Our property experts have provided some information and answers here to some frequently asked questions regularly raised by our clients about Shared Ownership.
Can I buy additional shares of the property?
Depending on the terms of your lease, you can buy additional shares of the property whenever you can afford to do so. Buying additional shares in your home is known as ‘staircasing’. The price of the additional shares will be based on the market value at the time. Like any home, the value can rise and fall along with the housing market.
There are also sometimes provisions in a shared ownership lease, where you can downward staircase, this would be when you sell shares in your property back to the landlord, this would also depend on your lease. It is always best to ask the sellers’ solicitors to get confirmation from the landlord this has not taken place.
Can I sell my property on the open market?
Within shared ownership leases, there are often terms in the lease where you have to offer the property back to the landlord before you can sell the property, if the landlord does not want to buy the property back, they will often give you permission to sell the property. Normally the transaction will have to be completed within 12 weeks.
Do I acquire the freehold when purchasing a leasehold flat and staircasing to 100%?
Do I have to pay ground rent and service charge and how much will this be?
Yes you do have to pay ground rent and service charge and this will be calculated upon the percentage of the property that you do not own.
Do I pay Stamp Duty Land Tax when purchasing a new shared ownership property?
At the grant of a new lease, you have the option to make a full market election, meaning you pay the full amount of stamp duty (The amount of stamp duty had you been purchasing a 100% of the property). This would mean when you purchase shares above 80% in the property you would not have to pay stamp duty. If you decided not to make a full market election at the grant of a shared ownership lease, you would have to pay stamp duty on every staircasing transaction over 80%.
Do I pay stamp duty when purchasing an existing shared ownership property?
If you are buying an existing shared ownership property, you would need to ask the sellers if they had made a full market election at the grant of the shared ownership lease. If they had decided to make a full market election, stamp duty would not be payable for any staircasing transactions above 80%.
How long do I have to complete a staircasing transaction?
Leaseholders would normally have three months to complete their staircasing purchase from the date the Housing Association receive the valuation from the valuer. This can be extended to six months if there has been a delay, so it is important you instruct a solicitor as soon as you have had the valuation done.
Is staircasing registered at the Land Registry?
When you staircase, a memorandum of staircasing will be completed. We would advise you staple this to your lease, as this will be your proof you have staircased to a certain amount. On a flat purchase, this does not have to be registered with the Land Registry, so it is imperative you keep a copy with your lease. On a house when you get to a 100% you will acquire the freehold.
What happens when I staircase and do I have to pay stamp duty?
The reply to this question depends on whether you are staircasing to 80% (where you do not have to pay stamp duty) or 100% in which event you will. This is not a straightforward answer and would have to be answered based on your specific circumstances, but is a question often asked.
Who undertakes repairs on shared ownership properties?
The shared ownership lease between the shared owner and the Housing Association will set out the rights and responsibilities of a shared owner. Although the shared owner has not bought the property outright, they will have the normal rights and responsibilities of a full owner occupier. In particular the shared owner will normally be fully responsible for the cost of repair and maintenance to a house, this differs from a flat, where it is normal for a landlord to be responsible for the repair and maintenance.
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