Conveyancing a property can seem pretty straightforward, as it often just involves transferring a property from one owner to another. Preparing the documents can be pretty heavy, but there are several considerations involved when it comes to completing the transfer and the type you’re trying to do.
For instance, staircasing is an option that you may want to consider. It allows you quite a bit of leeway and flexibility in gaining shares of a property if you’re still undecided. When you are on the fence about attaining full ownership or just studying your prospects as a shared owner, staircasing puts you in a favourable position.
It’s not a complete necessity to go through this step, but many find it attractive. If you decide to go through with staircasing, it’s recommended to get a conveyancer. They can help you through the process for a reasonable price. On top of that, they can also explain in-depth what you have to consider when finally staircasing a property.
To get you started, continue reading this introductory guide to staircasing:
What Are the Basics of Staircasing?
You may have heard about some general assumptions about staircasing, with the benefits of how your property shares tend to increase in the long run is more or less highlighted. However, before getting into that, let’s define what exactly staircasing is along with its basic information for a proper foundation for fully understanding it.
Staircasing Definition. Staircasing is characterised by the purchase or transfer involving the shares of a shared ownership property. Property shares are staircased 1% at a time based on the total sum of shares. Once staircasing has been completed, you’re essentially free from paying rent.
Staircasing Process. The staircasing process requires a conveyancer to notify a certain housing provider and association about the number of shares you intend to get and staircase. Some may provide a percentage cap to the total sum of shares you can work with before the valuation and approval of your staircasing request.
Staircasing Costs. There are a number of fees that you must cover when staircasing, starting with the conveyancing costs. There are also several legal fees for taking property shares from a housing provider or association alongside valuation fees that’ll go towards a surveyor registered by the RICS UK.
What Are the Stages of Staircasing?
As mentioned above, staircasing’s first stage is choosing the number of property shares that you’re going to work with. About 1% of staircasing is done at each time, allowing you to slowly buy and gain the other shares of the property through increments. Depending on their situation, some homebuyers can have their staircase go from 10% to 80% all at once.
Regardless, the strong start you get with beginning the staircasing process allows you to transition and build up enough property shares, almost characterised as taking a step up a flight of stairs. This period of accumulating and growing up to having 100% of the property shares is referred to as the interim staircasing stage.
After interim staircasing comes the final staircasing stage, which pretty much entails the end of the line. You’re able to purchase the remaining property shares and finally absorb ownership of the property. Instead of being a shared owner with a housing provider or association, you attain sole property ownership.
What Are the Advantages of Staircasing?
As discussed above, the main advantage of staircasing is the effect that it can provide with rent instead. Each percentage that you end up with staircasing results in a decrease in your rent payment every time. Wielding 75% of property shares during the interim staircasing stage means a significant decline. The rent goes to zero by the time you complete staircasing.
Staircasing also means eventually getting ownership of the property. As long as the property isn’t a flat, you wouldn’t have to face leaseholds or service charges in addition to the expenses at the end of the process either. Getting a full-fledged home to yourself allows you to transfer or resell the property at 100% value rather than the limited shares you hold under your wing.
What Are the Disadvantages of Staircasing?
A specific disadvantage when it comes to staircasing is how you need to aim for a particular property type if you want to avoid leaseholds and service charges. The weight of too many additional expenses can always seem a little too heavy, so be wiser about the property type that you commit to a staircase.
Other disadvantages will mostly involve the exhaustion of arranging the staircasing and understanding the terms, such as a percentage cap with staircasing. A conveyance solicitor can assist you through each stage though, as well as provide the advice necessary to help you accomplish your goal.
What Is the Limit with Staircasing?
Staircasing limits may not apply with some properties, while others are pretty adamant about the percentage cap. The number of times that you can staircase or how much you staircase can usually depend on the rules and regulations set by a housing association or provider.
Some homebuyers may be advised to purchase more than 1% of a property from the get-go to reach 100% quicker when staircasing, but it’s a case to case basis. Allow a conveyancing solicitor to assess your situation and guide you on what works best for you.
What Is with Stamp Duty and Staircasing?
Homebuyers may face a stamp duty at the beginning of their staircasing. This specific expense usually has to be paid in the midst of interim staircasing, specifically when you get around the 80% mark. This amount is subject to tax.
Shared owners staircasing a property may opt to pay the stamp duty from the very beginning so that they won’t have to cover the fee upon hitting the 80% milestone. Some may also just wait to pay stamp duty, lingering under 80% before they’re ready to increase and cover the cost.
What Happens When Selling the Home Involved?
Selling the home while staircasing can differ depending on the percentage you hold. As a shared owner with less than 100% of the property shares while staircasing, that means less appeal and flexibility when marketing and conveyancing.
Home-selling through shared ownership is possible to do so by getting a valuation and connecting with an interested buyer. However, most tend to wait until staircasing and attaining 100% of the property before putting it on the market.
With this guide, you should be able to have a better grasp of staircasing. Such an understanding can allow you to discuss the option better with your conveyancer while contemplating your potential moves in the property market.
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