Shared Ownership - Staircasing

ironman1

Hi all. We are currently in between buying the other 50% of our 2 bed apartment in London and I was wondering if anyone on here has done similar recently and could give me a rough estimate on cost?

The Mortgage Advisor has said we can just afford to buy the other half so our next step is getting our place valued. Someone local has put their identical (more or less, as they are new build) on the market for £210,000 if that makes a difference?

I know we need to pay for a valuation and then for the bank to also value it. Also solicitors fees etc. Are we talking over £10000??

Also any added advice would be most welcome. We bought for £96000 in 2009 at 50% of the full Value ofv£192000 andd currently owe £56000 of that. We plan on selling in two years maximum hopefully.

Thanks for any help!

kellyt86

Over 10k? Surely not! :eek:

The costs are surely the same as the buying normally? Ie the first 50%

I am currently buying a 50% shared ownership

My guess would be something like:
Solicitors fees £1000 - £1500 (my fees are £960, but includes things like searches etc)
Mortgage fees: depends on product but maybe £1000, ask your advisor or look on key facts document if you've got it.
Mortgage valuation: ours was around £400.
As for other valuation maybe £400. I think it's the housing association (or whoever owns the rest) who organises it.

So I think really you are looking at a max of 3K, but why not contact the solicitor who handled your initial purchase and ask for a quote? Then you'll have an idea and speak to mortgage advisor who will tell you about mortgage fees etc. you might not even have fees if you are extending current mortgage!

kingstreet

Did you make a market value election and pay your stamp duty when you completed your initial purchase?

If not, you now face a higher SDLT bill.

kellyt86

kingstreet wrote: »

Did you make a market value election and pay your stamp duty when you completed your initial purchase?

If not, you now face a higher SDLT bill.

Oh yes, I'd forgotten about stamp duty!

ironman1

Sorry about that I meant £1,000 not 10k!

ironman1

I didn't realise about Stamp Duty either. So ifcwe bought one half at £96k five years ago and the other half for around £105k soon, will we have to pay it? We certainly never paid first time round. Was just a £10k deposit and usual buuyingvfees but no StampD

kingstreet

Yes. You'll pay SDLT when you staircase upto, or past 80% if you did not make the MVE I mentioned. It's all here;-

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm

Paying SDLT in stages - buying further shares in a property

If someone buys further shares in a property (called 'staircasing') they don't have to pay any more SDLT or notify HMRC about the transactions in an SDLT return until their share reaches more than 80%. This is the case whether or not they paid any SDLT on the initial transaction.

However, once the buyer's share of the property goes over 80%, they must complete a return and pay any SDLT due on both of the following:

the transaction that took them over 80%

any subsequent transactions

The rate of SDLT applied to these payments is based on the total amount paid for the property so far, including the initial grant of the lease. This is because the transactions are treated as 'linked transactions' for SDLT purposes.

ironman1

Oh that's not good. Can you add that payment onto the Mortgage or is itva seperate payment to HMRC? If so that 1% of 205k may make me think twice about buying all 100%. Thanks for help the Mortgage advisor never mentioned this

zzzLazyDaisy

Have you actually paid off the mortgage on the first 50%?

If not it is worth considering overpaying that mortgage rather than staircasing at this time. The end result is the same - you own more of the house, just that you are 'buying' it from the lender rather than the housing association. You also don't get into stamp duty and legals fees etc.

Of course if you have already bought and paid for the first 50%, then my comments are irrelevant.

Daisy

kingstreet

ironman1 wrote: »

Oh that's not good. Can you add that payment onto the Mortgage or is itva seperate payment to HMRC? If so that 1% of 205k may make me think twice about buying all 100%. Thanks for help the Mortgage advisor never mentioned this

Ability to borrow an extra £2k is down to loan to value and affordability. There is no mechanism to add stamp duty on top if you are near/at the maximum possible.

ironman1

Hi. No we still owe just over 50k of the first half. The reason we are trying to buy all is I am sick of the increasing waste on the rent half. Plus we thought it will be a bit less hassle to sell in one or two years owning all of it. We have 1200 ready to pay fees etc but didn't account for Stamp duty