Staircasing – buying more shares

Staircasing

Staircasing is the process of buying more shares in your shared ownership home.

You can increase your share when the time is right for you, helping you move closer to owning your home outright. As the percentage you own increases, the rent you pay to whg will usually reduce.

Some customers staircase gradually, while others buy all the remaining shares at once. The amount you can buy and the maximum share you can own will depend on the terms of your lease.

Why staircase?

Pay less rent

You only pay rent to whg on the share of your home that you don’t own.

When you buy more shares, the share owned by whg becomes smaller, so the rent you pay will usually reduce. If you staircase to 100%, you will no longer pay rent to whg.

You may still need to pay a mortgage, service charges and other costs connected with your home.

Build up your ownership

Staircasing allows you to increase the percentage of your home that belongs to you.

This can help you build more equity in your property and move closer to full home ownership at a pace that suits your circumstances.

Benefit more if your home increases in value

The more of your home you own, the greater your share of its value.

For example, if you own 75% of your home when you sell it, you will receive 75% of the sale price, after any mortgage and selling costs have been paid.

Property values can go down as well as up, so owning a larger share also means you are affected more by any fall in value.

More options when you own 100%

If your lease allows you to staircase to 100%, you will no longer be a shared owner.

Depending on your property and the terms of your lease, this may:

• give you access to a wider choice of mortgages
• make it easier to sell your home on the open market
• give you more flexibility over your home
• mean you receive the full benefit of any future increase in its value.

Service charges or estate charges may still apply after you reach 100% ownership, particularly if you live in a flat or on an estate with shared spaces and services.

Is staircasing right for you?

There is no obligation to staircase. You decide whether to buy more shares and when the time is right.

Before going ahead, it’s important to consider:

• how much of an additional share you can afford
• whether you will use savings, increase your existing mortgage or remortgage
• how your new mortgage payments would compare with the reduction in rent
• the fees involved in completing the purchase
• whether you plan to remain in your home for the longer term.

You may wish to speak to your mortgage lender or an independent mortgage or financial adviser before making a decision.

How to staircase

1. Check your lease

Your lease explains the staircasing rules that apply to your home, including:

• when you can buy more shares
• the minimum percentage you can buy
• the maximum share you can own
• any restrictions that apply to your property.

Many leases allow customers to staircase to 100%, but some place a limit on the maximum share that can be owned.

2. Contact whg

Contact us when you are thinking about staircasing.

We will check the details of your home and explain:

• the process that applies to you
• the information we need
• the fees you will need to pay
• what happens next.

Contacting us does not commit you to buying more shares.

Email shared.ownership@whgrp.co.uk

3. Consider how you will pay

You may be able to pay for your additional shares using:

• savings
• additional borrowing from your existing mortgage lender
• a new mortgage with another lender.

Your lender will need to confirm that any new borrowing is affordable. There may also be mortgage arrangement, valuation or early repayment fees to consider.

4. Arrange a valuation

You will need an independent open market valuation completed by a surveyor who is registered with the Royal Institution of Chartered Surveyors, commonly known as RICS.

The valuation confirms the current market value of your whole home. We use this figure to calculate the price of the additional share you want to buy.

For example, if your home is valued at £200,000:

• a 10% share would cost £20,000
• a 20% share would cost £40,000
• a 25% share would cost £50,000.

You will be responsible for paying the valuation fee.

Valuations are normally valid for a limited period. We will explain how long you have to complete your purchase before an updated valuation is needed.

Please tell us about any improvements or alterations you have made to your home, as these may need to be considered as part of the valuation.

5. Receive your staircasing offer

Once we receive the valuation, we will confirm:

• the market value of your home
• the price of the additional shares
• the share you would own after staircasing
• your estimated new rent
• any whg fees.

You can review this information before deciding whether to continue.

6. Appoint a solicitor

Staircasing is a legal property transaction, so you will need to appoint a solicitor or licensed conveyancer.

It is helpful to choose someone who has experience of shared ownership and staircasing. They will:

• deal with the legal documents
• work with whg and your mortgage lender
• check whether Stamp Duty Land Tax is payable
• register your increased ownership with HM Land Registry.

7. Complete your purchase

Your solicitor will agree a completion date with whg.

On completion:

• payment for the additional shares will be made
• your percentage ownership will officially increase
• your rent will be recalculated
• you can begin enjoying the benefits of owning more of your home.

We will write to you to confirm your new share and revised rent.

What will staircasing cost?

As well as paying for the additional shares, you should budget for the associated fees.

• The additional shares
• RICS valuation fee
• Solicitor’s fees
• Mortgage and financial advice fees
• whg administration fee
• Stamp Duty Land Tax (payable in some circumstances, particularly if the purchase takes your ownership above 80%)