So what is shared equity? You purchase a property and own 100% of it, but you obtain a mortgage for a certain percentage of the equity (e.g. 75%) and the developer and/or Government holds a charge (mortgage) over the remaining share (e.g. 25%); depending on the scheme, you may or may not pay rent on that 25% share. In simple terms, although you own the property outright, your main lender holds a legal charge over the property and, in addition, the developer and/or Government will secure a second charge over the property to secure the repayment of their share when you sell or decide to pay the equity loan off.

So what is shared ownership? You purchase only a share in the property (e.g. 75%) and the local authority, developer or housing association retains the remaining share (e.g. 25%) and you pay rent on that share. In simple terms, you have a share in the property, which is usually purchased with the assistance of a mortgage, but you do not own the property outright. You can purchase further shares in the property later (up to 100%) and this is called ”staircasing”. This increases your share of the property and reduces the share retained by the local authority/developer or housing association, which  would also reduce your rent payments.

If you are still puzzled, please contact me at sarah.wilkins@mablaw.co.uk and let me help you understand the options open to you.

So what is shared equity? You purchase a property and own 100% of it, but you obtain a mortgage for a certain percentage of the equity (e.g. 75%) and the developer and/or Government holds a charge (mortgage) over the remaining share (e.g. 25%); depending on the scheme, you may or may not pay rent on that 25% share. In simple terms, although you own the property outright, your main lender holds a legal charge over the property and, in addition, the developer and/or Government will secure a second charge over the property to secure the repayment of their share when you sell or decide to pay the equity loan off.

So what is shared ownership? You purchase only a share in the property (e.g. 75%) and the local authority, developer or housing association retains the remaining share (e.g. 25%) and you pay rent on that share. In simple terms, you have a share in the property, which is usually purchased with the assistance of a mortgage, but you do not own the property outright. You can purchase further shares in the property later (up to 100%) and this is called ”staircasing”. This increases your share of the property and reduces the share retained by the local authority/developer or housing association, which  would also reduce your rent payments.

If you are still puzzled, please contact me at sarah.wilkins@mablaw.co.uk and let me help you understand the options open to you.

Staircasing – what does it involve? If you are not sure whether you are financially able to staircase and purchase further shares in your property, it may be worth checking out the market in your local area to get an idea of the likely prices of property and obtain a valuation. You will need to contact your Housing Association to arrange for this up-to-date valuation and this will be something you will have to pay for. Once you have this valuation you can then decide what further percentage you wish to purchase. Your individual Lease may stipulate the amount you can staircase in any one stage and the Housing Association should be able to confirm this for you.

If you have the funds available from savings or an inheritance, for instance, you will be in a position to proceed immediately, and you would need to instruct me as your solicitor to deal with the legal paperwork on your behalf. Another option open to you would be to contact your existing mortgage company and arrange for a further advance. Your last option would be to obtain a new mortgage from a new lender, borrowing enough money to purchase the further share and to pay off the existing mortgage. You may wish to speak to an independent financial adviser or mortgage broker in relation to your current mortgage product and what new products could be available for you.

Once you have decided the way forward, you will need to instruct me to proceed with the transaction, which must take place within three months of the date of the valuation. You will need to consider the stamp duty implications of staircasing and this will depend on the percentage share you are purchasing and how you paid stamp duty on your original purchase of the property. I will be able to give you further information depending on your individual circumstances. Once the staircasing has been completed, your lease will be noted accordingly, so on the sale of the property there is a record of the extra share or shares purchased.