When properties are purchased under a Shared Ownership scheme, the homeowner owns part of the building and pays rent on the other part. The option to buy more shares and increase the percentage owned (staircasing) is usually available. There have been changes to the process of staircasing, which we share in this article.
What is Shared Ownership?
The updated 2021-23 Shared Ownership scheme allows buyers to purchase between 10% and 75% of the property. They pay the mortgage on this percentage, along with rent to the housing developer for their share. The scheme is intended to make home ownership more affordable.
What is Staircasing?
Staircasing is when the residents of a Shared Ownership property are in the financial position to purchase more shares. This increases their ownership and reduces the rent they pay. There is no obligation to change the original agreement, however, it is a popular decision.
Previously, a minimum of 10% share purchase was required. This was updated in the 2021-23 scheme to a minimum of 1%.
Shared Ownership Valuation Reports
When staircasing, a current valuation of the property is needed to ensure that the process is fair to all parties.
10% Shares Staircasing Valuation Reports
For shares of 10% or more, the valuation has to be conducted by a Surveyor (RICS Registered Valuer) that is registered with the Royal Institute of Chartered Surveyors (RICS). They visit the property to conduct an inspection following RICS guidelines.
A Shared Ownership Valuation inspection will take approximately an hour. During that time, the valuer will record the condition, age and features of the property, along with the property and room measurements, plot size and other details that can impact value. This will be conducted both inside and outside of the building. You may have the opportunity to ask questions after the inspection.
The valuer cannot provide the valuation during the visit, as they also need to research the comparable evidence of local properties that have recently sold and interpret the evidence in respect of the subject property. The full report, compliant with the requirements of the Shared Ownership partner will be sent to you within a few working days. To comply with Shared Ownership terms, it has to be signed by the valuer and presented on headed paper.
How Long is a Shared Ownership Valuation Valid for?
As the property market is constantly changing, the shared ownership partners usually limit the validity of a valuation to a 3 month period. This should be sufficient time to purchase shares. If delays are experienced, the shared ownership partner will usually allow the Surveyor to undertake a ‘desktop’ valuation within two weeks of expiry of the original report, which the partner will usually allow to extend the valuation for a further 3 months.
Do I Need a RICS Valuation to Sell a Shared Ownership Property?
The other occasion when a RICS valuation is required is when you decide to sell the property.
If you are considering putting your home on the market, ensure that you read all the information in the initial contract. In some cases, you may need permission to sell from the housing developer or you may need to give them first refusal on the property.
Should you progress with the sale, it is a good idea to research local RICS registered valuers in advance. Ask their advice on the best time in the process to undertake the valuation to minimise the risk of it expiring before the sale is complete.
Finding a Valuer Registered with RICS
Ideally, you should research local companies providing this service. This is because it makes the site visits more practical, which can speed up the process. They are also more likely to be informed about the local property market.
Based on the Buckinghamshire, Bedfordshire and Hertfordshire border, Neil Moran Associates Ltd is a professional yet approachable team covering the Home Counties. We are RICS Regulated and specialise in valuations. Contact us for details of availability, cost and the process on 01296 254800 or email@example.com.
With offices in both Leighton Buzzard and Milton Keynes, Neil Moran Associates are Chartered Surveyors, RICS Registered Valuers and independent commercial property advisors, who would love to hear from you.