Staircasing shared ownership explained

If you bought your home using a shared ownership scheme you may be considering staircasing. This is where you buy further shares in your home so you own more of it. But how much does shared ownership staircasing cost? What are the steps you have to take? What are the common pitfalls? And should you do it? We look at everything you need to know.

Angela Kerr Director, Editor

What is staircasing your shared ownership property?

Staircasing your shared ownership property refers to the process of buying additional shares in your property. This increases your ownership percentage, reduces the rent you pay and can eventually lead to full ownership.

Although, check the terms of your lease as this isn’t always possible as some housing providers limit the amount of shares you buy.

Read our full guide to shared ownership to find out how this scheme works.

What are the benefits of staircasing your shared ownership home?

There are a number of reasons that you might want to increase the percentage you own of your home through staircasing:

1. Pay less rent. Shared ownership staircasing means you’ll own a bigger share of your home – so in turn this will also cut your monthly rent bill. And while your mortgage repayments will go up, you won’t be at the mercy of ever rising rental costs.

2. Benefit from any increase in house prices. The more of your home that you own, the greater you’ll benefit if its value increases.

3. More mortgage choice. If you use staircasing shared ownership to own 100% of your home, you’ll be able to get a standard mortgage, rather than a shared ownership mortgage. Standard mortgages tend to be cheaper.

4. More freedom when selling. If you own less than 100%, your housing association will have a fixed period of time to find someone to buy your share from you before you can sell it yourself via an estate agent. However, when you own 100% of your property and want to sell your shared ownership property, you don’t usually need to do this. However, you may still have to offer it back to the housing association first in some cases so make sure you check your lease.

5. Security. Until you own 100% of the property, you’re a tenant in the eyes of the law which could mean you lose your property – and the money you’ve put into it – if you don’t keep up the rental payments.

Shared ownership and buying more shares – are there any restrictions?

When it comes to shared ownership staircasing, some properties are subject to restrictions so check your lease. These restrictions can include a staircasing cap of 80%. This type of restriction is often found in rural areas in order to ensure the property is retained for local people. Find out more in our guide on Shared ownership: What is it? Is it worth it?  

Do I have to staircase?

No. You don’t have to staircase and increase your shares in your shared ownership property if you don’t want to. In 2018, a study by housing association Aster, found that only 10% of those in shared ownership chose to staircase. Many find the hassle and financial costs of shared ownership staircasing outweigh the benefits. And many people view their shared ownership home as a more secure form of renting, with the added advantage of also building up equity in a property.

How does shared ownership staircasing work?

This depends on whether you bought under the original shared ownership scheme or under the new shared ownership model. (See our article on the Shared Ownership Changes which explains the new and old model if you’re not sure)

Staircasing shared ownership if you bought under the original scheme

If you bought under the original scheme and want to buy additional shares in your home, you’ll first need to contact your housing provider and give notice that you intend to staircase. The minimum share you’ll be able to buy when you staircase is 10% and you’ll need to arrange (and pay for) for an independent surveyor to value your home. Once you get a copy of the valuation, you’ll be asked to confirm whether you would like to proceed with the process.

Most valuations are valid for only three months. If you take longer than that to complete on the transaction, a new valuation will be needed. So, get your skates on and get your finance in place and the purchase completed so you can avoid having to pay for a new valuation. And bear in mind shares are sold at their current market value. So, if you bought your home for £180,000 and it’s now valued at £200,000, if you want to buy a 25% share it will cost you £50,000 – plus legal and other fees (see below).

New staircasing shared ownership rules

However, if you bought under the new model you’ll have the option to staircase by 1% each year for 15 years from the date of purchase. If you take up the option of 1% shared ownership staircasing, the price of a 1% share will be based on the original price of your home, increased or decreased in line with the House Price Index. You won’t be required to pay for an independent valuation – although you or your landlord can choose to have one. But whoever asks for the RICS valuation must pay for it. Also, the fees will be heavily reduced -but some legal fees are still likely to be incurred.

When an existing lease is transferred, such as if you buy a shared ownership property through the resale process, this 1% shared ownership staircasing option will apply.

Under these new rules, the minimum amount that you can staircase in the normal way (above but not including the 1%) is now 5%. And if you want to go ahead with either option you’ll need to contact your housing association first.

How much does staircasing shared ownership cost?

On top of the purchase price for the additional shares, there are several other costs involved in shared ownership staircasing:

• Surveys. Surveyors aren’t free, and you’ll have to pay for the valuation report.
• Staircasing solicitors fees: You will need a solicitor or conveyancer to handle the legal work involved in shared ownership staircasing. You can read our guide to conveyancing fees to get an idea what this will cost.
• Stamp duty. Depending on the value of the additional shares you are buying, you may have to pay stamp duty. See below for more detail on shared ownership staircasing and tax.
• Mortgage fees. You may have to pay mortgage fees for a new mortgage. This could range from nothing to £999 or even more depending on the deal and your circumstances. Let a fee-free mortgage broker find you the best remortgage for you. They will break down the mortgage rate and fees charged.

Typically, the shared ownership staircasing process costs around £2,000 on top of the price of the shares themselves. But this is a ballpark figure and varies depending on where you live, the value of your home and how big a share you are buying.

Stamp duty and staircasing: How does it work?

When you buy a shared ownership property, in many cases you don’t need to pay stamp duty. But if you do need to pay stamp duty, you’ll have a choice about how you pay. You can either make a one-off payment based on the total market value of the property or pay it in stages. This means you pay what is owed on the initial share you buy, then pay again if you buy more shares – although you won’t need to make any further payments until you own more than an 80% share of the property.

Here’s an example. You are a first-time buyer purchasing a 25% shared in a flat valued at £500,000.

• One-off payment. You would pay £3,750 stamp duty. As a first-time buyer you get first time buyer tax relief on the first £425,000 of the property. You then pay 5% stamp duty on the remaining £75,000. If you aren’t a first-time buyer you would pay £12,500 stamp duty at this point.
• Pay in stages. You wouldn’t pay any stamp duty at this stage. That’s because the value of the share you are buying falls below the first-time buyer relief of £425,000. If you aren’t a first-time buyer there would be a small amount of stamp duty to pay. How much depends on how much rent you pay on the remainder of the property. However, when you pay in stages you could then face a tax bill when you staircase to 80%.

You can use HMRC’s staircasing stamp duty calculator to work out how much tax you would have to pay if you buy a shared ownership home.

How do I pay for additional shares of my shared ownership property?

If you’re considering shared ownership staircasing, you’ll need to think about how you’ll fund the purchase of the additional shares. Your main options are likely to be:

• Extending your existing mortgage
• Remortgaging
• Using your savings

Can I get a staircasing mortgage?

If you need to extend your mortgage or remortgage to purchase the extra shares you’ll need to contact your mortgage lender to check the process and what they can offer you. We’d recommend then speaking to a fee-free mortgage broker to see what other mortgage options are available beyond your lender, with the aim of shopping around to get the best deal.

Do I need a deposit to staircase?

You don’t need a deposit to staircase. You can use the equity you’ve built up in the share you already own to act as a deposit when applying for your mortgage. But if you can save a deposit you may be able to buy a bigger share of your home.

What happens with my rent payments if I staircase?

Because you end up owning more of your home with shared ownership staircasing, you’ll pay less rent to your provider. If you end up owning 100% of your home, you won’t pay any more rent for your property. However, you you could still have to pay ground rent and service charges.

If you are going through the shared ownership staircasing process and live in a house, you should find out if you can buy the freehold when you make the final payment taking you to 100% ownership. If you can’t, then your property will remain leasehold, even though you own 100% of it. This means you may still have to pay ground rent.

Here at the Homeowners Alliance we don’t think that is fair. If you own 100% of your house you shouldn’t still be liable for ground rent. The housing association should allow you to buy the freehold.

You can find out more about this issue with our guide to leasehold vs freehold properties and what to watch out for with shared ownership.

How many times can I staircase?

It used to be the case that shared owners were typically allowed to staircase three times. However, changes were made to this policy in 2022 and many properties no longer restrict how many times you can staircase. However, this can vary by provider so always check the terms of your lease regarding shared ownership staircasing. But given that you’ll pay admin fees every time you staircase it makes sense to buy as big a chunk as you can each time.

Can I sell shares back?

Possibly. If you are struggling with your mortgage payments, you may be able to ask your housing association to buy back shares in your home. This is known as downward staircasing or flexible tenure – but it’s rare. If you wish to sell back some of your shares you should contact your housing provider.

Can I sell my shared ownership home?

Yes. Although if you own less than 100% of your home, you’ll need to contact your provider to tell them and you’ll also need to organise a RICS valuation of your property (and pay for it) to determine its value. Your provider will have a period of time (usually 4 to 12 weeks) when they can exclusively market your property. If your provider doesn’t find a buyer, you can sell the property through an estate agent.

Once you own 100% you should be able sell your property on the open market. However, if your property is still leasehold check your lease first, some require you to offer the property back to the housing association first.

You can find out more in our guide How to sell your shared ownership home

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

No – however, you may choose to staircase your home to 100% before selling. This is known as back-to-back staircasing or simultaneous sale and it may be an option if you’ve been through the process and haven’t found a buyer, own a large share and this makes it unaffordable to other potential shared ownership buyers, or you believe that the property is worth more than the valuation.

When you staircase to 100% ownership, your property won’t be covered by shared ownership rules meaning you can sell as normal on the open market. And when your buyer is ready to complete, you’ll staircase to 100% and complete the sale, usually on the same day, so you won’t need to raise any extra money for the remaining share.

But there are things to consider – find out more in our guide on Selling a shared ownership.

Shared ownership staircasing at a glance

In summary, if you want to staircase and own more of your shared ownership property start by:

1. Checking your lease for what’s involved

2. Contacting your housing provider for details on process and timings

3. Getting an early idea of total costs before you commit to spending money on formal valuations and remortgaging

4. Deciding whether buying more shares is affordable and right for you now and in the longer term

Frequently Asked Questions