Shared Ownership and Staircasing
There are a vast number of homes available to purchase under shared ownership schemes, such properties include new build and more established developments.
The shared ownership scheme allows you to purchase a percentage of a property, the minimum being 25%, and you then rent the remaining share under a shared ownership lease. The lease is usually drafted in a way that allows you to "staircase" which means to buy additional shares in the property until you own 100% and can acquire the freehold. There are some instances where you may be prevented from acquiring 100% of the property, usually where you are buying a property situated in an area which is protected or in a development for the elderly or disabled. Leases that restrict you purchasing 100% are known as 'fixed equity' leases, your legal advisor will report to you on the limitations of the lease during your purchase.
Shared ownership properties are a little more complex to sell as the share ownership lease often gives the housing association / authority the right of first refusal, this is a right to buy the property back from you at the market value should you decide to sell it. If the housing authority do not chose to operate the buy-back provision then you will be allowed to sell the property on the open market.
When you are ready and have the funds available to purchase some more equity in your shared ownership home you will need a legal advisor to complete the process on your behalf. It is your decision whether to purchase additional shares in the property, you will not be forced to do so.
One thing you must consider is that any extra shares you wish to purchase are calculated based on the current market value at that point in time. It will not be based on the value of the property when you purchased your initial share. You will also be liable to pay for a valuation of the property, legal fees and possibly Stamp Duty Land Tax.
The higher percentage of the property you own the less rent you will be required to pay on the remaining share. Once you own 100% of the property, providing your lease allows you to acquire this amount, you will no longer be required to pay rent.
Full staircasing requirements will be detailed in your lease. All leases vary but your legal advisor will be able to discuss with you further based on the provisions in your lease.
To find out more or discuss your individual requirements in further detail, our Conveyancing experts will be delighted to help. Contact us today on 01603 693500 or email us using the 'Make an enquiry' form.