Shared Property Ownership and Staircasing: What You Need to Know

 

Shared ownership offers a practical route onto the property ladder for those who might not be able to afford a traditional home purchase. Whether you're a first-time buyer, forming a new household, or looking to downsize, shared ownership provides flexibility and an opportunity to increase your stake in your home over time through a process called staircasing. Here's everything you need to know about how shared ownership works and how you can buy more shares in your home.

How Does Shared Ownership Work?

Shared ownership allows you to purchase a portion of a property, typically between 25% and 75% of its market value. You can buy a 10% share on some homes. The remaining share is owned by a landlord, such as a housing association or local council, and you pay rent on their portion. This approach reduces the upfront deposit and mortgage requirements, making homeownership more accessible.

 

In addition to mortgage payments and rent, shared ownership properties often include monthly ground rent and service charges, which contribute to the maintenance of communal areas. Navigating these additional costs can feel overwhelming, but at Marsons Solicitors, we can provide clear advice to help you understand your financial commitments.

Who Is Eligible?

To qualify for shared ownership, it is advised that you must:

 

●  Have a household income of £80,000 or less (£90,000 in London).

●  Be unable to afford the deposit and mortgage payments for a home that meets your needs.

 

You also need to meet at least one of the following criteria:

 

●  Be a first-time buyer.

●  Have previously owned a home but can no longer afford to buy.

●  Be forming a new household, such as after a relationship breakdown.

●  Be an existing shared owner looking to move.

●  Own a home but need to move and cannot afford a new property that suits your needs.

 

Additional priority may be given to members of the armed forces or those with a local connection to the area.

 

Understanding your eligibility can be complex. Our team at Marsons Solicitors can review your situation and guide you through the process, ensuring that you meet all the necessary criteria.

Buying More Shares: What Is Staircasing?

Staircasing is the process of buying additional shares in your shared ownership home. This enables you to reduce the rent you pay on the landlord's share and potentially move towards full ownership.

How Does Staircasing Work?

 

1. Share Size: Depending on your lease agreement, you can usually purchase shares of 10% or more. Some newer leases will allow you to buy shares of 5% of more.

 

2. If you bought your home on or after 1 April 2021, you may also be able to buy shared of 1% each year for the first 15 years, however, landlords’ consent will be required. You cannot buy shared of 2%, 3% or 4%.

 

3. Valuation: The cost of additional shares is based on the current market value of your home. A surveyor registered with the Royal Institution of Chartered Surveyors (RICS) will need to assess the property value, which can factor in any improvements you've made.

 

4. Costs and Fees: Expect to pay an administration fee (usually between £150 and £500) for shares of 5% or more. For 1% shares, the price will be based on the original price of your home, increased or decreased in line with the House Price Index (HPI). In these cases, no administration fee is charged by the landlord.

 

5. Time Limits: Once a valuation is completed, you typically have three months to purchase the additional shares. After that, the property may need to be revalued or in some cases, you can request an extension to the current valuation, subject to approval.

 

Navigating valuations and understanding costs can be tricky. Marsons Solicitors can provide expert advice to ensure you’re fully informed every step of the way.

What About Home Improvements?

 

If you've made improvements to your home, the valuation will include:

 

●  Current market value, which accounts for the improvements.

●  Unimproved value, which excludes any enhancements.

 

To avoid paying a higher price for your new shares, ensure you obtain written permission from your landlord before making improvements.

 

Our solicitors can help you secure the necessary permissions and ensure that your rights are protected throughout the process.

Maximum Ownership Limits

For most shared ownership properties, you can staircase to 100% ownership, converting your home to a freehold, if applicable. Exceptions include:

 

●  Designated protected areas, where ownership may be capped at 80%.

●  Older Persons Shared Ownership (OPSO), which limits ownership to 75%. Once you reach this cap, rent is no longer payable on the remaining share.

 

If you’re unsure about your maximum ownership limits, Marsons Solicitors can help clarify your options and ensure you make informed decisions.

Key Considerations

 

●  Legal Fees: You’ll need to pay your own legal fees for staircasing. If you’re borrowing money to purchase additional shares, a solicitor is required to handle the transaction.

 

●  Long-Term Planning: Review the terms of your lease and ask your landlord for a key information document to understand the costs and options for future staircasing.

 

Marsons Solicitors can assist with the legalities of staircasing from reviewing your lease to managing the transaction, making the process seamless for you.

Is Shared Ownership Right for You?

Shared ownership provides a flexible pathway to homeownership, offering affordability and the ability to gradually increase your investment. However, it’s essential to carefully consider the additional costs, lease terms, and long-term commitment involved.

 

If you’re considering shared ownership or staircasing, Marsons Solicitors is here to guide you through the legal process ensuring you fully understand your options and obligations. Contact us today to take the first step towards securing your dream home.

How Marsons Solicitors Can Help with Conveyancing?

At Marsons Solicitors, we specialise in assisting clients with all aspects of property purchases and our team can provide expert guidance tailored to your situation. Whether you’re buying your first share of a shared ownership property or aiming for full ownership straightaway, we’re here to make the process as straightforward and stress-free as possible. Reach out to us today to discuss how we can support your journey to homeownership.

 

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