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How staircasing for shared property ownership works

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Shared ownership can be a good way for people to buy a home who otherwise couldn’t afford to as it allows you to buy a percentage of a property and pay rent on the remainder. This means you can get on the property ladder for less and pay a reduced rate of rent compared to standard renting. Typically you can buy anywhere from 25-75% of a property through shared ownership.

Another key advantage of shared ownership deals is that they usually allow you to “staircase”. This means that over time you can increase the percentage of the property you own. As you do this, the percentage owned by the housing association or private developer you purchased the property from will decrease, meaning the amount you have to pay in rent will also go down.

If you are thinking about buying a shared ownership property, there are some key things you should know about staircasing.

What you need to know when staircasing a shared ownership property

When looking to increases your share of the property, there are various issues you will need to take account of. This includes:

Valuation – The housing provider will need to have a surveyor confirm the current market value of the property in order to calculate the cost of the additional share you wish to buy.

Stamp duty land tax (SDLT) – You may need to pay SDLT on the additional share of the property you are buying unless you elected to pay SDLT on the full value of the property at the time you acquired the initial share.

Changing your lease – Staircasing will change the terms of your lease, so you will need a solicitor to deal with this for you.

Mortage fees – If remortgaging to cover the cost of the additional share, you may need to pay a lender’s valuation fee, a mortgage arrangement fee and potentially a penalty fee to your current mortgage provider if changing lenders.

Other considerations when buying a shared property

While shared ownership deals can be an attractive option, there are some key points to bear in mind when looking at this type of scheme.

Additional costs – When you buy a shared ownership property, it is usually on a leasehold basis. This means you will normally have to pay a monthly service charge to the property provider as well as potentially having to contribute towards the cost of maintenance works.

Restrictions on making alterations – You may need to ask the property provider’s permission before making any structural changes to the property. In some cases, you may also need permission to redecorate.

Selling a shared ownership property – If you decide to sell, the housing provider will generally have right of first refusal, meaning you have to give them the opportunity to buy the property back from you before you sell it on the open market. This can potentially slow down the process of selling and could impact the sale price.

Get reliable conveyancing for shared ownership property

Bird & Co Solicitors is a long-established law firm offering conveyancing services for properties across England and Wales from our 3 offices in the East Midlands.

We are highly experienced in conveyancing for all types of residential property, including shared ownership property, and can guide you through everything you need to know to ensure a smooth transaction and protect your interests. We are accredited by the Law Society’s Conveyancing Quality Scheme reflecting the high quality of our residential property services.

To find out more about our conveyancing services, call us today on 01476 591711 or use our contact page to find details of your nearest office.