What Costs Are Involved in Staircasing?

If you’re considering staircasing, one of the first questions you’ll probably ask is: how much will it cost?

The answer depends on several factors, including how much additional share you want to buy, the current value of your home, and the type of lease you have.

Understanding the costs involved before you begin can help you budget effectively and decide whether now is the right time to increase your share of ownership.

The Cost of Buying Additional Shares

The biggest cost involved in staircasing is the purchase of the additional share itself. Shared ownership property values increased 88% from £164,600 to £309,700 over 14 years making the investment to staircase worthwhile to take advantage of the equity gain.

The price is calculated using the current market value of your home, based on a RICS valuation. This means the amount you pay is not linked to the price you originally paid when purchasing your first share.

For example, if your home is valued at £250,000 and you’d like to purchase an additional 10%, the cost of that share would be £25,000.

The amount you choose to buy will determine your overall cost, whether you’re increasing your share by a small percentage or making a larger move towards full ownership.

What Is 1% Staircasing?

Some shared ownership leases allow homeowners to staircase in increments as small as 1%, once per year for the first 15 years of their ownership.

This option was introduced to make staircasing more accessible, allowing residents to increase their ownership gradually rather than saving for a larger share purchase.

For example, if your home is worth £250,000, a 1% share would be worth £2,500.

This can be a helpful option for homeowners who want to start reducing their rental share but may not be ready to purchase a larger percentage.

Whether 1% staircasing is available depends on the terms of your lease, so it’s worth checking your documentation or speaking to the Homeownership Team.

Costs for 1% Staircasing

One of the key benefits of 1% staircasing is that the process is usually simpler than a standard staircasing transaction.

If your lease allows you to staircase by 1%, you will not need:

• A RICS valuation
• A solicitor
• A mortgage lender’s involvement

This means the only cost may be the price of the 1% share itself, making it a more affordable way to increase ownership.

The exact process varies depending on the lease you hold, so it’s important to check the requirements that apply to your home.

Costs for Standard Staircasing

If you’re purchasing a larger share, there are several additional costs to consider alongside the share purchase price.

Valuation Fees

A RICS valuation is required to establish your home’s current market value and calculate the cost of the share you’re purchasing.

The valuation must usually be carried out by a qualified RICS surveyor and remains valid for a limited period.

Legal Fees

A solicitor or conveyancer will normally be needed to complete the legal work associated with the transaction.

Legal fees can vary depending on the complexity of the purchase and whether you’re staircasing with or without a mortgage.

Mortgage Costs

Whilst lower mortgage rates are expected to improve staircasing activity in the coming years, if you’re borrowing money to fund your staircasing purchase, there may be additional lender costs to consider.

These may include mortgage arrangement fees, valuation fees requested by your lender, or other administration charges.

Will Staircasing Save Me Money?

While staircasing involves upfront costs, purchasing a larger share in your home can reduce the rent you pay on the portion you don’t own.

For many homeowners, this is one of the main reasons for staircasing.

The larger your ownership share, the smaller the share on which rent is charged. In some cases, homeowners eventually staircase to 100% ownership, meaning rent is no longer payable.

It’s important, however, to consider the full picture, including mortgage repayments, service charges and any associated transaction costs.

Is Staircasing Worth It?

The answer will be different for every homeowner.

For some, purchasing a 1% share is a manageable way to begin increasing ownership. For others, buying a larger share can provide a more significant reduction in rent and move them closer to full ownership.

Before making a decision, it’s worth reviewing your finances, considering your long-term plans and understanding all of the costs involved.

Ready to Learn More?

If you’re thinking about staircasing, our Homeownership Team can help you understand the options available under your lease and explain the costs involved.

Visit our Staircasing Guide for more information about the process, eligibility and frequently asked questions.