SHARED OWNERSHIP STAIRCASING QUESTION

babyangel10

Hi,
I am probably about to start the process of staircasing my 50% owned home up to 100%. It all depends on the valuation, as the H/A will take my renovations into consideration despite them not paying anything towards them - one of the pitfalls of S/O and naivety back then!... 😒😒 

I bought 50% share of the house in 1999 at a mere £20,000   I had a conservatory and a 2 storey extension fitted about 15 years ago, costing an additional £17,000 which was borrowed as a remortgage, so the mortgage was about £35,000 at this point. I now owe around £19,000.

It's now roughly worth £90,000 at 50% share (valuation being done next week, basing this on other houses in the area) so giving me approx £71,000 equity. 

So, the question is as follows. I'm not the brightest with financial stuff, so bear with me!

When I ask for additional borrowing, is the equity counted as a 'deposit' of sorts? As in, because the new share I'm buying is 'worth' £90,000 is that what I have to borrow, or do I only have to borrow another £19,000? Does that even make sense or is that some weird made up scenario in my fuddled head?! 😂

If it matters, I'm 47 so I presume the usual equity release schemes won't apply.

Of course, I will be taking proper advice, but just getting all the info I can before taking the full plunge.

Thanks for any advice on this or any other S/O info. I'm sure I'll  have more questions as the days go on!   

L_T_88

@babyangel10 Have you checked your lease for the staircase valuation wording? I'd expect that tenant improvements should be disregarded when calculating the market value. This is the case for the HCA/Homes England model leases, although your lease pre-dates these.

If you didn't get permission for the alterations you should ask for retrospective permission as you'd be in breach.

Happy to take a look for you if you have a PDF copy of your lease to hand?

babyangel10

Hi thanks for your reply.
I asked the H/O about the valuation and this is their reply
"I have made significant structural improvements to the property at my own cost, and see that the valuer will offer 2 valuations, but the form doesn't state which one is taken into account when purchasing the remainder of the property.  We will use the figure without the improvements, the valuer will advise if the report of the improvements, if he sees them as increasing the value of the property."
So I read that as being the valuer will inform them that it has increased the value? (Original 2 beds on my street like mine was, are worth about £65-70,000 at 50% share)
I did get permission for the works (You have to get them even for a catflap!) so all good there.
And I only have a faded and barely legible version of an old lease, but I did ask for an emailed one a few days ago, so will see what that says and send it you if necessary (thanks for that too! )

ctbfc

I've just staircased to 100% ownership of my property, taking advantage of the SDLT holiday. You will have to pay the 'without improvements' figure.

MWT

babyangel10 said:

When I ask for additional borrowing, is the equity counted as a 'deposit' of sorts? As in, because the new share I'm buying is 'worth' £90,000 is that what I have to borrow, or do I only have to borrow another £19,000? Does that even make sense or is that some weird made up scenario in my fuddled head?! 😂

The equity you have in the house reduces the 'loan to value' (LTV) percentage and that reduces the interest rate you will pay, but it doesn't reduce the amount you have to borrow to buy the other 50% of the house.

... and no, at 47 you can't access equity release products like a 'Lifetime Mortgage' but even if you were old enough (55+) you cannot use them while you have an existing mortgage without being able to payoff the existing mortgage completely from the proceeds of the equity release, so that wouldn't help you anyway.

babyangel10

MWT said:

babyangel10 said:

When I ask for additional borrowing, is the equity counted as a 'deposit' of sorts? As in, because the new share I'm buying is 'worth' £90,000 is that what I have to borrow, or do I only have to borrow another £19,000? Does that even make sense or is that some weird made up scenario in my fuddled head?! 😂

The equity you have in the house reduces the 'loan to value' (LTV) percentage and that reduces the interest rate you will pay, but it doesn't reduce the amount you have to borrow to buy the other 50% of the house.

... and no, at 47 you can't access equity release products like a 'Lifetime Mortgage' but even if you were old enough (55+) you cannot use them while you have an existing mortgage without being able to payoff the existing mortgage completely from the proceeds of the equity release, so that wouldn't help you anyway.

Ah thank you, that makes sense now! Thanks for clarifying that  

L_T_88

babyangel10 said:

Hi thanks for your reply.
I asked the H/O about the valuation and this is their reply
"I have made significant structural improvements to the property at my own cost, and see that the valuer will offer 2 valuations, but the form doesn't state which one is taken into account when purchasing the remainder of the property.  We will use the figure without the improvements, the valuer will advise if the report of the improvements, if he sees them as increasing the value of the property."
So I read that as being the valuer will inform them that it has increased the value? (Original 2 beds on my street like mine was, are worth about £65-70,000 at 50% share)
I did get permission for the works (You have to get them even for a catflap!) so all good there.
And I only have a faded and barely legible version of an old lease, but I did ask for an emailed one a few days ago, so will see what that says and send it you if necessary (thanks for that too! )

Ok, so say the market value is £150,000 with improvements and £140,000 without the improvements, they should be calculating the 50% staircasing valuation on the lower figure.
Make sure when the valuer is there they know about all of the improvements you've done.