Staircasing is a term commonly used in the context of conveyancing and property law, particularly relating to shared ownership schemes. Shared ownership is an affordable housing option that enables individuals to purchase a percentage of a property, typically between 25% and 75% while paying rent on the remaining share. Staircasing is the process by which an individual increases their ownership share in the property over time, ultimately aiming to achieve full ownership. This outline will discuss the concept of staircasing in conveyancing, its benefits, the process involved, and potential challenges faced by homeowners.
Concept of Staircasing
Staircasing is an incremental approach to property ownership, allowing those who may not initially afford a full mortgage to enter the property market. As the homeowner’s financial circumstances improve, they can increase their ownership stake by purchasing additional shares in the property. This is achieved through a series of transactions, with each step referred to as ‘staircasing’.
Benefits of Staircasing
- Affordability: Staircasing enables individuals to buy a property at a more affordable price, as they are only purchasing a share of the property initially. This can be particularly helpful for first-time buyers who may struggle to save for a large deposit.
- Flexibility: Homeowners can staircase at their own pace, depending on their financial situation. This allows for a more tailored approach to property ownership, accommodating individual circumstances and needs.
- Increased equity: As homeowners purchase additional shares in the property, they build equity and can potentially benefit from an increase in property value over time.
- Reduced rent: As the homeowner’s ownership stake increases, the proportion of the property they rent decreases, ultimately reducing their overall housing costs.
- Full ownership: By staircasing to 100% ownership, homeowners gain complete control over the property, enabling them to sell it without restrictions or make modifications as they wish.
Staircasing Process
- Eligibility: Before starting the staircasing process, homeowners must ensure they meet the eligibility criteria specified by the housing association or shared ownership provider. This may include a minimum residency period and be up-to-date with rent and service charges.
- Valuation: A RICS (Royal Institution of Chartered Surveyors) accredited surveyor must assess the property’s current market value. This valuation will determine the price of the additional share being purchased.
- Mortgage advice: Homeowners should seek financial advice to determine the best way to finance the additional share purchase. This may involve remortgaging or arranging a top-up loan.
- Legal representation: A conveyancing solicitor should be appointed to handle the legal aspects of the staircasing process. They will liaise with the housing association or shared ownership provider and ensure that all necessary paperwork is completed.
- Completion: Once the financial and legal aspects have been finalised, the new ownership share will be registered with the Land Registry, and the homeowner’s rent will be adjusted accordingly.
