Published 29 Aug 2018

Moving Up the Ladder with Staircasing

Staircasing is an excellent opportunity to make the most of your investment by purchasing more shares in your home. The greater the share you buy in your home, the less rent you will pay to Peabody, and if you staircase to 100% you become an outright owner and pay no rent.

Benefits of Staircasing

Purchasing a greater proportion of your Shared Ownership home has numerous benefits:

  • You reduce the amount of rent you are paying to Peabody
  • If you decide to sell your home, the greater the percentage you own the more profit you can make from any increase in the value of your home
  • Should you own 100% you will get back the full amount of any profit on the current market value when you come to sell your home
  • If you own your property outright (100%) you can sell your property on the open market using an estate agent of your choice
  • Becoming the outright owner allows you to maximise the profit from any major home improvements you make
  • Your rent will reduce when you purchase further shares
  • If you staircase and own your property outright, you can sell your home on the open market using an estate agent of your choice

Different types of leases can affect staircasing:

Staircasing when you bought your lease before 1st April 2006

  • Leaseholders of a New Build HomeBuy (Shared Ownership) property may acquire the entire interest in their property in a maximum of four steps, including the purchase of the original equity share
  • Staircasing cannot take place in the first twelve months after the initial purchase.
  • For subsequent owners, (as in the case of a resale) staircasing can only take place after three months
  • The leaseholder must purchase a minimum additional 20% share and in multiples of at least 5% above this percentage except in the third and final share which would take the shared owner’s equity up to 100%

Staircasing when you bought your lease after 1st April 2006

  • Leaseholders of a New Build HomeBuy (Shared Ownership) property have no limit on the number of staircasing transactions
  • Staircasing can take place any time after the initial purchase
  • For subsequent owners, (as in the case of a resale) there is no three month restriction rule
  • Leaseholders can buy a minimum of 10% and in multiples of at least 5% above this percentage except in the third and final share which would take the shared owner’s equity up to 100%

Key requirements for all leases

  • The additional equity purchased will be based on the current market value of the property at the time of application to staircase
  • The valuation must be carried out by an independent RICS (Registered Institute of Chartered Surveyors) qualified surveyor with the valuation accompanied with at least three comparable property values
  • The leaseholder is required to meet the valuation costs and any other costs incurred in connection with the staircasing transaction, i.e. legal fees, mortgage arrangement fees, additional valuations in the case of surveyor disputes or expired valuation reports
  • The leaseholder must pay any arrears of rent, service charge or other charges incurred prior to completion of the staircasing transaction
  • In some cases your lease may restrict you from selling your property for three months following final staircasing.

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