Increasing the portion of the property you own is a smooth process – and if you want to move on, you can easily sell your home too.
As buying a home becomes more expensive, especially in London, many people are choosing to use the Shared Ownership scheme as a way to get onto the property ladder.
In doing so, you buy a share of a home, and pay a mortgage on that part, while paying rent to a housing association – like Notting Hill Genesis – on the remaining part.
Since you are only purchasing a portion of the home, the deposit required to secure a mortgage is lower than if buying on the open market (often as low as four figures!), as are the monthly mortgage payments.
Many buyers start with purchasing the minimum share – 25 per cent. The brilliant thing about Shared Ownership is that it allows you to buy more of your home as and when you can afford to do so. This is called ‘staircasing’. Eventually, you can own your home outright.
But how does this work in practice? What do we really mean when we talk about staircasing?
When you buy a Shared Ownership home with a housing association, you can ‘staircase’ the share of the property you own whenever you want to.
The first thing you will need to do is to get your home valued by a RICS surveyor. The housing association would then use this valuation to work out the price of the share you want to buy. The value given to your home is not dictated by them, but is dependent on market circumstances.
After this, you can speak to a mortgage lender to discuss what mortgage you would need to cover that portion of the home. Usually this would involve taking a further advance from your lender, or a remortgage.
The time it takes people to purchase more shares from the moment they decide they want to do so varies from around four weeks up to three months. It depends on a number of factors including when you can get your home valued, and how quickly your solicitor can support you in buying more shares.
There are certain costs involved, including the fee for valuing the property, mortgage arrangement fees, legal fees, and of course the cost of the extra share you are purchasing.
Once you have bought your extra shares, your rent will go down in proportion with the share you have bought. More guidance on the process of staircasing can be read here.
Why do buyers staircase?
Increasing the share of the property you own not only means you are working towards full ownership of your home, it also means you are paying more of the mortgage and therefore are more likely to benefit from rising property prices if you to choose to sell your home. You will also pay less rent on the share that you don’t own.
If you increase your share to 100%, you will likely have access to a wider selection of mortgage options as you’ll be eligible for a standard mortgage rather than a Shared Ownership one.
Do all buyers need to staircase? No, increasing the share you own in your home is not essential, and in fact many buyers prefer to keep the share they purchased and pay rent on the remaining part, for the duration of time they live in the property.
Selling your home and moving on
In some cases, you may wish to sell your Shared Ownership home, perhaps to move to another location or to purchase another property. You can sell your home at any time, regardless of whether you have staircased or not.
An important thing to note is that if you haven’t staircased to full ownership, the housing association will take the lead on selling your home through Shared Ownership in the first instance and will have eight weeks to do this.
If it does not find a buyer in this time, you can choose to sell your property privately – as you would do if you’d bought it on the open market.
Explore Shared Ownership and our homes on offer
Find out more about our homes, which are available to buy through Shared Ownership here. All are located in up-and-coming areas of London with thriving new communities, excellent transport connections and access to green space.