Your way up the property ladder
If you currently share the ownership of your home with a Housing Association, you may wish to buy another share of your property or even buy it outright. This is called staircasing. You can agree with the housing association a percentage to staircase to - for example to increase the percentage you own from 50% to 75%, or you may buy all of the outstanding shares to own 100%. Please note that some leases do not allow you to purchase all the shares in your home. Please check with your Housing Association for confirmation.
What do you need to do?
You, your solicitor and the Housing Association must take the steps outlined below:
1. You should contact your Housing Association in the first instance and they will tell you how to proceed.
2. If you are considering staircasing then you should find out from your building society or bank whether they are willing to lend you a further amount of mortgage. The additional amount you are able to borrow will help determine the size of the further share which you may be able to buy. If you decide to change mortgage companies, you should beware of any ‘redemption’ penalties you may have to pay. We can recommend an Independent Financial Advisor who can help you with this process if you are unsure.
3. You should appoint a solicitor to act for you as it is important that you have a legal representative as the documentation involved is complex.
4.Upon receiving written notification of your intention to purchase further shares, your Housing Association will instruct a valuer. The valuer will be an independent qualified (RICS) valuer agreed between the Housing Association and yourself.
You may provide the name of another valuer provided that your Housing Association agrees. You will need to confirm their name and address and your Housing Association will instruct them. You will be liable for the valuation fee.
An estate agent’s valuation is not acceptable, nor is the valuation provided by your bank or building society as this is principally for mortgage purposes and is not classed as an independent valuation for purchasing further shares.
The agreed valuer will confirm the market value of your property and the cost of purchasing any further shares in your house is based on this figure. The valuer will disregard any improvements you have made since moving into your property, or any improvements undertaken by previous occupants. Improvements could include the installation of double glazing, central heating or the building of an extension.
5. Within 7 days of the Housing Association receiving notification of the valuation, you will be informed of the current market value of your home and the cost of purchasing a further share.
6. You have up to three months from the date of the valuation to complete the purchase. After three months the valuation is no longer valid and, if you decide to continue, a new valuation will be necessary and you will have to pay a further valuation fee.
7. Once you have been notified of the valuation and the purchase price of your further share, and have decided that you wish to proceed, you must notify your Housing Association in writing of your intention to continue your ‘staircasing’ and provide details of your solicitor.
8. In purchasing a further share, as well as the valuation fee, you will have to pay:
• Your solicitor’s fees
• A valuation fee to the bank or building society should they decide to revalue the property
9. When you purchase the remaining share in your property you will (generally after three months) be granted the freehold or 100% leasehold interest in your property, in accordance with the terms of the lease. Whether you can have the freehold will depend on whether you own a house or a flat. Your solicitor will advise you on the terms of the lease. In addition, in some circumstances there may still be a service charge payable.
Please note that the staircasing procedures are contained within your Shared Ownership lease and you should contact your solicitor if you have any further queries.
