We often get asked at Clarion Housing – what happens after you buy a share in your home and your financial situation changes? One of the benefits of Shared Ownership is that you can buy what you can afford now, and when the time is right for you, you can buy more shares right up until you own your home outright. This is a process known as Staircasing.
When you first buy your home through Shared Ownership, you start off by purchasing a 25 – 75% share of your home and pay a subsidised rent on the remaining share. This is a great way to get onto the property ladder for first time buyers who are struggling to raise a deposit.
But if you get promoted or get a large pay increase, inherit some money, change jobs or would like to add someone else on to your lease, now may be the time to consider buying a bigger share of your home. Also, if you bought your property a few years ago, you may be pleasantly surprised to find out that you have built up some equity in the property, which could put you in a strong position to buy more shares.
For most shared owners, you are able to buy up to the full 100% ownership of your home, should your situation allow. However it’s best to check your lease first as some older properties may not allow you to buy the entire property. The minimum you can purchase through Staircasing is typically an additional 10%.
One thing to note is that there are costs related to Staircasing including a valuation, a solicitor, and any mortgage related costs which you will have to consider when you choose to Staircase your home.
So, how do you get started? Firstly you need to speak to the Staircasing team and get a Staircasing Instruction form. This gives us the details we need to start the process. We will then instruct an independent, RICS accredited surveyor to determine the value of your home. We will discuss the surveyors valuation with you and confirm that you are happy to proceed with the purchase.
Once the valuation report is received, we will send you your offer which sets out how much the new shares of your property will cost, as well as your new rent (if applicable). We will confirm any fees required to complete the Staircasing, and you will need to identify the solicitor that you wish to use to complete the purchase.
When these items are all returned to us, we’ll put together a Memorandum of Sale and send you and your solicitor a copy of this. Our solicitors will contact your solicitor, answer any queries they may have, and if applicable wait for the mortgage offer to agree a target completion date.
One thing to be aware of is that this must be completed within three months of the date of the valuation report. If the completion takes longer than this, you may need to get an updated valuation report, and if the value changes, the share value will have to be recalculated.
Once the Staircasing process is completed, you will now own either a larger share or 100% of your home, which puts you in a stronger position as you will have more equity and be paying less rent.