New 1% staircasing rules: Making shared ownership even more affordable

Shared ownership is a government-backed scheme designed to help people get onto the property ladder when buying a home outright isn’t affordable. Instead of purchasing 100% of a property, buyers purchase an initial share and pay rent on the remaining share to a housing provider. This reduces the upfront deposit and mortgage needed, making homeownership more accessible for first-time buyers and those on lower to middle incomes.

One of the key features of shared ownership is the ability to increase your stake in the property over time through a process known as ‘staircasing’. Staircasing allows shared owners to buy additional shares in their home, reducing the rent they pay and increasing the amount they own. Recent changes to shared ownership leases now allow some buyers to staircase in smaller 1% increments, making it easier and more affordable to build equity gradually and take further steps towards full homeownership.

How staircasing can help you climb the property ladder

For many people, moving from renting to owning a home continues to feel out of reach. One survey found that 59% of renters aged between 25 and 44 expected to own a home by 2025 but have yet to achieve that goal, highlighting the ongoing challenges facing would-be buyers.

Against this backdrop, shared ownership has become an increasingly attractive option for those struggling with rising house prices and higher mortgage costs. By allowing buyers to take their first step onto the property ladder without needing to fund the full purchase price upfront, the scheme has grown significantly in recent years. There are now more than 250,000 shared ownership households in England – a rise of 25% since 2020.

Once you become a shared owner of a property, you can then apply to buy more shares in your home through staircasing. This helps to reduce your rent payments while building equity. In some circumstances, you can keep buying shares until you own a property outright. There are two approaches for staircasing, both of which can help you move towards full homeownership at your own pace.

Standard staircasing: how it works

Introduced in the 1980s, standard staircasing currently enables shared owners to buy additional shares in their property of 5% or more, normally at any time during their occupancy.

The cost of the new shares will depend on how much your home is worth, which could be impacted by any improvements that you’ve made during your ownership. You will need to pay for a valuation by a registered surveyor and possibly an administration fee to your landlord.

Different housing providers have different rules about how staircasing can be applied, so make sure you check your lease. For example, you might have to live in a property for a specific length of time before you can buy additional shares. Staircasing rules also vary depending on when you first entered into a shared ownership agreement and the location of the property.

Gradual staircasing: a phased approach for new homes

Gradual staircasing only applies to new grant-funded shared ownership homes delivered through the government’s Affordable Homes Programme 2021-2026. With gradual staircasing, you can buy a 1% share each year for the first 15 years of your shared ownership. You cannot roll over unused shares to future years.

The price of a 1% share is based on the original cost of your home, increased or decreased in line with the House Price Index. Your landlord or housing provider should give you a valuation at least once a year or whenever you ask to buy a 1% share. There is not usually an administrative fee for this, but you should always clarify the position with your landlord.

Be ready to make your move

Sourcing an accurate valuation and securing funding will be key to achieving your staircasing goals. Getting the timing right is also important. For example, fluctuations in property prices and interest rates will influence the cost of additional shares and future mortgage payments.

As with any property transaction, it’s worth seeking legal and financial advice from the outset. Staircasing generally involves a number of complex conveyancing steps and documents, such as updating Land Registry records and calculating any potential Stamp Duty payments.

Support from shared ownership specialists

Shared ownership transactions can involve unique legal and practical considerations, particularly for buyers navigating the scheme for the first time. Attwaters has extensive experience advising clients on all aspects of shared ownership, from the initial purchase to longer-term ownership and future planning, including in staircasing transactions.

Whether you are considering a shared ownership purchase or would like advice on your options as a shared owner, our Residential Property team is well placed to guide you through the process and help ensure your interests are protected at every stage. To find out how we can help, please contact our Residential Property team on 0330 221 8855 or email enquiries@attwaters.co.uk.