6 min read
In this guide, we’ll explain what staircasing is, how it works when buying a property, and how it works when selling a property. We’ll also help you understand the impact of staircasing on property ownership and how it can benefit both buyers and sellers.
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Staircasing is a term commonly used in shared ownership schemes to describe the process of gradually increasing the percentage of a property you own. It allows buyers to purchase additional shares in their property, typically from a housing association or a through their shared ownership scheme.
In this article:
Staircasing is a process where a homeowner increases their share in a property, often within a shared ownership scheme, by buying more of the property from a housing association or developer.
Initially, when you purchase a shared ownership home, you typically own a portion of the property (e.g., 25%, 50%, or 75%), with the rest owned by a housing association or a landlord. Staircasing property allows you to buy additional shares of the property (often in increments of 12.5 or 25%) until you eventually own 100% of it.
The main benefit of staircasing is that it allows you to gradually increase your equity in a property over time without having to save for a full 100% deposit upfront. However, it’s important to understand the terms and conditions of your shared ownership agreement, as certain restrictions may apply.
If you originally purchased a home with a 25% share and are now looking to staircase to buy an additional 25%, you’ll then own 50% of the property. This process enables you to increase the percentage share you own, sometimes even up to 100% ownership. Find out about exceptions here.
Keep in mind that the price of the additional shares may fluctuate depending on the current market value, and there may be fees associated with each staircasing transaction. It’s essential to check with your housing provider for specific guidelines on how staircasing works in your shared ownership scheme.
Staircasing might be a good idea if you’re looking to:
Enjoy more flexibility: staircasing gives you more control and enables you to assess your financial situation and decide on the level of ownership that’s right for you.
Pay less rent over time: after you’ve staircased to own more of your home, your rent will decrease as you’re only required to pay rent on the share that you don’t own. Whether you do this using additional mortgage or savings will define whether your mortgage payments increase as a result.
Own the freehold: once you’ve staircased to 100%, you’ll be able to gain full ownership of the property and buy the freehold of the house, giving you full control.
Benefit from property price increases: if the property has increased in value since your purchase, you might have built equity. This could also mean a higher resale value.
Easier to sell: if you have staircased to the full 100% ownership and you decide to sell the property, you won’t have any restrictions – meaning you can sell your home without the involvement of your shared ownership provider.
The Housing Association that owns part of your property and the land it sits on will have specific rules about staircasing. Before buying additional shares, check their term. Typically, you can staircase in increments of 12.5% or 25%, but this can vary depending on the lease and scheme.
Book a RICS valuation survey to determine the current market value of the share you want to purchase. This valuation is usually valid for 3 months and is required by the Housing Association.
If you are using a mortgage to finance buying your additional shares, you will need to apply for a mortgage with a lender that supports staircasing. Some lenders may require a fresh affordability assessment and may charge valuation or arrangement fees.
Instruct a solicitor or licensed conveyancer experienced in shared ownership transactions and staircasing to manage the legal side. They’ll liaise with the Housing Association, handle the contract changes and ensure all documentation is updated.
We work with expert conveyancers experienced in staircasing, who will make the legal process smooth and stress-free.
Once your purchase is complete and the additional share has been paid for, your solicitor will update the lease and ownership documents to reflect your increased share.
You can continue staircasing until you own 100% of the property (unless the Housing Association states otherwise). If you reach full ownership, the property may become freehold, depending on the terms of the lease, your solicitor will confirm this.
Staircasing when selling is when you own a certain percentage of the property, but your buyer wants to own a greater share. For example, if you own 25% and rent the remaining 75% from the Housing Association, but your buyer wants to own 50% and rent the remaining 50%. The additional share (25%) needs to be purchased as part of the sale transaction.
You will need to get a valuation report for the Housing Association, as the buyer has to pay the current market value for their share. The RICS valuation is usually at the sellers’ expense and is valid for 3 months. Valuation surveys typically cost around £200-£300.
Instruct a solicitor or licensed conveyancer experienced in shared ownership sales and staircasing to manage the legal side. They’ll liaise with the Housing Association and buyer’s solicitors, handle the contract changes and ensure all documentation is updated.
We work with expert conveyancing solicitors experienced in shared ownership sales. Get a free online quote in minutes.
You will need to let the Housing Association know that you’re selling and staircasing may occur. They may have specific requirements or restrictions so they will need to approve the staircasing plans as well as the valuation and new buyer. Your conveyancer will take care of this step for you.
If staircasing happens during the sale, the buyer pays for the additional shares, not you. However, the staircasing must be completed in your name before the property is transferred to the buyer.
It’s important to remember how you paid Stamp Duty Land Tax (SDLT) when you first bought your home. If you only paid SDLT on your initial share (e.g. 25%), and the sale results in you staircasing to over 80% ownership, you may now be liable to pay stamp duty on the remaining value - even as the seller. This often comes as an unwanted surprise, especially if full advice wasn’t given at the time of purchase. Note that first-time buyers under a certain threshold may be exempt.
On completion day, staircasing and the sale both happen together. The Housing Association receives payment for the additional share from the buyer, and you sell the property at the agreed final share percentage.
Common pitfalls can include:
Slower conveyancing: the conveyancing process can take longer if you're buying or selling a shared ownership property that hasn't been fully staircased, as it typically involves the seller’s solicitor, the buyer’s solicitor and the housing association’s solicitor.
Extra costs: each time you staircase, you’ll usually need to pay for a RICS valuation survey, legal fees, admin fees, and potentially stamp duty. Additionally, if you’re selling a home that hasn't been fully staircased, you as the seller, would be expected to pay the housing association’s legal fees.
Rising property prices: if the property’s value has increased since you bought it, buying additional shares will be more expensive, as you're paying market value at the time of staircasing, not the original purchase price.
Limited staircasing options: some leases or schemes restrict staircasing to a certain percentage (e.g. capped at 80%), may only allow staircasing in specific increments, or may require you to staircase to 100% within a certain time frame, limiting flexibility.
Mortgage complications: if you need a new mortgage or to remortgage, you might face fees, affordability checks, and limited lender options, especially for smaller staircasing amounts.
Understand your shared ownership agreement. Carefully read the terms and conditions of your shared ownership agreements and look for any restrictions as well as costs involved in the process. Communicate with your Housing Association or shared ownership provider to discuss and clarify any uncertainties.
Understand resale restrictions. Some versions of shared ownership leases provide that the landlord has a right of first refusal if the property is sold, even though the leaseholder may have purchased 100% of the property.
Financial assessment. As your ownership percentage increases, your responsibilities and expenses may also increase. Familiarise yourself with the costs involved in the process, such as the legal and valuation fees, and additional responsibilities (e.g. maintenance charges) and assess your finances. Think about your income, expenses and make sure you can afford the increased mortgage payments.
Talk to a professional. Consult a conveyancer who can explain every step of the process and help you with the legal aspects of staircasing. At My Home Move Conveyancing, we are always available to answer your questions and guide you through the staircasing process. Get in touch.
Explore answers to the most common questions around staircasing.
Since September 2011 – there are no restrictions on the number of staircasing applications that can be made. If you purchased before this date, you’re allowed three purchases and the final one must result in you owning 100%.
Each time you staircase, you’ll pay the current market value for the share percentage you wish to buy.
The cost of staircasing can vary depending on several factors, like the amount of shares you’re buying, property type, location, etc. However, the typical costs for staircasing include:
Surveys. You’ll need to get a valuation report before you staircase, this is because you pay the current market value for the additional shares. Find out more about valuation surveys and the cost or get a valuation survey quote today.
Legal fees. You’ll also need to cover your conveyancer fees for dealing with the legal process of staircasing.
Stamp duty. If you’re purchasing property shares over a certain value, you may also have to pay stamp duty, check stamp duty rates.
Mortgage fees. Whether you decide to remortgage or use your existing mortgage, you’ll still need to pay fees. These will vary depending on your provider and the amount you’re staircasing by.
Housing Association fees. Your Housing Association might charge administration fees for your staircasing transaction.
If you meet the eligibility criteria, you can get a mortgage specifically for staircasing in a shared ownership property that could enable you to buy more shares in your home. Find out how to get a mortgage.
According to gov.uk, in some places called ‘designated protected areas’, you may only be able to buy a share of up to 80%. However, for most shared ownership homes you can gain complete ownership.
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