Help to Buy and Shared Ownership schemes can sometimes be over-complicated with different terminology. Staircasing is one of the terms that some people struggle with, and a lot of the rules and regulations surrounding it can be equally confusing. Luckily, once the information is broken down it becomes much easier to understand.
So what is staircasing in a Help to Buy house? In a Help to Buy scheme, staircasing is the term used for buying more shares in the property. Buying more shares means that you’ll pay less rent on the ones that you don’t own. You’ll potentially be able to reach 100% of the total shares and own the property outright.
Read on to learn more about staircasing, how many shares you can buy, whether you need a deposit, and what a Shared Ownership valuation is.
What Is Staircasing?
If you’ve purchased your home through a Help to Buy or Shared Ownership scheme, you can usually choose to buy more shares in it after you’ve lived there for a certain amount of time. This is what’s referred to as ‘staircasing’. These payments can be made either from your savings or through the help of a mortgage.
The advantage of this is that when you buy more shares, you’ll pay less rent. This is because the amount of rent that you pay will be based on the landlord’s share of the property. If you manage to staircase your way all the way up to 100%, you’ll own your home outright and won’t have to pay rent anymore.
How Many Shares Can I Buy?
The maximum share is 100%, at which point you own the property outright. However, in some places called ‘designated protected areas’, you might only be able to buy up to 80%. These areas were set up to ensure that rural affordable housing remains in the ownership of local people. There are also Older Persons Shared Ownership (OPSO) homes where the maximum share is 75%. With this, you’ll never outright own the property, but once you reach 75% you won’t have to pay rent on the rest.
There is a minimum amount of shares that you can buy in one go. This is dependent on when you bought the property and what your contract says – so ask your landlord if you’re unsure. We’ve broken down the minimum share amount for each purchase below:
5% Or More
In the majority of cases, you’ll be able to buy shares of 10% or more at any time. In some older leases, you may only be able to buy shares of 25% or more, and in newer leases you might be able to buy shares of 5% or more. As mentioned above, all of this is dependent on when you bought the property and what you agreed to in your contract, so be sure to read that before doing anything.
Shares of 1%
If you purchased your home on or after the 1st April 2021, then for the first 15 years you might be able to buy shares of 1% a year. Speak to your landlord to find out if this applies to you. This only applies to shares of 1% and you’re unable to buy shares of 2%, 3%, 4%.
Before you purchase a Shared Ownership home, you should always ask the landlord for all of the important information regarding share amounts you’ll be able to buy in the future. This should be in the ‘key information document’ that will be provided before you buy the property.
Do I Need a Deposit for Staircasing?
You don’t need to wait until you can save up for a deposit so that you can mortgage more shares because you can use your existing equity in your share of the property to act as a deposit. If you do have savings then an effective way to buy an even bigger share is to combine them with the equity in your home, this will allow you to staircase faster and pay less rent in the meantime.
What Is a Shared Ownership Valuation?
A Help to Buy valuation is needed when buying more shares or selling a home bought via the Help to Buy scheme. The purpose of getting a valuation is to assess the market value of the property at the time, because since you initially bought the property the value is likely to have changed. There are certain conditions that need to be fulfilled when carrying out a Shared Ownership Valuation:
- The valuation must be carried out by a Royal Institution of Chartered Surveyors (RICS) Registered Valuer.
- The valuer must be independent of an estate agent.
- The valuation report must be on headed paper, and must also be signed by a RICS Registered Surveyor.
- The valuer must provide at least three comparable properties and sale prices.
- The three comparable properties must be similar in terms of size, age, type, and must be within a 2-mile radius to the property being valued.
- The valuer must not be in any way related or known to the client.
- The valuer must inspect the property interior, and provide a full valuation report.
Once the valuation has been completed, you will receive a completed report. The report will include a thorough room inspection with photographic evidence, details of the properties condition and any defects. You’ll also receive details of any nearby properties that have been sold in the last 12 months and information about the location and surrounding area.
Shared Ownership Valuation With Crest Surveyors
Our helpful and experienced team of RICS qualified surveyors are ready to help you on your journey to buying or selling your property. We offer affordable service around London and the home counties, with a quick and reliable service to help you through the process.
To learn more about our Shared Ownership Valuations, simply get in touch. Or for more information on the services we have to offer, visit our website.