Shared Ownership and Staircasing Solicitors
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Buying or selling shared ownership property is a great way for first-time buyers or those struggling to get onto the property ladder by making homes more affordable. The procedure of buying through shared ownership requires an expert shared ownership lawyer who understands the process and the steps involved in staircasing.
The residential property team at Holden Smith Law has been assisting clients with shared ownership and staircasing since 2019. Helping thousands of clients along the way.
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How shared ownership works
Shared ownership is a method of buying a home where you purchase a share of a property. After you buy a share, you will then pay a rent on the remaining part of the property. Through shared ownership you can buy anywhere between 25% to 75% of a property at its full market value. You buy properties from a social landlord or housing association who will pay the rent to.
Once you have purchased a share in a property, you can arrange to buy additional shares in the property, known as staircasing. Staircasing helps you gradually increase ownership of your home while reducing the rent you pay. Depending on the lease you have the landlord you may be able to purchase 100% of the property. Although, some leases will not allow you to staircase up to complete ownership of the property to help future buyers. This is why you will need an expert solicitor or conveyancer who will ensure if you can or cannot staircase to 100% ownership.
Shared ownership purchases are a good way for households to get on the property ladder.
Who is eligible for shared ownership?
To buy through shared ownership, you must meet criteria set out by the housing associations or social landlords. The criteria you must meet are:
Your household income must be less than £80,000 per year or £90,000 per year if based within London.
You cannot afford all the deposit and mortgage payments for a home.
If you meet both above criteria, then you must also match one of the following:
You are a first-time buyer.
You used to own a home but can no longer afford one.
You are creating a new household because a previous relationship has broken down.
You are moving from one share-owned property to another.
You currently own a home but can no longer afford a new home that meets your needs.
For some properties, you will also need to prove that you have a connection to the area. This can be that you currently live or work in the area.
This applies to people across England and Wales, and the criteria may differ for the rest of the United Kingdom. For more information about whether you are eligible for shared ownership, please visit the government website.
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What are the steps in staircasing?
The process and steps involved with staircasing can be extremely complicated. Having the right solicitor or conveyance is essential.
If you are considering purchasing more shares in your home, then you should follow these steps to ensure a smooth purchase:
Get a full-market value of your property.
Contact your housing association or social landlord to inform them of your intention to purchase additional shares.
Receive confirmation from the association that you can buy more shares and pay any fees and surveyors.
The housing association/social landlord will then assess the value of the property itself. If the property value differs from the valuation you received, then the purchase price will rely on the most recent valuation. From this point as well, you must complete your purchase within three months. If you fail to complete the purchase, you will need to get a new valuation.
You will receive confirmation of the purchase price for the shares.
This is where you appoint a solicitor or conveyancer to carry out your legal work.
All property owners must confirm in writing that they accept your offer to purchase the property shares.
The housing association or social landlord’s solicitor will draft up paperwork for your solicitor or conveyancer to review.
Once you and your lawyer look over all the documents, you will agree on the terms. After that, you will sign a "Memorandum of Staircasing". This document essentially acts as a receipt of your purchase.
Your solicitor or conveyancer will document your purchase and register it, acting as proof of your ownership.
Selling a shared ownership property
If you are looking to sell your shared ownership property, the steps for selling it differ from those for selling a fully owned property. One key difference is that your housing association or social landlord will have the first refusal to purchase your shares of the property from you. If they do not want to buy your shares in the property, then they may help you find a buyer.
Our residential property team can help you sell your shares in a property. We have experience of selling to new buyers or back to the housing associations and can work with you to ensure a smooth sale. Contact our team today to get started.
Contact our shared ownership solicitors in Leeds, Huddersfield, Manchester, Horsforth and Queensbury.
Our shared ownership conveyancing team can guide you through the process of buying or selling shares in a property. We will explain all the steps to you and offer expert legal advice.
Although we base ourselves in the North of England, we can assist clients across England and Wales through our app. Our app allows clients to send their documents to us and receive 24/7 updates on their case.
We are regulated by the Solicitors Regulation Authority (SRA). This helps us to provide a high standard of service and quality to all clients. We are also accredited by the Law Society for quality conveyancing. We follow strict guidelines to ensure that we meet this requirement.
FAQs
Will I have to pay stamp duty?
If you are buying a property through shared ownership, there are two routes you can go down for paying Stamp Duty Land Tax (SDLT).
The first option is to pay the stamp duty at the full market value. This route is the best option for buyers who are planning to purchase the entire property in the future. This option may cost more in the short term however, when buying additional ownership you will not have to pay any further stamp duty. It is worth noting that this option is not always available to buyers as it depends on the terms of your lease. Having a solicitor or conveyancer who understands these transactions will be able to advise you on this.
The second route is that you pay SDLT on the share that you are purchasing and your rent. When purchasing any additional shares, you will have to pay SDLT. The amount you pay will vary depending on the rate applicable to the purchase, meaning you may incur additional costs in the long term. This method of paying stamp duty is more complicated, it requires specialist advice to calculate the amount you must pay.
If you are a first-time buyer, the current SDLT first-time buyer rules apply. You do not have to pay stamp duty on any properties valued at £300,000 or 5% for any property valued between £300,001 to £500,000. If the value of the property exceeds £500,000, then you will not be eligible for the first-time buyer rules.
How long does it take to buy or sell a shared ownership home?
Typically, conveyancing for shared ownership properties can take around 2-3 months, but this timeframe may be extended depending on the property and the presence of any issues.
What homes can I buy through shared ownership?
Under the shared ownership schemes, you are allowed to purchase the following homes:
New-build properties
A home through the shared ownership resale scheme
A property that matches your requirements if you have a long-term disability
Do I have to buy more shares in my property?
No, you do not. If you are happy with the rent rate and the percentage of ownership of the property you own, or if your financial circumstances change, you do not have to purchase additional shares.
Will my shares be the same price?
When staircasing, the price to pay for the shares varies. This is because the share price is dependent on the market value of the property each time you buy more shares.
Can my request to buy more shares be declined?
If you fail to meet the requirements laid out by the housing association or social landlord, then they may reject you from buying more shares in the property. There may be a restriction within the lease of some homes, preventing you from buying more than a certain percentage of the property. This is common with properties based in rural areas.
Most cases will only allow you to staircase the property for a maximum of three times during your time at the property.
Can I make improvements to the home and increase its value if I don't own it outright?
As a shared owner, you can decorate and make small changes to your home. The landlord or housing association must agree to any larger changes, whether structural or external. This lease typically outlines this when you initially purchase a share in the property.
Contact us.
Contact our team to get a quote for buying or selling shares in your property. Contact one of our offices or complete our online enquiry form to get started.
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