Staircasing is a process of increasing ownership in your property. Many people don’t even realise it is an option for them, or what benefits they can see from it, explains Sebastian Paulo, Director & Head of Staircasing at Owen Paulo Legal
Is staircasing worth it?
This is a question a lot of people are asking. The main selling point of staircasing is that the more you own of the property the less rent is payable. In the long term this makes ownership more affordable, as any rent/service charge increases implemented by the housing association are not felt as strongly. When staircasing to 100% the property is then owned outright and the housing association (generally speaking) has no involvement.
How to start the process
Your financial adviser will need to carry out an assessment as this will help you come to a decision on whether staircasing is affordable for you and what share will be affordable. It is important that you discuss your options with a specialist Shared Ownership broker – some housing associations operate a panel of experienced mortgage brokers for you to approach.
You will also need to contact your housing association and serve formal notice of your intention to staircase and a valuation of the property must also be arranged, as the price of your additional share is based on the market value at that time.
Time to instruct a solicitor
Once you have done the above, you will then need to instruct a solicitor to act on your behalf. As with specialist brokers, your housing association will usually have a panel of recommended solicitors that you can pick from. Due to the niche type of conveyancing, it is vital that you chose a solicitor who has plenty of experience with staircasing!
Once a solicitor is instructed, they will liaise with your housing association’s appointed solicitor, approve the draft staircasing documents, review your mortgage offer to ensure all your lender requirements are met, raise any enquiries that there may be, order any searches that are needed and finally, register the Memorandum of Staircasing at the
Land Registry which evidences your staircasing transaction.
It may also involve acquiring freehold title/superior leases, if you are staircasing to 100%, and this may require additional work (more in-depth enquiries may be raised for example).
Stamp Duty
The current Stamp Duty rules around staircasing are that Stamp Duty is payable for a staircasing transaction only if the transaction makes your total share above 80%, and on any staircasing thereafter. However, no Stamp Duty is payable if you have paid Stamp Duty on the 100% full market value at the time of the initial purchase. It is worth noting that the option on what percentage you pay Stamp Duty is only given to the original purchaser of the property when it was newly built. When purchasing as a resale, you can only pay Stamp Duty on the percentage you are buying at that time.
Conclusion
Staircasing and eventually owning 100%, or the maximum share permitted in the lease, is a logical conclusion of owning a shared ownership property, subject to who wants to and can, but it is a choice only the leaseholder can make. However, it is important to note that leases can vary, and the process can be complex, this is why it is always advised to instruct a solicitor who is knowledgeable in Shared Ownership, particularly in staircasing, to ensure a smooth process.
Owen Paulo specialises in resales and staircasing and we are happy to offer further advice or a quotation. Please email us at enquiries@owenpaulo.co.uk, visit our website or call us on 0808 196 7020
First Time Buyer is an exciting bi-monthly glossy which takes a stylish and comprehensive look at all the options available, setting them out in an entertaining and informative way, and helping potential customers navigate their way through what is often a daunting and complex process. We dispel the myths, reinforce the facts and arm the reader with the tools necessary to make their homeownership dreams a reality.
