But once you have bought your share, usually starting at 25%, is it worth Staircasing to own more? In this article, we’ll run through the financial considerations when it comes to Staircasing your Shared Ownership home.
What is Staircasing?
"Staircasing" is the process of buying more shares of your Shared Ownership home. The more shares you purchase means you will own more of your home, and you will pay less rent, as the share that you don’t own will be smaller.
The cost of any extra shares in your home is based on the market value of the property at the time you want to buy the shares, not on the original value of the property when you bought the first share. The value of your home will be determined by an independent RICS-qualified valuer.
Buying additional shares of the property is known as 'Interim Staircasing'. If you Staircase to 100% (either in one transaction or after one or more interim Staircasings) this is known as 'Final Staircasing'.
How much does Staircasing cost?
The cost of Staircasing a Shared Ownership home depends on the value of your home and the amount of shares you wish to buy.
For example, if you already own 25% of a home currently valued at £420,000 and wish to purchase an additional 25%, it will cost £105,000 (plus any transaction fees for Staircasing).
This can be paid for with cash or with a new mortgage, using the equity you already have in the home as your deposit.
There will also be some additional costs involved in Staircasing such as a valuation fee and solicitor’s fees.
How can you Staircase a Shared Ownership Home?
To start the process of Staircasing, get in touch with your housing provider.
The process with Peabody is the following:
- Download the Peabody Staircasing Enquiry Pack and consult a Mortgage Advisor to assess your financial situation.
- Arrange an independent RICS valuation once you're ready to proceed.
- Submit the required documents, then you will receive an offer letter, and you can apply for a mortgage to purchase a larger share of your home.
Is it worth Staircasing?
Whether it’s worth Staircasing your Shared Ownership home will depend on your own financial circumstances and your long-term plans. We’ll go over the main benefits and considerations of Staircasing to help you make an informed decision, though we always recommend speaking to a Mortgage Advisor.
Benefits of Staircasing
- Staircasing gets you more equity in your home: The more shares of your home that you own, the more you will benefit from increases in house prices as your home increases in value.
- Staircasing means paying less rent: When buying through Shared Ownership, you will have to pay rent on the share of the home that you don’t own. This means that the more of the home you own, the less rent you will have to pay monthly. If you Staircase to 100% ownership, then you won’t have to pay any rent.
- Staircasing to 100% can make it easier to sell your home: Staircasing until you own the property outright will mean there will be a larger pool of buyers on the open market, as opposed to just the Shared Ownership market.
Things to Consider when Staircasing
- Paying additional fees: You will have to pay various fees every time you staircase, including legal fees, valuation fees, admin fees, and possibly stamp duty. At Peabody, we have negotiated competitive fees with surveyors to help keep costs as low as possible.)
- Potentially higher monthly outgoings: If you are not buying the shares outright, then you may have increased mortgage costs depending on the current mortgage rates at the time of purchasing.
- Your home may take longer to sell if you Staircase: Shared Ownership properties have income limits (£80k outside London, £90k in London) to ensure affordability, therefore it may be harder to sell due to a limited pool of buyers who fit within the affordability limits if you own more shares in your home.
Talk to a mortgage advisor
Most importantly, when you want to Staircase, Peabody highly recommends speaking to a Mortgage Advisor to help assess your financial decisions.
They can help you decide whether Staircasing is the right decision for you and advise on the additional costs of the process.
Summary
Staircasing offers key benefits, such as increased equity in your home and lower rent, making it a natural next step for homeowners who bought through Shared Ownership.
The decision to Staircase depends on your personal circumstances and long-term goals. We recommend consulting a Mortgage Advisor before proceeding.
At Peabody, we have helped many homeowners increase their equity through Staircasing. For more information, you can read our comprehensive Peabody Staircasing Guide, which includes step-by-step instructions, costs, and FAQs. If you'd like to request to Staircase and own more shares, visit our Guide to Staircasing page.
Frequently asked questions about Staircasing
No, you typically don’t need to pay a deposit when buying additional shares through Shared Ownership. You can use the equity you already have in the property to act as a deposit.
Yes, in most Shared Ownership homes you will be able to Staircase to 100% and own the home. This will mean you no longer have to pay rent on the shares that you don’t own.
If all documents are sent in and correct, the whole process can be completed on average in 3 to 4 months. It may take longer depending on if the solicitor you instruct is familiar with the Staircasing process.
When purchasing through Shared Ownership, you buy a portion of the property (typically 25%) and pay rent on the remainder. You only need a mortgage for the share, which often falls below the first-time buyer threshold, so no stamp duty is required.
Stamp duty isn’t charged on intermediate Staircasing unless you own over 80%. In that case, it's considered a "final Staircasing" for tax purposes, and stamp duty will be calculated based on the total value of the shares, including the initial share, intermediate shares, and the final share. It's advisable to consult a Solicitor for more guidance.
