Right to Shared Ownership: buying a share of your rented home
Buying more shares ('staircasing')
You can buy more shares in your home after you become a shared owner. This is known as ‘staircasing’.
When you buy more shares, you’ll pay less rent to the landlord on the rest of the property. The amount of rent you pay will be based on the share you do not own.
If you buy additional shares, you may need a solicitor to update your lease.
You can buy shares until you own a 100% share of the property. There are two ways to do this:
- gradual staircasing - buying shares of 1% each year
- standard staircasing - buying shares of 5% or more
Gradual staircasing - buying shares of 1%
You can buy a 1% share each year for the first 15 years after you become a shared owner. You cannot buy shares of 2%, 3% or 4%. This is called ‘gradual staircasing’.
The landlord will not charge an administration fee when you buy a 1% share.
How gradual staircasing works
The price of a 1% share will be based on the original price of your home, increased or decreased in line with the House Price Index (HPI).
Your landlord will give you a HPI valuation at least once a year or whenever you ask to buy a 1% share.
You or your landlord can choose to use a Royal Institution of Chartered Surveyors (RICS) valuation instead of HPI. Whoever asks for the RICS valuation must pay for it. The most recent RICS valuation will be used as the basis for future HPI valuations.
You cannot roll over unused options to buy 1% shares to future years.
Standard staircasing - buying shares of 5% or more
You can usually buy additional shares at any time if you are increasing your stake by more than 5% or more. This is called ‘standard staircasing’.
The cost of your new share will depend on how much your home is worth when you want to buy the share.
Getting a valuation
You’ll need to pay for a valuation by a surveyor who is registered with the Royal Institution of Chartered Surveyors (RICS). Your landlord will let you know whether they’ll arrange the valuation or you need to arrange it yourself. Your landlord will tell you the price of the share after the valuation.
The landlord may charge an administration fee each time you buy a share of 5% or more. It’s set by the landlord and can vary between around £150 and £500.
If you decide to buy more shares, you must buy them within 3 months of the valuation date or a surveyor will need to revalue your home.
If you’ve made home improvements
If you’ve made home improvements which affect the value of your home, the valuation must show 2 amounts:
-
the current market value - this is the home’s value including any increase because of home improvements
-
the unimproved value - this is the home’s value ignoring any home improvements carried out
If you have your landlord’s written permission to carry out the home improvements, the price of additional shares is based on the unimproved value.
If you did not get your landlord’s written permission, the price of the additional shares is based on the current market value. This price is likely to be higher.
Legal fees
If you need legal advice when you buy a share, you must pay your own legal fees.
The landlord must pay their own legal fees when you buy more shares.