What is staircasing?
Staircasing means buying a bigger share of your shared ownership home from the housing association. You can normally add shares in steps of 10% or more, right up until you own the property outright. Every time you staircase your rent drops, because the association now owns less of the home.
Once you own 100% of the property the rent stops completely and you become its sole owner. Depending on the property type, you may also be able to switch from leasehold to freehold at that stage.
How much does staircasing cost?
Each additional share is priced on the property’s current market value when you staircase, not on what you originally paid. You cover the cost of an independent valuation, and the housing association uses that figure to set the price of the extra share.
To fund the extra share you may need to remortgage or top up your existing loan. There are legal fees too, because the change in your ownership share has to be formally recorded. Your adviser can help you weigh the rent you would save against what staircasing costs at that point in time.
When does staircasing make sense?
Staircasing usually stacks up best when prices in your area have held steady or risen, since you gain from the equity building in the share you already own. If your income has gone up or your mortgage rate is low, the drop in rent can make the larger mortgage payment worth taking on.
Run the numbers carefully each time, though. Where values have jumped, the next share costs more, so it takes longer for the rent savings to catch up with the outlay. Your adviser can model the figures and help you pick the right moment to staircase.