Shared Ownership - Staircasing

Hannah2442

Hi everyone 

I've been in my SO flat for 5 years now and am looking to staircase from 40% to 70%, once my fixed rate mortgage runs out in September. The goal was to staircase to 100% but the current mortgage rates are creating an issue, and I don't have quite enough equity yet. 

The flat was purchased in late 2018 for 260k (full price), and remained at this price when I last staircased in 2020. I've had it valued this week and it's been put at £290k. Given this jump in value, what would people advise on staircasing? I wasn't expecting that big of a jump! 

Many thanks!

annetheman

Can you check what other similar flats have sold for in the area via the Land Registry? If you can find 3 comparable examples, you can send that to the valuer to challenge the valuation, if it's higher than the actual sold prices.

There will be a clause in your lease about the specifics of challenging a valuation - mine says something along the lines of if we don't agree on the value, a senior valuer will value it and that price will be final.

I asked my valuer to - within what is reasonably possible within their professional allowances - very kindly err on the side of conservatism with their valuation within the range they value it at. Luckily for me there was nothing else that has registered as sold in the area (brand new post code) so did give a relatively low valuation. A neighbour's recent sale is going to change that in about 6 months!

If you do wait and get another valuation in the coming months, see if you can also ask the same - but remember (a) local values will likely just continue to go up, albeit not too steeply for flats and (b) the valuers are working for the HA, even though YOU are paying them (one of the many joys of SO), so they may not necessarily go lower just because you ask (very nicely!).

_Penny_Dreadful

Hannah2442 said:

Hi everyone 

I've been in my SO flat for 5 years now and am looking to staircase from 40% to 70%, once my fixed rate mortgage runs out in September. The goal was to staircase to 100% but the current mortgage rates are creating an issue, and I don't have quite enough equity yet. 

The flat was purchased in late 2018 for 260k (full price), and remained at this price when I last staircased in 2020. I've had it valued this week and it's been put at £290k. Given this jump in value, what would people advise on staircasing? I wasn't expecting that big of a jump! 

Many thanks!

Do you see this property as your forever home or that you will eventually be able to staircase to 100% one day?  If the answer to those questions is no then I'm not sure staircasing will be worth it.  As I understand it, should you staircase to 70% now and then have to sell before you get to 100% you'll have to sell a 70% share.  I think most people who are considering SO as an option would be looking for <50% share so a 70% share could be a tough sell.

Albermarle

The flat was purchased in late 2018 for 260k (full price), and remained at this price when I last staircased in 2020. I've had it valued this week and it's been put at £290k. Given this jump in value, what would people advise on staircasing? I wasn't expecting that big of a jump! 

An 11.5 % increase in 6 years is not a lot.

The average UK increase in prices in that time is over 20% .

Hannah2442

Albermarle said:

The flat was purchased in late 2018 for 260k (full price), and remained at this price when I last staircased in 2020. I've had it valued this week and it's been put at £290k. Given this jump in value, what would people advise on staircasing? I wasn't expecting that big of a jump! 

An 11.5 % increase in 6 years is not a lot.

The average UK increase in prices in that time is over 20% .

Thanks - the only reason I didn't expect that much of an increase is because it's a new build. My neighbour's flat was valued last year and it had actually decreased in value. I think the value has been pushed up because a few similar flats in the block have been sold privately at 100% ownership for around 300k.

The aim is to staircase to 100% before selling, even if that means having to simultaneously staircase. 

EssexHebridean

As and when you do  staircasing which takes you over 85% ownership, remember that you may have SDLT to pay - although my hope would be that you were advised when you bought originally (if I am reading correctly that the value of the flat when you bought it was deemed to be £260k - therefore you originally paid £130k?) that you should make a "Full market value election" at that time. If however the election you made on the original purchase was to simply make a submission based on the amount you were paying, then you will need to factor that in at the SDLT rates which apply at the time once your ownership level goes to 85%. 

Albermarle

Hannah2442 said:

Albermarle said:

The flat was purchased in late 2018 for 260k (full price), and remained at this price when I last staircased in 2020. I've had it valued this week and it's been put at £290k. Given this jump in value, what would people advise on staircasing? I wasn't expecting that big of a jump! 

An 11.5 % increase in 6 years is not a lot.

The average UK increase in prices in that time is over 20% .

Thanks - the only reason I didn't expect that much of an increase is because it's a new build. My neighbour's flat was valued last year and it had actually decreased in value. I think the value has been pushed up because a few similar flats in the block have been sold privately at 100% ownership for around 300k.

The aim is to staircase to 100% before selling, even if that means having to simultaneously staircase. 

You are right that new builds can lose some value when they are not new anymore, but that is probably why it has only gone up 11% in 6 years.
In some regions of the UK prices went up more than 20%, so it depends where you are to some extent.