people onto the property ladder”.