Last week we discussed how shared ownership works and explained that you can “staircase” your way to full ownership. This week, we would like to go deeper into what staircasing is and how you can go from shared ownership to complete ownership!
What is shared ownership staircasing?
As we have mentioned in our previous post, staircasing is the journey you take from a shared ownership property. In other words, you can increase the percentage of the property you own over time until you own it outright. With shared ownership, you will pay a mortgage, as well as a small amount of rent to the housing association that owns the rest of the property. As you buy more shares of the property, the rent will go down as your mortgage goes up.
What you need to know when staircasing a shared ownership property
When you wish to increase your share of the property, it is important to bear in mind various issues that must also be taken care of, including:
- Valuation – The housing provider will need a surveyor to confirm the current market value of the property to calculate an accurate cost of the additional share you wish to buy.
- Change of lease – Staircasing will also change the terms of your lease, but your solicitor will take care of this for you.
- Stamp duty land tax (SDLT) – This must be paid on the additional share of the property unless you have already chosen to pay the full value at the time you acquired the initial share.
- Mortgage fees – If you are remortgaging to cover the cost of the new share, you may be required to pay a lender’s valuation fee, a mortgage arrangement fee and perhaps even a penalty fee to your current mortgage provider if you happen to change lenders.
Other things to consider when buying a shared property
While it can be tempting to go for a shared ownership property, there are additional considerations that you may want to think about before making any decisions.
Before you can make any changes to the structure of the property, you will probably have to ask the provider for permissions. In some circumstances, you may even need permission to redecorate.
In most cases, the shared ownership will be on a leasehold basis. This means you will have to pay a monthly service charge to the property provider in addition to potentially having to pay towards the cost of maintenance.
Should you choose to sell later on in life, the housing provider will usually have the right of first refusal. This means you must give them the opportunity to buy the property back from you before you sell it on the open market. As a result, the sale process could be slow and the sale price could be affected.
Get reliable conveyancing for shared ownership property
At Betesh Middleton Law, we are proud to offer conveyancing services throughout Greater Manchester to ensure an easy move. Our experienced team is here to guide you through every step of the way, keeping the process efficient and easy to understand. If you would like to learn more about our conveyancing services, get in touch to speak to a member of our team.