Shared Ownership staircasing - 75% or 100%?

cherryblossomuk

Hi all,

I have been following MSE forum for years and would really appreciate some guidance, particularly as numbers aren't my strong point.

Early 2019 I bought 50% in a shared ownership house worth £188k.

Since then my salary has increased a fair amount and my 2 year fixed term comes to an end on Feb 1st. Due to some pressured advice from the existing mortgage provider I have signed into a new 2 year deal with a lower interest rate however they are prepared to waive any early exit fees if I staircase in the property with them.

I have yet to obtain a valuation but I can easily afford to staircase to 75% now and 100% is possible (but not guaranteed). The mortgage provider's valuation on the re-mortgage was £213k but I understand these aren't concrete.

Q. Should I push to purchase 100% now or should I wait longer? Should I bother with 75% if I can't purchase 100%?

I know opinions are that 50% or 100% are preferable because 75% is trickier to sell. I don't want to purchase 100% if prices are at a high and I will be trapped by negative equity later if a crash in prices is likely. I will obtain the freehold at 100% and cut out the rent element however I do not wish to stay in this property for a long time. I would definitely like to move to a better area and property within the next 3 years.

I can add further information if it is required, thank you!

Lostthegame

I’d say if you’re planning on leaving within the next 3 years then either go to 100% or stay at 50%

HanPop

I’d say staircase to 100% if you can. Then you won’t be paying rent and when you come to sell it is a much easier process without the housing association being involved. We staircased our last property from 75% to 100% before we sold. I do think it is harder to sell a shared ownership property once you go over 50% ownership but below 100%.

oldbikebloke

it all comes down to your gamble on what the market will be in 3 years time, and no one can answer that

- selling 100% of a property worth more (or less) than it cost to buy 3 years previously but having "avoided" paying 3 years of rent offset by 3 years of extra mortgage

- selling 50% of a property worth more (or less) than what you originally paid for it x years ago, offset by 3 years of "full" rent 


I suggest you consult a clairvoyant for an answer 

bottom line is probably more realistically the answer to the standard question applicable to all SO properties. Are there buyers for 100%? Or, given you are moving on due to the area,  is the area really only suited to buyers who cannot afford 100% and so "have" to buy SO, in which case what is the typical share they want to buy: 50%?  less? or more?

getmore4less

You have not given the important numbers.

How big is your mortgage, what LTV did they use for the new deal.
What rent do you pay for the other 50%
What rate will your lender give you on the 100% staircase  that will 1/2 your relative equity and change LTV.

Do you have  any spare cash to top up.

annetheman

oldbikebloke said:

it all comes down to your gamble on what the market will be in 3 years time, and no one can answer that

- selling 100% of a property worth more (or less) than it cost to buy 3 years previously but having "avoided" paying 3 years of rent offset by 3 years of extra mortgage

- selling 50% of a property worth more (or less) than what you originally paid for it x years ago, offset by 3 years of "full" rent 


I suggest you consult a clairvoyant for an answer 

bottom line is probably more realistically the answer to the standard question applicable to all SO properties. Are there buyers for 100%? Or, given you are moving on due to the area,  is the area really only suited to buyers who cannot afford 100% and so "have" to buy SO, in which case what is the typical share they want to buy: 50%?  less? or more?

Good answer. I asked a similar question (wanna answer mine? ^.^) and this applies, but had not considered the last point.