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Want to buy more shares in your shared ownership home? See why increasing the share in your home could really work for you.
What is staircasing?
Staircasing means to increase the share of the property you own. You can do it gradually over time and in most cases buy further shares until you own 100% of that property.* Increasing shares in your property will, in turn, reduce the amount of rent payable on the share that you don’t own. The cost of additional shares is calculated by the market value of your home when you decide to start staircasing.
*Please check your lease agreement or speak to a member of the Home Ownership Team for further details.
Staircasing in detail
Benefits of staircasing
Pay less rent
By reducing the percentage of your property that you rent from us, means you'll cut your monthly rent bill. Your mortgage repayments may go up, but this then goes towards you owning more of your own home. So overall, you may be better off financially. Please note that as mentioned in your lease agreement, rental costs increase annually, so it's worth reviewing your rent and mortgage regularly.
More mortgage choice
If you staircase your way to owning 100% of your home, if permitted in your lease, you’ll be able to get a standard mortgage, rather than a shared ownership mortgage. As standard mortgages are more widely available, they tend to be cheaper.
Freedom to sell
As a shared owner, any potential buyers of your property are required to meet criteria for affordable home ownership and would need to be assessed and approved by Thirteen. If you own 100%* of your home, when you want to move you can sell your home on the open market.
*In some Developments there are certain age restrictions, for example, where you need to be 55 years or older.
Staircasing in detail
How does staircasing work?
Cost of additional shares
The cost of additional shares in your shared ownership home is calculated by the market value of your home when you decide to start staircasing. For example, if your property is valued at £100,000 and you want to buy an additional 25% share, the purchase price of the extra share would be 25% of the valuation, which would be £25,000. *Please see examples below.
You need to get an independent RICS (Royal Institute of Chartered Surveyors) valuation to establish the current market value of your home each time you staircase. This can be arranged by Thirteen, but you must pay for this service in advance
There may be restrictions in your lease agreement about the number of times you can staircase. Quite often it's three times, and financially it's sensible to staircase in the largest steps that you can afford.
Paying for further shares
Unless you can afford to pay for further shares from savings, staircasing will normally involve either taking a further advance from your current mortgage lender or a new mortgage for both your existing mortgage and the new shares from another lender.
Additional costs can include solicitors’ fees and mortgage fees. In some cases, you may also be required to pay Stamp Duty and a Land Registry fee.
Are there rules on purchasing further shares?
The rules on the share amounts you can buy in a single purchase are different depending on whether the property was funded by the shared ownership programmes prior to 2021 or the new programme for 2021 to 2026.
For homes funded by the shared ownership programmes prior to 2021, you can buy shares of 10% or more at any time.
For homes funded by the shared ownership programme 2021 to 2026, you can buy shares of 5% or more at any time or you can buy a 1% share each year for the first 15 years of ownership.
Please check your lease agreement or speak to a member of the Home Ownership Team for further details.
Every time you wish to buy further shares in your property an affordability assessment must be carried out.* This is to confirm that the share that you wish to purchase meets the Government's affordability criteria. *This is not required if you are purchasing 100% of the property.
Staircasing in detail
Financial examples of how staircasing works
These two examples give you details about costs based on a £100,000 home:
First representative example – 50% share
A customer wishes to buy 50% of the property (£50,000) through shared ownership, and pay rent on the rest.
The customer has savings of £5,000 (10% of £50,000) to put down as a deposit, and qualifies for a repayment mortgage with a 4% interest rate over 25 years, The monthly mortgage cost would be £273.53. Based on the remaining value of the property (£50,000), the monthly rent would be £114.58. The total monthly costs would be £388.11.
Second representative example – 75% share
To compare costs, the customer asks to see an example of costs if they bought 75% of the property (£75,000) through shared ownership and paid rent on the rest.
The customer has savings of £7,500 (10% of £75,000) to put down as a deposit, and qualifies for a repayment mortgage with a 4% interest rate over 25 years, his monthly mortgage cost will be £356.29. Based on the remaining value of the property (£25,000), the monthly rent would be £57.29. Total Monthly Costs: £413.58
In the second example, the customer puts down a higher deposit and their outgoings would be £25.47per month higher, but they would own 75% of their home. Mortgage costs will increase as you staircase, but rent charges will reduce the higher the percentage of your home that you own. So it can be beneficial to seek advice and support from Thirteen that's tailored to your personal circumstances to support you on your staircasing journey.
Additional costs would include building insurance, management charges and possible service charges, depending upon the property type.
*All costs are estimates and for representative purposes only.
Get in touch
To discuss your financial situation and find out how staircasing could benefit you, or for help with financial planning, please get in touch with our Home Ownership team:
- on 01642 668256
- or email firstname.lastname@example.org
This is a non-regulated service, and you may wish to seek independent financial advice.