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What is Staircasing?

The benefits of buying with Shared Ownership is you can get on the property ladder sooner with a smaller deposit by buying a share in your home. You can then buy additional shares in your home as you save more money over the year until you own 100% of the property. This is know as staircasing.

Example: If you initially bought a 25% share in your home and paid rent on the remaining 75%, in a few years time, you may be in a position to buy another 25% share when you have saved more money. This would mean you would own a total 50% share in your property and pay rent on the remaining 50%. 

Steps to staircasing with Square Roots:

  1. If you are interested in staircasing, you  can get an idea of how much your home is worth via Rightmove or Zoopla. The price you pay for extra shares is based on the market value of your home at that time. When you have an estimation you can decide if you are happy to continue.
  2. Make sure you have accounted for the additional costs involved when you are looking to staircase, such as a valuation fee and solicitor fees. However, these shouldn't be as much as when you bought your first share
  3. Check your lease. You will need to wait a certain period of time after you first purchased, before you can buy more shares (typically 1 – 2 years)
  4. Speak to your Mortgage Advisor. They will help you understand your finances and help you work out how much you can afford to staircase based on your estimated property value. If you wish to increase your mortgage they will be able to guide you on your mortgage terms.
  5. You should notify us of your intention to staircase and instruct an independent RICs-qualified valuer, we can help recommend you one from our experienced panel of surveyors if you wish. Square Roots will need to approve the valuation before you can proceed.
  6. Once approved you will need to take a full financial assessment, have appointed your solicitor and make your mortgage application.
  7. Your solicitor and lender should work quickly to complete the transaction before the expiry of your valuation.
  8. Once you solicitor has completed all legal work – you will have successfully increased your share in your home or now own 100% of your home !
     
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FAQs

  • How much does staircasing cost?

    You will need to account for several costs on top of the purchase price of the shares you wish to buy. As a guide allow for around £2000 plus Stamp Duty.

    • Valuation fee – each time you want to buy m ore shares you will need to pay for a valuation report
    • Legal fees – you will need a solicitor or conveyancer to complete the legal work
    • Stamp Duty – this will vary depending on the value of the share you are buying. Check our HMRCs stamp duty calculator to work out how much you will have to pay: Stamp Duty Land Tax Calculator
    • Mortgage fees – if you are changing your mortgage you may have to pay fees. 
       
  • What are the benefits to staircasing?

    Most people who buy with Shared Ownership aspire to eventually own 100% of their property, staircasing can help you achieve this goal even if you sell your Shared Ownership home before you own 100%.

    • If you increase the shares you own, you will pay less rent
    • If you decide to sell your home, the greater the percentage you own, the more profit you can make if the value of your home has increase.
       
  • Do I have to staircase?

    No, you don't have to increase your shares if you don’t want to. Many people just see Shared Ownership as a more secure form of renting. If you are unsure of what to do, it is always good to seek Independent Financial Advice if you wish to explore your options. We would be happy to recommend someone from our panel that you could speak to for further clarity.
     

  • How can I pay for additional shares?

    You are best to speak to an Independent Financial Advisor to work out the best solution for you. Options include:

    • Using some of your savings you have accumulated over time
    • Extending your existing mortgage
    • Remortgaging 
       
  • Can I sell my home before I have bought 100% of my home?

    Yes, if you wish to sell your Square Roots home before you have reached 100% ownership, you will need to speak to us. There will be a period of time in which we try to sell your home first, once this period is up, you are free to sell on the open market yourself.

    If you have reached 100% ownership you can sell on the open market as you wish.

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