If you are a shared ownership homeowner, you may have heard of the term “staircasing”.
Staircasing refers to the process of purchasing additional shares in your shared ownership property, gradually increasing your ownership percentage. This can be an excellent opportunity to gain more control over your home, reduce rental payments and potentially increase your property’s value. In this blog, we will explore what staircasing entails, its benefits and when the best time to do it might be.
Staircasing allows shared ownership homeowners to buy additional shares in their property, beyond their initial ownership percentage. The process involves purchasing these additional shares from the housing association or developer that owns the remaining portion of the property. As you acquire more shares, your ownership percentage increases and your rental payments decrease accordingly.
Benefits of Staircasing:
- Increased Ownership: Staircasing provides an opportunity to gain more control over your home. As you purchase additional shares, you move closer to full ownership, potentially giving you greater autonomy in decision-making and potentially reducing restrictions associated with shared ownership (for example being able to let the property out).
- Reduced Rental Payments: With each share you purchase, your rental payments decrease proportionally. This can significantly improve your monthly cash flow, allowing you to allocate funds towards other financial goals or investments.
- Potential for Capital Appreciation: As you increase your ownership percentage, you also have the potential to benefit from any increase in the property’s value. If the market value of your property has risen since your initial purchase, staircasing allows you to capitalise on this appreciation and potentially build equity.
- Improved Mortgage Options: Owning a larger share of your property may open up more favorable mortgage options. As your ownership percentage increases, you may be eligible for lower interest rates or access to a wider range of mortgage products, potentially reducing your overall borrowing costs.
When is the Best Time to Staircase?
The decision to staircase depends on various factors, including your financial situation, long-term goals and the current property market conditions. Here are a few scenarios when staircasing might be advantageous:
- Improved Financial Stability: If your financial situation has improved since your initial purchase, such as an increase in income or savings, it may be an opportune time to consider staircasing. Assess your affordability and determine if purchasing additional shares aligns with your long-term financial goals.
- Favourable Market Conditions: If property prices in your area are rising, it may be advantageous to staircase sooner rather than later. By purchasing additional shares at a lower price, you can potentially benefit from future capital appreciation. It is always worthwhile consulting with a valued or surveyor on this point.
- Reduced Rental Payments: If you find that your rental payments are becoming burdensome, staircasing can help alleviate this financial strain. By gradually reducing your rental obligations, you can free up funds for other purposes or save for future investments.
- Long-Term Homeownership Goals: If your ultimate goal is to own your shared ownership property outright, staircasing is a crucial step towards achieving this. Consider your long-term plans and evaluate how staircasing fits into your overall homeownership objectives.
Staircasing offers shared ownership homeowners the opportunity to increase their ownership percentage, reduce rental payments, and potentially benefit from property value appreciation. The decision to staircase should be based on your financial circumstances, long-term goals, and the current property market conditions. By carefully assessing these factors and seeking advice from housing associations, developers, and financial professionals, you can determine the best time to staircase and take a step closer to full homeownership and financial freedom.
Alexander JLO are one of the country’s leading specialists when it comes to staircasing a shared ownership home. With decades of experience and links with some of the UK’s largest housing associations we are best placed to assist you in making your staircasing dreams become a reality.