Your Guide to Staircasing How to buy further shares In your Shared Ownership home
Staircasing What Is Staircasing? As a current shared owner you may wish to buy another share of your property or even buy your property outright. This process is known as staircasing and it enables you to own a greater proportion of your home. The greater the share you buy in your home the less rent you will pay to Estuary Housing Association. If you staircase to 100% you will become an outright owner and will no longer have to pay rent! Buying additional shares in the property is know as interim staircasing. However if you staircase to 100% (either in one transaction or after one or two interim staircasings) the share taking you to 100% ownership is known as final staircasing. When this occurs you own the property outright and are no longer a shared owner. In this case you will not pay rent to Estuary but you will still pay the service charge and may have to pay an annual ground rent. There are no restrictions in the majority of cases; however we would recommend in the first instance that you refer to your Lease. This may require assistance from your legal representative. We do not allow staircasing if you have arrears with your service charge and/or rent. Do I Have To Staircase? You don t have to staircase - it is entirely up to you. Most people who live in Shared Ownership properties staircase to reduce the rent they are paying. As the rent is paid on the share that Estuary Housing Association owns, by purchasing further shares the rent is reduced. When you come to sell your home, the greater percentage you own, the more profit you will make if the value of your home has increased. How Do I Staircase? By requesting this information or downloading this brochure, you have made the first step towards buying further shares in your property. 2 estuary.co.uk sales@estuary.co.uk 0300 304 5000
Instruct A Valuer The additional equity purchased will be based on the current market value of the property at the time of application to staircase. In order to determine the current market value you will be required to contact an independent Royal Institute of Chartered Surveyors (RICS) qualified valuer. The valuation should be accompanied with at least three comparable property values. Please note that under the terms of your Lease an estate agent s valuation is not acceptable. The valuation is valid for 3 months and your purchase of the additional share should complete in this time. If we allow the transaction to extend beyond the three month period the property will have to be re-valued. This can normally be in the form of an extension or desktop valuation from the surveyor who carried out the original inspection and they would therefore not need to revisit the property. There could be an additional cost for this and please bear in mind that if the value has increased then you will have to proceed at a higher value. 3
Staircasing Appoint A Solicitor An increase in the share of your property will involve changes to your existing Lease and will require the professional services of a solicitor. Before instructing Estuary Housing to proceed, it is best to select your solicitor so that you are ready to act promptly when you receive the valuation report, which is only valid for three months. We recommend using the solicitor who originally dealt with your purchase as they are most likely to have details regarding your original purchase. If this is not possible we can assist you by providing you with a list of client-recommended solicitors. We recommend you: select a solicitor who charges a fixed fee for their services; obtain a quotation before instructing your solicitor; choose a solicitor with knowledge and experience of Shared Ownership Leases. Financial Review 4 estuary.co.uk sales@estuary.co.uk 0300 304 5000
When you originally purchased your Shared Ownership home you would have had a financial assessment with our recommended financial adviser. From the time you originally bought your home to now, when you are considering buying more equity in your home, your personal circumstances may have changed considerably. As a responsible Housing Association, we suggest you have another financial assessment meeting with an adviser to ensure that the additional share being purchased is not likely to cause you financial difficulties in the future. The adviser will be able to assist you with your mortgage arrangements to buy the additional share if you want them to. If you would like to arrange your own mortgage, you should contact lenders and make sure you tell them you are buying additional shares in your Shared Ownership home. You must act quickly and stress to your lender that the staircasing valuation is only valid for three months; therefore it is imperative they act quickly to achieve this completion deadline to prevent you incurring additional costs. Did You Know? We can provide you with details of a financial adviser who will be able to assist if you email sales@estuary.co.uk. Once you have the mortgage offer, contact your solicitor to arrange to complete the staircasing transaction. They may need to arrange an appointment to go through the legal paperwork with you. When this has been completed, your solicitor will advise us of the date you intend to complete the staircasing transaction. We will then send out a completion statement which will confirm the increased share in the property you will own, along with the new rent payments if you are not staircasing to 100% ownership. Your rent account, if applicable, will be adjusted accordingly once you have completed the transaction. If you have taken out a mortgage for the share, you will pay an increased amount to your lender from the day of completion. 5
Staircasing What Are The Costs Involved In Staircasing? Every time you staircase you will have expenses to pay. Therefore, before deciding to staircase it s advisable to investigate the full costs involved and carefully consider the additional share you wish to buy. Some of the expenses you will have to pay are: The valuation fee Estuary s administration fee Legal expenses Stamp duty - this will need to be discussed with your legal representative. Mortgage fees - if you are applying to change lenders (re-mortgage) to buy the additional share, or to obtain a better interest rate, you will be required to pay the lender s valuation fee and you may be required to pay a mortgage arrangement fee. You may also have to pay penalty charges to your existing lender if you re-mortgage before the product end date. You must investigate this with your lender and mortgage advisor prior to applying to staircase. Please note that if you withdraw your application to staircase once solicitors have been instructed, you will be responsible for Estuary Housing's abortive legal fee as detailed in the Home Ownership Administration Fees booklet. 6 estuary.co.uk sales@estuary.co.uk 0300 304 5000
How Many Times Can I Staircase? You can usually staircase up to three times, with the third time taking you to 100% ownership. The minimum share that you can purchase is specified in your Lease but is usually in multiples of 25%. This will vary upon Final Staircasing depending on the initial share purchased. Your Lease will specify the staircasing provisions and the circumstances in which you may staircase. Leases do vary; for example some Leases allow you to staircase after three months whereas other Leases only allow you to staircase after the first 12 months have passed. Where you have purchased a resale property you may be able to staircase once you have owned the property for 3 months. What Are The Benefits Of Staircasing? You reduce the amount of rent you are paying to Estuary Housing - once you own 100% of your home you will not pay any rent at all. When you decide to sell your home, you will make more profit if the value of your home has increased. If you own 100% of your property you can sell your property on the open market using an estate agent of your choice. Becoming the outright owner allows you to maximise the profit from any major home improvements. Once you own 100% you will get back the full amount of any profit on the current market value when you come to sell your home. 7
Staircasing Do I Benefit From The Improvements That I Have Made To The Property? When you have your home valued for staircasing, the value is based on the current market value of your home which will include the home improvements you may have made. General home maintenance, repairs and redecoration are not regarded as improvements and will not increase the value of your home. The following list details works that are classed as improvements which may increase the value of your home but not always for as much as you originally paid for the work: New installation of central heating (less than 5 years old - if previously storage heating/ warm air); Double/triple glazing - windows/doors (less than 5 years old - if previously single glazed) New fitted kitchen (less than 5 years old) New bathroom (less than 5 years old) Conservatory (less than 5 years old) Loft conversion Extension Porch Addition of a garage (does not include replacement of existing structure) Addition of driveway and dropped kerb (does not include renewal of existing surfaces) Cavity wall insulation Please remember that you need to request permission and written approval from our maintenance team before carrying out any major improvements to your home. You will have had to provide us with estimates, quotations and relevant plans and local authority planning approval for the permission to be granted. Our surveyor may have also visited your home. 8 estuary.co.uk sales@estuary.co.uk 0300 304 5000
You will need to provide these documents if you wish major home improvements to be disregarded from your staircasing offer. If any of the above improvements are applicable and you wish for them to be considered please instruct your surveyor to provide two valuation figures - one with the improvements and one without. If the valuation of the property indicates that the value of the property is reduced due to lack of maintenance and repair, we will request a valuation of the property assuming the property had been maintained to a good standard. This is within the requirements of your Lease and the purchase price will be based on this figure. What Happens If I Staircase To 100% 9
Staircasing Once you have staircased to 100% you will no longer pay Estuary Housing Association any rent. However, if you are the Leaseholder of an apartment, you are still required to pay your service charge, management charges including any ground rent and Buildings Insurance, as we remain the freeholder of the apartment block. Leasehold Enquiries Questionnaire to enable the sale to proceed. If this is the case, you would be responsible for paying the cost of these Enquiries in advance. For information about fees, please refer to our booklet Home Ownership Administration Fees. If you own a house, the freehold of your home can be transferred to you when you have staircased to 100%. You will need to serve notice to Estuary requesting the freehold of the property be transferred to you (your solicitor will be able to advise you). There is no charge for this transfer; however you will have to pay your legal costs. Once this has taken place, you will no longer be charged for buildings insurance. In some cases you may still have to pay a service charge or estate management charge to Estuary Housing Association. If you live on an estate, you will be responsible for some of the communal cost. Please note that your Lease restricts you from selling your property for three months following final staircasing. Regardless of whether you live in a flat or a house, once you have staircased to 100% you are free to sell the property on the open market, usually with the professional services of an estate agent. If you pay a service charge, your solicitor will require Estuary Housing to answer their 10 estuary.co.uk sales@estuary.co.uk 0300 304 5000
Is There Any Reason Why I Would Be Unable To Staircase? Estuary Housing Association would not allow a Leaseholder to complete on the purchase of further shares if they are in either service charge or rent arrears. Some properties have a restriction on staircasing and, should this affect your property, details can be found in your Lease. You would not be able to staircase without the consent of all registered owners of the property. All Leaseholders named on the Lease/Title Deeds to the property must agree to the staircasing of the property and sign all necessary paperwork. Did You Know? Once you have staircased to 100% you are free to sell the property on the open market. 11
Stages To Staircasing 1 Contact Sales & Marketing Team to request application to staircase pack. 2 Search for a solicitor who has Shared Ownership experience to act for you. If you would like a list of solicitors please contact the Sales & Marketing Team at sales@estuary.co.uk. 3 4 Speak to your lender and/ or a financial adviser about purchasing a further share in your home to ensure you can obtain additional funds and then find out the costs involved. Instruct a RICS qualified valuer to obtain the current open market value of your home. Before you incur this cost it would be advisable to research the property market generally in your area to get an idea of current comparable property values. An Estate Agent s valuation is not acceptable, nor is a valuation carried out by a lender for mortgage purposes as this is not classed as an independent valuation. 12 estuary.co.uk sales@estuary.co.uk 0300 304 5000
5 Complete the staircasing application form and return along with the valuation and the Estuary staircasing admin fee to the Sales & Marketing Team. Please note that the valuation will be valid for 3 months from the date of the valuation is carried out. VALID 3 MONTHS Authorisation Form 6 If you or Estuary Housing Association feel that the valuation given is not a fair valuation, then the District Valuer Service can be instructed to re-determine the value of the property. The District Valuer Service s valuation will be final and binding on both parties. 7 We check the valuation report and issue the offer letter to you with an authorisation form. You check the offer and complete the staircasing authorisation form which requires the name and address of your solicitor, mortgage advisor and/or mortgage lender. 13
Stages To Staircasing 8 Instruct your solicitor. 9 Contact your mortgage advisor or lender and apply for your mortgage. 10 Return the Staircasing Authorisation Form to Estuary. Authorisation Form 11 Estuary instruct our solicitor to send the legal pack to your solicitor. 14 estuary.co.uk sales@estuary.co.uk 0300 304 5000
12 Your mortgage offer is issued. Send a copy to your solicitor to forward to Estuary s solicitor and also send a copy by email to Estuary - sales@estuary.co.uk. 13 Your solicitor completes the legal work and sets the completion date with our solicitor. 14 Estuary issues the completion statement which breaks down the staircasing transaction and confirms rent, service charges and ground rent application after completion. COMPLETION DATE SET 15 You complete the staircasing transaction before the three month expiry date of your valuation (failure to achieve the three month deadline will result in you having to pay for a new survey and the market value on which your purchase is based may have increased). 15
Registered Office: Estuary Housing Association Ltd 8th and 9th Floors, Maitland House, Warrior Square, Southend-on-Sea, Essex, SS1 2JY 0300 304 5000 sales@estuary.co.uk estuary.co.uk/staircasing Version 1-2017