Staircasing — Buying More Shares in Your Home

What is staircasing?

Staircasing is when you buy more shares in your home, increasing your share of the equity and reducing your rent charges. The price you pay for each share you want to buy will depend on the value of your home at that time. Instead of increasing your share you may just want to buy it outright which means you will no longer pay any shared ownership rent to Plumlife.

If you live in a flat, or a house with communal services like gardening or maintaining play areas, you will still have to pay a service charge.

There can be some limitations on buying more shares and not all of our properties allow you to staircase.

Your lease may restrict how much you can buy — by a certain amount or a certain percentage — so check your lease before you begin.

If you live in a house you will normally be granted the Freehold Title on the property, but in certain circumstances Plumlife may not be able to do this.

If you live in a flat then, even if you have staircased to 100% ownership, you keep your current lease but certain parts of it no longer apply.

You should have a copy of your lease from when you purchased your home. You you can get a copy from HM Land Registry by applying online at https://eservices.landregistry.gov.uk, or request a copy from Plumlife but a fee will be payable.

Buying more shares in your home has a number of benefits:

  • You reduce the amount of shared ownership rent you are paying to Plumlife, or stop paying altogether if you buy your home outright
  • When you decide to sell your home, the more shares you own, the more profit you will make if the value of your home has increased

Every time you staircase, there will be expenses you need to pay. Before you decide to staircase, please investigate the fees involved. These will include:

  • Valuation fees — required by Plumlife in accordance with your lease.
  • Legal expenses — staircasing will involve changes to your existing lease which will require the services of a solicitor. The solicitor will charge you for this service.
  • Mortgage fees — if you are applying to change lender (re-mortgage) to buy additional shares or to get a better interest rate, you will need to pay the lender’s valuation fee and possibly a mortgage arrangement fee. You may also have to pay penalty charges to your current lender if you re-mortgage before the end of a pre-agreed deal or product that ties you in to set a timescale.
  • Rent and service charge arrears — if you are behind with your rent or service charges, you will need to bring these up to date before the staircasing can be completed.

1. Instruct a valuer

The Valuation

Your valuation needs to be done by a valuer who is a member of the Royal Institution of Chartered Surveyors (RICS). Please note an estate agent, bank or building society valuation is not classed as an independent valuation and will not be accepted.

The valuer will ask you about your rent, service charges and improvements you have made to your home. They will then separately assess any improvements you have made to your home.

You must have asked our permission before making any improvements. Improvements made without our permission may not be considered when you come to staircase and the valuation should be based on the property having been maintained.

The price will be a percentage of the full market value. For example, if the full value of your home is £200,000 and you want to buy the remaining 50%, the cost will be: £200,000 x 50% = £100,000.

The valuer will send you their report and invoice you directly.

Improvements

The price of the share you're buying will be a percentage of the value without the improvements, as shown in the following example.

The full value of your home is £203,000. This includes £3,000 of improvements you have made. The value without your improvements is £200,000 (£203,000 minus the £3,000 of improvements). This is known as the 'net value'. If you own a 50% share and want to buy the remaining share, the price will be 50% of the net value. That is, £200,000 x 50% = £100,000.

Not all improvements add value. Carpets, curtains and furniture which haven't been fitted do not count as improvements. Some improvements may fall in value due to wear and tear. The valuer must list the improvements on the report, so make sure you're clear what should be included.

2. Arrange finances to buy the extra share

We recommend that you speak to your current lender or an independent financial advisor (IFA) when deciding on the size of share that you can afford and to see how much money you will be able to borrow.

3. Decide which size share you are able to buy

The extra shares come in certain sized 'chunks' set out in your lease, usually 20% or 25%.

The minimum amount you can buy is 10% and then by 5% i.e. 10%, 15%, 20%, 25% and so on.

Please be aware that some of our homes cannot be bought outright. On a limited number of developments you will only be able to buy a share up to 70%, 75%, 80% or 95%.

Your lease includes information about staircasing restrictions, if there are any.

If you did not pay stamp duty on the full value of your home, you may need to pay additional stamp duty. We cannot advise on stamp duty but your solicitor should be able to answer any questions for you.

4. Choose and instruct a solicitor

You'll need to use a solicitor when you buy an extra share in your home. Some people prefer to use the solicitor who dealt with their original purchase — they should have easier access to information about your property. Others are solicitors commended by their mortgage lender. We need the details of your solicitor before you can go ahead with staircasing.

5. Send us your staircasing instructions

You'll need to fill out the staircasing instruction form and send this in to us with a copy of your valuation and details of your solicitor. You can post this to us or email it to: resales@plumlife.co.uk. Please send all your documents at the same time. We won't be able to start processing your application until we have the staircasing instruction form, the up-to-date valuation and your solicitor’s details.

Keep in mind:

  • Your valuation is valid for three months. If this expires before you complete your purchase you will need to pay for an updated valuation.
  • You must arrange finances quickly, including the mortgage, as this can take several weeks
  • Ideally, you should choose a solicitor that is familiar with staircasing. If you change solicitors during the process, this will slow the completion and may result in you needing an updated valuation.
  • If for any reason you decide not to proceed with the purchase of more shares in your home, after we instruct the solicitors, you'll need to pay our solicitors' fees.

So what happens next?

  • We'll write to our solicitor and your solicitor with the details of the transaction
  • Our solicitor will send out the legal paperwork to your solicitor and to us for signing
  • Once the legal paperwork has been completed and your funds are ready, your solicitor will arrange a date to complete the purchase of your extra share
  • Our solicitor will ask us to check if you owe any rent — we'll collect any amounts when the purchase is completed
  • Please note that if you pay your service charges directly to a managing agent, you will need to get an up to date statement of account to show that there are no arrears. Your solicitor will then pass this on to our solicitor. We'll not be able to complete without this. You'll need to pay the whole service charge demand in advance, even if this has just been added to your account.
  • After the purchase is completed, we will amend your rent account according to your new share, or end your tenancy (if this applies).
  • If you're buying 100% of your property, your solicitor needs to arrange to transfer the title into your name for leasehold properties. If we are not the freeholder of your property, you will need to contact whoever is and arrange to pay service charges to them direct.