Staircasing is a process where an owner of a Shared Ownership property purchases further shares of the property from the housing association who owns the remaining part.
An owner can usually purchase in blocks (tranches) of 10% or more. However as there are valuation and legal fees to pay, a leaseholder would be well advised to buy the largest additional share they can afford at the time of staircasing.
What is interim staircasing?
This is the purchase of a share which increases the amount owned by the leaseholder, but not to 100% (e.g. staircasing from 50% to 75%). After intermediate staircasing the leaseholder remains a shared owner.
A valuation is carried out and the price payable for the share is based on this. Once the share has been bought there is a corresponding reduction in the amount of rent paid to the housing association, as you only pay rent on the share you do not own.
What is final staircasing?
This is the process of buying final shares which will take you to 100% ownership of the property and hence no longer be a shared owner.
If the property is a house, the freehold can be transferred to you when you have staircased to 100%* Peabody can only transfer the freehold of the property if we are the freeholder The former shared owner will become the owner of a freehold property following final staircasing.
With a flat, the property will still be leasehold which means that service charges continue to be payable. However, the “Specified Rent” payable to the association is reduced to nil, although in some cases a small ground rent may still be payable. Also, certain provisions of the lease will be excluded so that it is no longer a Shared Ownership lease.
As with an intermediate staircasing, the price payable is based on the current market value of the property as assessed by a valuer.
How do I pay for my staircasing?
The additional share can be bought either with savings or with the assistance of a mortgage. If paying for it with a mortgage, then this may be either by way of a further advance from your existing lender or a new loan through a remortgage from another lender.
In the case of an interim staircasing, the mortgage offer must be approved by the association and the additional borrowing must be no more than the amount being paid for the additional share. With a final staircasing the mortgage does not have to be approved by the association and there are no rules limiting the amount you can borrow.
SDLT on staircasing - Refer to their solicitors
In certain circumstances, you may need to pay stamp duty. Please discuss this with your legal representative. Peabody are not able to confirm stamp duty owed on staircasing or the amount paid at the initial purchase.