Shared ownership simultaneous staircasing - who keeps the profit?

SeasidePanda

Hi guys,

I tried to find the answer to this but not much luck.

I own a 25% shared ownership flat (I know, I know...) that I would like to sell to buy a family home. I originally bought the flat for £220,000 and similar properties are now selling for £400,000.

If I do the sale with simultaneous staircasing to 100% do I keep all the profit? Obviously we're trying to find out how much deposit we will have to put down for a house as we really have no idea where we stand at the moment.

Many thanks

Tom99

[FONT=Verdana, sans-serif]I would think if you own 25% you will end up with 25% of the current value. The increase on the 75% you don't own will go to whoever does.[/FONT]

00ec25

rather obviously the owner of the remaining 75% will sell that to you at whatever that owner regards as being current market value of the property.

therefore, obviously, the only way you will profit from buying the extra 75% is if the owner of that share sells it to you at less cost than you sell the whole property to your own buyer.

Housing associations (or whoever owns the remaining 75%) are a) not stupid and b) are charitable/public sector bodies who have a duty not to give away taxpayer owned assets "for a song"

Cakeguts

To staircase to 100% you have to buy 75% of the £400k not 75% of the £220k you paid. You will get whatever you have paid off the mortgage of the 25% plus the increase of value of that 25%. You won't get the increase in value of the 75% as that goes to the housing association who own it.

So can you afford to pay for the other 75% at today's prices?

Wouldn't it just be simpler to sell the 25% that you do own?

SeasidePanda

There really is no need to be rude.

In my understanding, if I staircase to 100%, even if for just an hour or a day when the sale is processed, then at that point I own 100% of the property and therefore the whole profit from sale should go to me.

However, reading various things on the internet it seems to not always be the possibility with shared ownership therefore I'm trying to understand what actually happens.

Cakeguts

SeasidePanda wrote: »

There really is no need to be rude.

In my understanding, if I staircase to 100%, even if for just an hour or a day when the sale is processed, then at that point I own 100% of the property and therefore the whole profit from sale should go to me.

However, reading various things on the internet it seems to not always be the possibility with shared ownership therefore I'm trying to understand what actually happens.

Yes but you have to pay the housing associaton for the 75% that you don't own. You have to pay for that 75% at the present valuation so there will be no profit to you on the 75% because you will buy it and then sell it at the same price.

I assume that you need a loan for the 75%? Which you pay back when you sell the 100%. What is left over is the increase in value of your 25% minus the mortgage that is owed that you pay back to the bank.

HampshireH

Majority of SO staircasing to 100% means no further financial ties to the HA beyond service charges if applicable.

However you need to check your lease. They can hold restrictions on resales. Such as not to be sold until a period of x amount of months has passed since staircasing.

Staircasing fees will be applicable and you will be expected to pay them all so bear this in mind when considering any profit you may receive.

Sounds like an expensive way forward when you will need to buy the other 75% at current market value from the HA and pay all associated fees for what is likely to be a very low return.

eddddy

SeasidePanda wrote: »

There really is no need to be rude.

In my understanding, if I staircase to 100%, even if for just an hour or a day when the sale is processed, then at that point I own 100% of the property and therefore the whole profit from sale should go to me.

However, reading various things on the internet it seems to not always be the possibility with shared ownership therefore I'm trying to understand what actually happens.

I think you may have misunderstood this part...

The house is currently worth £400,000
So buying the remaining 75% will cost you £300,000


So you can either sell your current 25% for £100,000

Or, you can pay £300,000 for the extra 75%, and then sell 100% for £400,000

(i.e. You make no more profit by staircasing.)

Cakeguts

Your profit will be the increase in value of the 25% that you own minus selling costs associated with shared ownership. You will also pay back the mortgage that you borrowed to buy the 25%. What is left over is yours.

00ec25

SeasidePanda wrote: »

There really is no need to be rude.

In my understanding, if I staircase to 100%, even if for just an hour or a day when the sale is processed, then at that point I own 100% of the property and therefore the whole profit from sale should go to me.

that is true IF you sell it for more than it cost you to buy the remaining 75% that you did not own at the point you started the process.

(Text removed by MSE Forum Team)

csgohan4

Greed springs to mind, if you overprice the house/flat, expect it to rot on the market for years unsold and single figure viewings


Plenty of posts on here about 'Why my house is unsold' or 'why only x vewings'