It is not always easy to buy a home. When people don’t have enough funds for buying a new home, they can opt for shared ownership. This method is becoming more common these days because of its transparency and ease in dealings. Staircasing is an easy method which will help you own a property without spending a huge amount all at the same time.
What is staircasing?
The process of shared ownership is very simple, all you have to do is get a form from the housing association and fill it up. You can buy the shares of property and own that portion of the property. You will have to pay the rent for the percentage of shares that you have not yet bought.
You also get an option to buy more shares of the property or the property as a whole. This process is called as staircasing.
Mortgage
If you are getting ready for staircasing, first find a building society or mortgager in your locality who is willing to provide you with another mortgage. The amount you are able to raise will help you decide the size of the further shares you are able to buy. If you are planning to change the mortgage company, you will have to check if there are any redemption penalties. You can also depend on a financial advisor, who can advise you in such situations.
Once you have enough funds, find a good solicitor. The processes involved with staircasing are even more intricate than that of shared ownership.
Valuation
You should first submit a written application showing your interest to purchase further shares. Once they receive the application they will appoint a value. The association will generally instruct an independent and qualified valuer who is acceptable for both you and the association. You can suggest the names of valuer along with their details, but the final decision will be made by the housing association. You will have to pay the valuer.
The housing association may not agree on the valuation conducted by the estate agent or the bank from which you are borrowing the money. This is conducted for lending loans and will not be independent. The valuer will consider the market value and fix a cost price for the shares based on this value.
Value of Improvements
The value of any improvements made by you or any previous occupant to the property will not be considered while calculating the value of the shares. The improvements may include any extensions made to the house, central heating system, plumbing and fixtures etc.
Expiry of valuation
Once the housing association gets a report of valuation, they will inform you about the value of the property and the price of shares within a week or so. The valuation will be valid for a span of three months. You will have to complete the purchase within the specified time limit.
Completion
After three months, if you intend to continue, then you will have to conduct a new valuation from the beginning and pay a new valuation fee. If you decide move forward with the transaction after getting the notification of the valuation, you should inform the housing association in writing. You should also provide the details of your solicitor to the association.
Check the lease
But there some leases which hinders you right to purchase the entire lot of the shares.
It is crucial to check the existence of such a clause in your lease. You can check it with the housing association. A good conveyancing solicitor will help you in this regard.
Photo courtesy: ChicagoGeek
