What is staircasing?
If you’ve bought into a Shared Ownership home, you’ll own a percentage share of that property lease. Afterwards, you can buy further shares and own more of that property, or even buy outright ownership. This process is known as staircasing.
You can staircase gradually or get full ownership. For example, you might own 50% of the lease. Then you can increase the ownership by 20% and own 70% or you can increase by 50% and take full ownership. Once you own 100% of the Leasehold, you can then progress to buying the Freehold.
Do I need a conveyancer/solicitor?
Yes – you’ll need a solicitor or a licensed conveyancer because the increase in your share will result in changes to your existing lease.
Do I have to staircase?
No – it’s entirely up to you, there’s no pressure to staircase. Staircasing is the only way most people can get on to the property ladder these days; and many choose to staircase to gradually reduce the rent they are paying.
What about my mortgage?
It is possible to get a mortgage or increase your current mortgage (known as a ‘further advance’) in order to staircase. If you want to staircase in a mortgage you’ll need to contact your mortgage lender.
You might be better off getting a new mortgage elsewhere with a better rate, this is known as remortgaging.
Do I have to pay stamp-duty when staircasing?
Yes – Stamp Duty Land Tax is a tax you’ll have to pay on property purchases, it’s a bit complicated when staircasing though.
For example, you might be buying an extra 25% of your ownership of a property that’s total value is £200,000. You ready own 50%, so at the end of the transaction you’ll own 75% and it will below the SDLT threshold of £125,000. So you won’t have to pay the Tax. If you purchased another 25% after that, you’ll have to pay the 3% tax on that.
Make sense? For a better explanation view our Stamp Duty page.
If you have any questions on staircase conveyancing, drop us a comment below.