Guide to Staircasing
As a Shared Owner you are entitled to purchase additional shares (equity) in your home which is called Staircasing. The process which you are required to follow will be outlined in your Lease. You need to ensure that you have your rent account up to date and that you have budgeted for all the costs involved including such fees as:
- the premium
- Your own and Thrive’s valuation
- administration charges
- mortgage fees
- solicitor’s costs
Buying additional shares in your home will reduce the amount of rent that you pay, as you will own more of the property on completion. It is important to note that the service charges that you pay will remain the same.
You should always seek advice from your mortgage lender or financial advisor on the impacts buying additional shares will have on your loan agreement.
To begin the process, we will collect a payment from you. This includes an administration fee for processing your purchase, as well as the cost of an RICS qualified valuer to value your property. We will ask them to disregard any improvements that you have carried out to your home and are registered on your account (you should have sought consent for this improvement from Thrive before you carried out those works). The valuation will be valid for a period of three months where you will pay for any revaluations if this expires during the process. If the valuation changes during this time, the sales price will be amended accordingly.
When we have the valuation to hand, we will calculate the cost of the Tranche (increase that you would like to purchase as a %) and send you an offer to sign and return to us with your solicitor’s details. We will then be able to send the application to our solicitors who will take the sale to you to completion.
You own a 40% share and you wish to purchase another 20% Tranche so that you own 60% of your property.
The valuation that is carried out states that your property is now worth £100,000 and so the 20% share will cost you £20,000.
You pay that amount to Thrive (along with all other associated fees) and you will then own 60% of the property.
Your new rent will be calculated on the 40% part of the property that Thrive owns. Your service charges will remain the same.
Staircasing to 100%
If you own a 40% share and you wish to purchase the remaining 60% share, we will carry out the same process as the working example above. In this instance, your premium will be £60,000 to purchase the final 60% of the property.
If you live in a house, you will normally be entitled to purchase the Freehold Title of the property upon completion at the same time. This will mean that our Lease agreement terminates, and you will no longer have a relationship with Thrive as a Landlord. If Thrive or a Third-party Management company carries out services and works to the estate that you live on, you will continue to pay for that service.
If you live in a flat, you will no longer be a shared owner. You will become a 100% Leaseholder where you continue to pay service charges and ground rent to Thrive. The key change is that you will no longer have any rent obligation. Another benefit is that you may have a reduction in the number of restrictions in your lease such as more flexibility in how you sell it. You will also benefit from higher equity, which is relevant if the market value of your home increases.
Reverse staircasing is where a landlord may agree to buy back some or all of your shared ownership property. This would only considered and agreed in extreme circumstances where you can evidence your homes at risk of repossession and you have already exhausted all solutions with your mortgage lender. You should always speak with your lender or financial advisor for help and advice as to the best solution to your circumstances. To speak with us about this more, please contact us at firstname.lastname@example.org