Shared Ownership Staircasing - how long to complete?

ep015

Hi all,

I'm hoping that anyone who has gone through/has knowledge of the staircasing process might be able to offer me some advice regarding completion timeframes!

I am currently in the process of buying additional shares in my shared ownership flat. At the moment I own 50% of the property and was originally looking to purchase an additional 30%.

No sooner had I received my mortgage offer, I received a pay rise at work – which would enable me to purchase a 35% share (rather than 30%). However the lender needs to see a pay slip with my new salary before they will agree to lending me the extra money, but I won't receive my pay slip until 30th November when I get paid. The lender isn't prepared to accept a letter from my employer confirming the pay rise.

My problem is that the current valuation on my flat runs out on 26th December. So by the time I receive my pay slip and get a revised offer from the lender, this would leave me probably 2 weeks to complete the sale (and completion would be around Christmas time where everyone is winding down).

My question is... is the timeframe do-able? My solicitor has already started the process based on me buying a 30% share, so they will have had time to do all the land registry checks etc before hand. I really don't want to have to arrange for another valuation, especially since the lender's surveyor thinks that the HA's current valuation is too low (by a lot) – I'm worried the purchase price could go up!

Or do I just stick with my current mortgage offer to purchase a 30% share, which leaves me ample time to complete the sale, but I lose out on buying 35%.

I don't know if I will ever be in a financial position to staircase again, which I why I want to purchase as many additional shares as possible now. My flat is in East London and has increased in value by 7.5% over the last 2 and a half years. I can only imagine house prices rising further in my area, making it less and less likely that I could afford to buy more shares again in the future.

Any advice would be much appreciated!

Thanks

PS. I also just want to mention that I am aware that buying an additional 35% share as opposed to 30% will mean I have to pay stamp duty. I've taken this into account and still want to go ahead.

Kynthia

I'm sorry but I really can't see that owning an additional five percent is really worth all the hassle when you are mid-purchase already. Also many housing associations only allow you to increase in 10% increments so are you sure you could buy 35%?

However I probably would have advised you against staircasing to 80% as I believe that leaves you with the worst of both worlds. What I mean is that you still are shared ownership and don't own the whole property and still need to sell through the association yet the percentage is so high that it's unaffordable to buyers who can't afford a property on their own and are looking at shared ownership.

ep015

Kynthia wrote: »

I'm sorry but I really can't see that owning an additional five percent is really worth all the hassle when you are mid-purchase already. Also many housing associations only allow you to increase in 10% increments so are you sure you could buy 35%?

However I probably would have advised you against staircasing to 80% as I believe that leaves you with the worst of both worlds. What I mean is that you still are shared ownership and don't own the whole property and still need to sell through the association yet the percentage is so high that it's unaffordable to buyers who can't afford a property on their own and are looking at shared ownership.

Thanks for your reply!

I would be allowed to purchase 35%, the HA's requirement is that you purchase a minimum of 10% when staircasing – after than you can buy in 5% increments if you wish.

I'm not too sure what you mean when you say that if I were to sell the property through the HA, the percentage would be unaffordable to the buyer. I always assumed that with resales the HA would sell the property to the new buyer at a percentage affordable to them – the same as if they were buying a new build?

brit1234

You may be better off paying more of your existing mortgage than stair casing further. The more you staircase the harder it is to sell, the more fees you pay and the more risk of price falls you take on board.

Graham_Devon

ep015 wrote: »

Thanks for your reply!

I would be allowed to purchase 35%, the HA's requirement is that you purchase a minimum of 10% when staircasing – after than you can buy in 5% increments if you wish.

I'm not too sure what you mean when you say that if I were to sell the property through the HA, the percentage would be unaffordable to the buyer. I always assumed that with resales the HA would sell the property to the new buyer at a percentage affordable to them – the same as if they were buying a new build?

You'd have to check the conditions, or ring and find out, though I don't know of any housing association which will buy the house off you to sell on.

If you staircase, it's usually because you want to buy the place outright. No harm in staircasing in that respect.

But, as said, if you buy 80% and need to move anywhere, you'll need to sell 80% on to the next buyer. As I say, you need to check for sure with your the housing association.

So you have to ask yourself....if you were looking on the market, why on earth would you buy into 80% of a shared ownership place, when you could buy a place 100% for roughly the same amount of money (Shared Ownership always overvalued), less all the terms that come with a shared ownership place?

You wouldn't....so you'll have a massive headache trying to shift it on...infact you probably wouldn't be able too, forcing you to buy 100% (and causing more legal fees) just to get shot. So, ONLY buy 80% if you truly wish to stay in this place and aim to buy 100%. Otherwise you really are shooting yourself in the foot.

I could buy more of mine, but I've decided not too purely based on the fact I need to sell it on to someone else in the same position I was. Therefore the question for you would be, would 80% interest you, looking back at when you bought? Would you have been able to buy 80%? Then ask how you think someone else is going to.

As someone else said, you are FAR better off paying down your existing mortgage with any surplus monies.

skater_kat

I too have a 50% shared ownership. I've also decided not to staircase, exactly for the reason of resale. Better off paying down mortgage or saving cash deposit to put down on a full market share property when you move on.

Kynthia

It can really depend on your future plans and the terms of your particular scheme. However I think staircasing is expensive. Therefore I'd rather overpay the mortgage to increase my equity, then sell and buy a place outright now that I had a deposit and was earning more.

However you may really want to stay in your property long term and intend to staircase to full ownership one day. Also if your in an expensive area where you still couldn't afford to buy a property outright then you might be doing the best thing for your circumstances.

ep015

Thanks all, I really appreciate your comments and it has certainly made me think about what happens when I decide to sell.

I will definitely get in touch with the HA to find out what the deal is.

Thanks again for your advice!

ep015

I just thought I would give an update on my situation...

I went ahead and staircased to 85% ownership, and after taking into account everyone's comments, I am now planning to staircase to 100% ownership in 2 years time.

I will either be saving/overpaying my mortgage (depending on interest rates) to increase my equity by £10k over the next 2 years, which I am hoping will help me when I come to remortgage or request a further advance!

Thanks again for everyone's advice!

simonsays321

Hi epo15,

Glad everything worked out for you. Just wondering how long it took you to go from meeting your mortgage provider to completing the transaction?

Were you able to extend your existing deal or did you have to get a new mortgage deal?

many thanks

kingstreet

Last activity 25/5/13, so don't hold your breath.