Staircasing lets you buy a bigger share of your shared ownership home over time. Each time you do it, your rent goes down, and your stake in the property goes up. Buy enough shares and you can own the home outright.

This article looks at how staircasing works, what it costs, and what to think about before you start. Please note that this information is for general guidance only. Always speak to a qualified mortgage adviser before making any decisions. For more background, read our guide on what is shared ownership.

What is staircasing your shared ownership property?

When you buy a shared ownership home, you buy a share of it and pay rent on the rest. Staircasing means buying more of that remaining share.

Say you own 35% and you staircase to 50%. You’d only pay rent on the remaining 50%, not 65%. If you reach 100%, you own the whole property and pay no rent at all. You can find more details in our shared ownership mortgage glossary.

What are the benefits of staircasing your shared ownership home?

There are four main benefits:

  • Lower rent. Each time you buy more shares, your rent falls. This can make a real difference to your monthly costs.
  • More equity. The more you own, the more you gain if the property goes up in value.
  • Better mortgage options at 100%. At full ownership, you can access the full range of standard mortgages, not just shared ownership products.
  • Fewer restrictions. Shared ownership leases come with rules on how you use the property. At 100%, many of these no longer stand.

 

Shared ownership and buying more shares: are there any restrictions?

Yes. Check your lease before you start. Some properties have a cap at 80%, which means you cannot buy beyond that point. This is sometimes applied to keep homes affordable in certain areas.

Some leases also limit how many times you can staircase. Your housing association can tell you what applies to your home. You can also check our guide on shared ownership criteria.

Do I have to staircase?

No. Staircasing is optional. You can stay at your current share for as long as you like. Many shared ownership owners never staircase at all. If it does not make financial sense for you right now, there’s no pressure to do it.

How does shared ownership staircasing work?

The rules depend on which scheme you bought under. There are two: the original scheme and the new model introduced in April 2021.

Staircasing shared ownership if you bought under the original scheme

If you bought before April 2021, these rules apply:

  • The minimum share you can buy in one go is 10%.
  • You need an independent RICS valuation before each transaction. You pay for this.
  • The price of each share is based on the current market value, not what you paid originally.
  • The valuation is valid for three months. You must complete your purchase within that window.
  • Legal fees and a housing association admin fee will also apply.

 

New staircasing shared ownership rules

If you bought under the new model (April 2021 onwards), you have two options:

Gradual staircasing (1% per year): For the first 15 years, you can buy 1% more each year. The price is based on the original purchase price, adjusted using the House Price Index. You don’t need a full RICS valuation. Fees are much lower. You can’t use this route to buy 2%, 3%, or 4% at once – only 1%.

Standard staircasing (5% or more): Under the new model, the minimum standard increment is 5%, down from 10%. A RICS valuation is still needed, and fees apply, but it’s easier to staircase in smaller steps than before.

Not sure which model applies to you? Ask your housing association.

Stamp duty and staircasing: how does it work?

Stamp duty on staircasing can be complex. When you first bought, you may have paid stamp duty on the full market value or just on your initial share.

When you staircase, stamp duty may become payable again. Under the new model, this is triggered when your total ownership reaches 80% or more. Under the original scheme, the rules vary. Get advice specific to your situation before you complete any staircasing transaction.

How do I pay for additional shares of my shared ownership property?

There are two ways to pay:

  • Cash savings. If you have enough saved, you can fund the transaction without a bigger mortgage. This is common for the 1% annual route, where the cost is usually small.
  • A larger mortgage. For bigger transactions, most people borrow more. You can either get a further advance from your current lender or remortgage to a new deal.

 

Your lender will carry out source of funds checks either way. If you need a mortgage offer, get that sorted early. Offers expire, and delays can cause problems close to completion.

Can I get a staircasing mortgage?

Yes. If you need to borrow, you can apply for a further advance from your current lender or remortgage to a new one. Not all lenders offer shared ownership mortgages. The criteria may also have changed since you first bought.

A specialist broker can help you find the right product. This is especially important if your finances have changed since your original purchase.

Do I need a deposit to staircase?

You don’t pay a deposit in the traditional sense. But you do need to fund the purchase, either from savings or by borrowing more. If you’re taking out a larger mortgage, your lender will look at your loan-to-value ratio based on your new, larger share.

How many times can I staircase?

Under the original scheme, your lease will set a limit. Many leases allow up to three transactions before you reach 100%. Check yours to be sure.

Under the new model, the 1% route is available once per year for up to 15 years from your purchase date. Standard staircasing (5% or more) can take place at any time, subject to your lease.

If your lease caps your ownership at 80%, you’ll not be able to go beyond that point. Once you reach 100%, there’s nothing left to staircase.

Final thoughts

Staircasing can be a good move. But it’s not right for everyone. It depends on property values, your mortgage situation, and whether the savings on rent outweigh the extra mortgage cost.

Get specialist advice before you start. A qualified mortgage adviser can go through the numbers with you and help you decide if the timing is right. Pepper Money works with specialist brokers who understand shared ownership. You can find a broker through us today.

 

This article is for general information only and does not constitute financial advice. Your circumstances will affect what is available to you. Always speak to a qualified mortgage adviser before making any decisions.