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What is Staircasing?

Zenyx Griffiths

Written by

12th May 2021 (Last updated on 14th May 2021) 11 minute read

Staircasing is when a buyer decides to purchase additional shares in their Shared Ownership property, increasing the percentage they own. You can usually begin the process of staircasing your shares anytime after the property purchase, but many housing providers include a waiting period that will be set out in the lease. 

As of April 2021, the minimum a buyer can staircase is 1% at a time, but many will opt for a larger sum as it can be an expensive process. Once you’ve staircased to 100%, you will no longer be required to pay rent on the Shared Ownership property. However, some housing associations will cap the maximum percentage you can staircase to, so it’s vital you read the terms of your lease.  

Compare My Move works with a variety of property, finance and removal experts to provide users with informative and reliable guides that will help you through the buying and selling process. In this article, we will explain how staircasing works, what additional costs are involved and how it will affect your rent afterwards. 

This article will cover the following:
  1. How Does Staircasing Work?
  2. What Does ‘Final Staircasing’ Mean?
  3. How Many Times Can You Staircase?
  4. How Much Does Staircasing Cost?
  5. How Much is Stamp Duty on Shares?
  6. How will Staircasing Affect Your Rent?
  7. Advantages and Disadvantages of Staircasing
  8. What Happens When You Sell Your Shared Ownership Home?
  9. Staircasing FAQs
  10. Learn More About Help to Buy

How Does Staircasing Work?

To start the process, you first need to contact your housing provider and notify them of how much you intend to staircase. They will then organise a new valuation with an independent RICS registered property surveyor. Keep in mind that although they may provide you with a list of surveyors to choose from, you can still compare surveying quotes to find an approved professional. The valuation will then be valid for 3 months and will help you calculate the cost of the shares you intend to buy at their current market value. If it takes longer than 3 months to complete the transaction, know that you will have to arrange another valuation. 

Every time you want to staircase, you will have to find a suitable conveyancer to act on your behalf. Not only will this mean further conveyancing costs, but you will also be expected to cover the legal fees for your housing provider. Once you’ve found an experienced solicitor to help, you can review the valuation and continue with the purchase. The housing association will likely send you an ‘offer letter’ to sign to ensure you want to continue. 

Depending on the provider, you may be expected to attend a financial interview before the purchase. This will be undertaken by a mortgage adviser and will assess your current finances to ensure you can afford the increased shares. Once everything is in place, you can continue with the transaction and arrange a completion date where your provider will confirm your new rent price. 

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What Does ‘Final Staircasing’ Mean?

Final staircasing is when you reach the process of buying the final shares, taking you to 100% ownership of the property. Before you get to this stage, you may hear the term ‘interim staircasing’ which basically means you, as the leaseholder, are increasing your shares but not to 100%.

When you reach the final staircasing stage, you will no longer be a ‘shared owner’ and will have sole ownership of the property. You will no longer be expected to pay rent and the freehold can be transferred to you. However, if the property is a flat, it will remain as leasehold and the regular service charges will continue.  

How Many Times Can You Staircase?

This will often be dependent on your housing provider, but many companies will limit the number of times you can staircase to around 3. Some providers may even stipulate in the lease that the third and final staircase must be to 100%. It’s highly advised that you read the terms of your lease before starting the process and that you talk to your provider once you decide. 

As of April 2021, the minimum a buyer can staircase was lowered from increments of 10% to 1%. However, many buyers will purchase larger percentages as the additional fees can make it an expensive process. It also ensures you reach 100% more quickly as each time you staircase, you are reducing your rent.  

It’s important to note that you do not have to staircase your shares if you don’t want to. It is an optional decision and you can still remain living in the property if you decide against it. In 2018, the housing provider Aster discovered that only 10% of their Shared Ownership buyers chose to staircase.

How Much Does Staircasing Cost?

On average, it costs around £2,000 to staircase additional shares when owning a Shared Ownership home - that's not including the actual price of the shares you're purchasing. However, this price will vary depending on a variety of factors such as the conveyancer you choose to work with, the value of the property, the size share you're buying and where specifically the home is located.

What will greatly affect the overall cost of staircasing is the additional costs you'll be faced with that will be added on top of the price of the shares. These can include:

  • Valuation Fees - Every time you staircase you will have to arrange a valuation with a RICS registered surveyor as the share you buy will be based on the current market value of the property. 
  • Legal Fees - You will also require a conveyancer to complete the legal work of staircasing. You may also be expected to cover the legal fees of your housing association. 
  • Mortgage Fees - Another possible cost is the fees that come with applying for a new mortgage. This price will greatly depend on the mortgage deal as well as your personal circumstances. 
  • Stamp Duty -  You may have to pay stamp duty depending on the value of the shares you’re purchasing. We will explain this in more detail further along in the article.

Whilst staircasing does result in a lower monthly rent, it is still a costly process, meaning you should budget very carefully before deciding to continue. 

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How Much is Stamp Duty on Shares?

When purchasing a Shared Ownership home, you will have two options for how to pay the stamp duty:

Paying Stamp Duty Through Stages

If you’re buying a share of the home that is worth less than the current stamp duty threshold, you can choose to pay it on the share at the time of the purchase. If you choose this option, when you begin staircasing, you will have to pay stamp duty on the accumulated value of the percentage of the property you own. 

If you choose this route, you will not have to pay stamp duty each time you staircase, only when you reach 80%. For example, if you’re increasing your current 25% share to 75%, you will not have to pay stamp duty. However, if you staircase from 25% to 85%, you will be expected to pay stamp duty at the usual rates. However, keep in mind that the thresholds have recently changed due to the new COVID-19 stamp duty rules. Any further purchases beyond 80% will also be subject to tax. 

Paying Stamp Duty Up-Front

The second option you can consider is paying all of the stamp duty at once. Despite only owning a certain percentage of the home, you still have the option of paying all the stamp duty up-front, meaning you won’t have to pay it again when you staircase to 80%. Whilst it means paying a large sum up-front, this option can save you money in the long run. 

As stamp duty rules and thresholds have the ability to change at any time, the future rates you may have to pay could increase. The more your property increases in value, the higher the chance you’ll have of paying increased stamp duty after reaching 80%. 

Stamp duty costs can be difficult to work out, especially when staircasing. Due to this, it’s always advised you seek professional help and confirm how much you will need to pay with your legal adviser. There are also a number of online stamp duty calculators that can help give you an average for the type of property you’re purchasing. 

How will Staircasing Affect Your Rent?

As you purchase additional shares, your rent will start to decrease. How much rent you have to pay depends entirely on how big of a share you own, meaning the more you staircase, the lower your rent becomes. 

If you manage to get to the final staircase, owning 100% of your home, you will no longer be expected to pay rent. As you officially own 100%, you will no longer be classed as a ‘shared owner’. However, depending on the property type, you may be expected to continue paying the ground rent and service charges. This mostly occurs with flats as they will always be leasehold properties

If you reach the final staircase stage and live in a house, however, you should be able to buy the freehold once you have 100% ownership. If you’re unable to purchase the freehold, then the home will remain leasehold despite you owning 100%. Again, this would mean you will be required to continue paying ground rent and other leasehold charges. 

Advantages and Disadvantages of Staircasing

Before deciding if staircasing is the right path for you, it’s important to consider both the pros and cons of the process. To help with your research, we’ve included an easy-to-read table explaining some of the advantages and disadvantages of staircasing: 

AdvantagesDisadvantages

Allows you to pay less rent each time you purchase additional shares

Whilst your rent will decrease, your mortgage repayments will increase

More mortgage choices - if you reach 100%, you can also switch to a standard mortgage which is often cheaper

It is expensive to do continuously as you will have to pay the same added fees each time e.g. valuation fees

Staircasing is always an optional decision so there is no pressure to decide

The price you pay per share may rise with the property’s value if house prices have increased

You will achieve sole ownership at 100%

Some providers cap the maximum percentage you can staircase, ensuring you can only own 80% of the home

Freedom to sell on the open market at 100% rather than through Shared Ownership

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What Happens When You Sell Your Shared Ownership Home?

When selling a shared ownership home, the process will be slightly different if you do not own 100% of the property. If you’ve reached the final staircase and have full ownership, you will be able to sell the property as you would any other home on the open market either privately or through an estate agent. If you do not own 100%, you will have to sell the home through the Shared Ownership scheme. 

This means arranging a valuation, obtaining an Energy Performance Certificate and Leasehold Information Pack and finding an appropriate buyer who meets the scheme’s eligibility criteria. Your housing association will have the right to buy and will have around 8 weeks to find a buyer for you. If they are unsuccessful, you can then search for a potential buyer yourself. 

Staircasing FAQs

1. How do you pay for the additional shares?

Your options will include extending your existing mortgage, using your savings or remortgaging. It’s advised you contact a mortgage broker before deciding as they can help find the best deals for your personal situation. You'll also need to hire a remortgage conveyancer to help with the process of remortgaging.

2. How will staircasing affect your mortgage?

If you can afford to pay for the additional shares using your savings, it should not affect your mortgage. If that isn’t an option, you will either need to take a further advance from your current lender or remortgage. 

Many leaseholders opt to apply for a new mortgage as the additional shares can sometimes mean a better deal and cheaper repayments. It would be wise to contact your current lender and mortgage broker for more advice. 

3. How do you know you‘ll be allowed to staircase?

Whilst most people will be eligible to staircase, there are a few reasons why you might not be able to. For example, if the lease states there is a restriction on staircasing you may be capped at a maximum amount (for many this is at 80%). This is typically seen in rural locations due to the requirement of planning permission. 

If you have arrears on your rent or service charge, your income doesn’t meet the criteria, if the request isn’t signed or if you do not have a mortgage offer or proof of savings, then you will not be eligible to begin the staircasing process. 

4. Do you have to staircase?

No, there is no obligation to purchase additional shares. It’s entirely your choice and you will still be able to remain living in the property. 

5. Can you sell shares back?

This greatly depends on the housing association and the terms stated in your lease. If you are struggling with your mortgage repayments, you can ask your provider to buy back the shares. This is called ‘downward staircasing’. 

Learn More About Help to Buy

This article has been part of our help to buy guide. In our next article, we will look into selling a Shared Ownership home and how it differs from a traditional residential property sale. To read more, take a look at selling a Shared Ownership property

Zenyx Griffiths

Before Compare My Move, Zenyx once wrote lifestyle and entertainment articles for the online magazine, Society19 as well as news articles for Ffotogallery.