Shared Ownership Staircasing Guide

Buying more shares in your Shared Ownership home

For current owners who bought their home through the Shared Ownership scheme, you may be considering buying additional shares in your home. Find out everything you need to know about the staircasing process below.

What is staircasing?

Once you have lived in your Shared Ownership home for a certain period of time (as outlined in the terms of your lease), you can choose to buy further shares in your property. For example, if you initially purchased a 25% share in your home and went on to buy an additional 25% down the line, you would then own 50% of the property.

Known as staircasing, this process allows shared owners to build the percentage share that they own in their home with most being able to staircase all the way up to 100% ownership.

On Share to Buy, we offer a staircasing calculator which enables you to find out if you are likely to have enough equity in your home to purchase an increase share, and also provides an estimate of how much your new mortgage might cost.

Are there any restrictions to the amount I can staircase?

Some properties are subject to restrictions to the staircasing process so it’s important that you check the terms of your lease in case there are any limitations.

These restrictions can include a staircasing cap at 80% which are sometimes put in place as a result of planning permission to ensure that the property is retained for local people and does not become available as a second home.

What are the benefits of staircasing?

There are many reasons why a current shared owner would want to increase the percentage they own in their home. For example:

• If you choose to purchase more shares, your mortgage will increase while your rental payments will decrease at the same time.
• In most instances, you can purchase up to 100% of your home, in which case you would no longer pay any rent, just your mortgage along with any outlined service charges and ground rent.
• The greater the share you own, the more you will benefit from increased property prices. If you go on to buy 100% of your home, you will also no longer be required to give your housing provider the opportunity to market the property first at the time of sale. To find out more about this process, check our our guide to selling a Shared Ownership home.
• If you staircase all the way to 100% ownership, you will likely have access to a wider selection of mortgage options as you would be eligible for a standard mortgage, rather than a Shared Ownership mortgage.

Do I have to staircase?

Absolutely not, the staircasing process is completely optional. While some buyers choose to buy additional shares in their home as their financial circumstances change, many owners choose to stay at their currently owned share.

How does the staircasing process work?

The government have recently introduced a new Shared Ownership model as part of their Affordable Homes Programme which has seen some changes to the staircasing process.

Current staircasing rules

Existing shared owners are not covered by the new staircasing rules. Therefore, if you choose to buy additional shares in your home, you will first need to contact your housing provider and give notice that you intend to staircase.

You will need to arrange for an independent surveyor to visit the property and work out the current value of the property. You will receive a copy of the valuation and be asked to confirm that you would like to proceed with the process, with most valuations being valid for three months. In the case that you take longer than this set period to complete on the transaction, you will be required to arrange for a new valuation to take place.

New staircasing rules

If a buyer is to purchase a home under the new model, you will have the option to staircase by 1% each year for 15 years from the date of purchase. Please note that there will be a transition period between 2022 and 2023 whereby some new properties will have leases under the existing staircasing rules, and some with the new rules.

Shared owners who wish to take up the option of the 1% staircasing will not be required to pay for an independent valuation and the fees will be heavily reduced, although some legal fees are likely to be incurred.

Where an existing lease has been transferred (for example, on the sale of an existing Shared Ownership property to a new owner through the resale process), the 1% option will apply.

As the 1% is not likely to be large in terms of monetary value, it is expected that most transactions are likely to be paid from the owner’s savings. However, a mortgage lender may consider a small further advance, or it may be included on the back of a remortgage or mortgage for home improvements. Your lender or specialist broker will be able to advise further on this.

For owners with the new lease, the minimum amount that you can staircase in the normal way (above but not including the 1%) is now 5%. If you wish to proceed with either option, you would need to contact your housing association in the first instance. 

How much does staircasing cost?

While there is the obvious cost of the purchase price for the additional shares that you are buying, there are many other costs involved when staircasing in a Shared Ownership home. Generally speaking, we would recommend having around £2,000 saved for the process, however this amount can vary depending on a number of factors:

• You will be required to pay for the surveyor report required to value the property.
• You will need to appoint a solicitor or conveyancer to act on your behalf during the staircasing process.
• You may need to remortgage your property to be able to afford the additional shares with mortgage fees ranging from lender to lender.
• Depending on the value of the additional shares that you are buying, you may be required to pay Stamp Duty.

How will staircasing affect my mortgage?

Unless you can afford to pay for the additional shares from your savings, staircasing will normally involve either extending your existing mortgage or remortgaging altogether. Many owners choose to contact a specialist mortgage broker with experience in Shared Ownership and the staircasing process to help them find the best deal that suits their needs.

Will I pay Stamp Duty if I choose to staircase?

At the time of purchasing your Shared Ownership home, you will have the choice of making a one-off Stamp Duty payment based on the total market value of the property, or you can choose to pay the Stamp Duty in stages, paying what is owed on the initial share you buy and then again for any additional shares down the line.

If you chose to make a one-off payment when you first bought your home, you won’t have to pay any Stamp Duty at the time of staircasing.

However, if you chose to pay in stages, there will be no Stamp Duty to pay until your owned share reaches 80% and above. If you are staircasing to 80% in your home, you will need to pay Stamp Duty on the transaction that took you over 80% and any further transactions.

How many times can I staircase?

Shared owners were previously allowed to make three applications to buy more shares in their home, with the final application resulting in the purchase of the remaining shares in the property. However, changes were made to this policy in September 2011 and many properties will no longer have any restrictions on the number of staircasing applications that can be made. However, this can vary from provider to provider so we would always recommend checking the terms of your lease.

Do I have to staircase to 100% before selling my home?

No – you can choose to sell your Shared Ownership home at any time, regardless of whether you have staircased or not.

If you choose to sell your home, you will first need to contact your housing association to make them aware before obtaining an independent valuation prior to sale to determine the current value of the property.

If you haven’t staircase to 100% ownership, your provider will usually have a set period of time (approx. eight weeks) to market your home first and, if they find a buyer, they will go through a similar process to the one you went through when you bought the home. If your provider doesn’t find a buyer during this time, you can then choose to sell your property privately or through an estate agent of your choice. You can find out more about the sales process of a Shared Ownership home via our next steps guide for current owners.

What is downward staircasing?

Downward staircasing (also known as reverse staircasing and flexible tenure) allows Shared Ownership homeowners to sell some or all of their shares back to their housing provider. This option is typically only available in exceptional circumstances – such as financial hardship, a change in personal circumstances, or unexpected costs – when someone is struggling to keep up with their mortgage or other payments. Unlike upward staircasing, this is not an option that is available to everyone as standard.

Instead of buying more shares as you would with regular staircasing, downward staircasing lowers your ownership share which decreases your mortgage payments, while increasing the amount of rent you pay to your provider. In some cases, it may even mean selling your full share and becoming a tenant instead. However, this option isn’t guaranteed and is only available at the discretion of the housing provider, who will assess individual circumstances on a case-by-case basis before making a decision.

If you’re struggling financially and think this might be an option for you, it’s best to speak with your provider to understand their policies and any requirements.