When dealing with shared ownership staircasing or equity valuations its first vital to understand exactly how shared ownership works and what staircasing refers to. Shared ownership properties are those which are owned by more than one party, as the name suggests. In the vast majority of cases the ownership in question will be shared between a resident and the housing association dealing with the property in which they live.

The principle underpinning shared ownership is that residents who currently may not be able to purchase a property outright can purchase a percentage of that property, with the remainder of the property remaining in the ownership of the housing association. Staircasing refers to the process of gradually increasing the percentage of the property you own in a way which also reduces the rent payments you have to make on the outstanding percentage.

How staircasing works

The concept of staircasing is that the resident is able to increase the share of the property which they own in small, affordable steps. Each instance of staircasing involves householders increasing their share of the property by at least 10%, although there is no maximum amount of increase as long as the figure goes up in multiples of 5%. If the lease in question was purchased before April 1^st 2006 then anyone wanting to staircase has to increase their share of the property by at least 20%.

The larger the share of the property which you own via staircasing becomes, the lower the amount you’ll need to pay in rent to the additional owner will be, and it is possible to increase your share in the property up to 100%, at which point you’ll stop making any rent payments and own the property outright. Besides cutting your outgoings in the form of rent, the other big benefit of staircasing is that the higher the percentage of the property you own is, the more equity you’ll receive if you opt to sell it.  

It should be noted that if the property in question was purchased before 1^st April 2006 then the resident/part-owner will only be able to increase the share of the property they own three times following that initial purchase. For properties in which the initial share was purchased after 1^st April 2006 there are no limits to the number of staircasing transactions that can be entered into.    

Why you need a shared ownership staircasing/equity valuation

If you decide that you want to purchase more shares in a property which you jointly own with a party such as a housing association, then the price you have to pay for those shares will be based upon the current value of the home. This will clearly vary from the value as it was at the time of the original purchase, and any increase or decrease in value (in practice you’ll usually be looking at a property being worth more than the original purchase price) will need to be ascertained using a highly accurate valuation report. Working with an independent RICS qualified surveyor such as those at Crown Survey and Valuation will mean that the valuation you receive is accurate, independent, and drawn up with a combination of experience and genuine local expertise.

An accurate valuation report should enable you to secure a fair price when staircasing, as well as making it easier to plan your finances over the longer term. As well as setting a fair price for the shares in your home that you wish to purchase when staircasing, an accurate valuation should ensure that the rent you’re being charged on the remainder of the property is fair as well. Entering into an agreement of this kind could impact hugely on your finances over the longer term, effecting mortgage and rent repayments and the perceived value of your property, and that’s why it’s so vital to have a clear, independent and fact-based idea of the value of your property when entering into any negotiations with the other owner.    

When to have a shared ownership valuation carried out

Obtaining an independent equity valuation is a legal requirement when staircasing , but it also provides you, as the resident, with invaluable information to draw upon when deciding things such as exactly how much to increase your share in the property by. Indeed, you could even have an equity valuation of this kind carried out before deciding whether to increase the share of the property which you own. By knowing exactly how much the property is worth at the current time you’ll be able to calculate how much a specific percentage of that property would cost you,  and how paying for this is likely to impact on your overall budgeting. In simple terms, knowledge is power, and the knowledge of the market valuation of your property should put you in a very powerful position when assessing any price quoted by the shared owner and perhaps asking them to reconsider.

Once you’ve had an inspection carried out by a RICS qualified surveyor and a valuation report published, the valuation provided will remain valid for three months. This will give you time to consider exactly what your next move will be whilst also providing a concrete deadline to work toward. This is particularly pertinent if you purchased your initial shares before April 1^st 2006 and can therefore only buy additional shares three more times. Before using one of the times on which you’re entitled to purchase more shares you’ll want to be certain it’s absolutely the right moment in terms of the value of the property.

A shared ownership staircasing/equity report will give you the confidence to know for sure whether now is the right time to act or you should wait, to give one example, for the local housing market to cool down. Unlike an estimate given by an estate agent with a vested interest in persuading you to purchase more shares and perhaps pay a commission to them, a valuation drawn up by Crown Survey and Valuation will be completely impartial and will reflect not just the property itself but also a range of other factors which might impact on the current value of that property.

How we arrive at a valuation

The first and most important aspect of the process which leads to a detailed valuation report being written is for one of our RICS qualified surveyors to carry out a physical inspection of your property. Aspects which could increase or decrease the value of the property will be inspected and included in the report, as will  relevant external factors. Among the issues which a RICS qualified surveyor will be looking at are the following:

• The Location – the location of your property is vitally important when it comes to calculating exactly how much the property is worth. Factors to bear in mind when weighing up the impact of the location include the proximity to amenities such as local shops, banks, doctor’s surgeries, transport links etc. and whether the property is located within the catchment area of a highly regarded school, or in a conservation area. Other things a surveyor will bear in mind will be the ease with which you can access transport hubs such as railways stations, tram stops and major road junctions from the property. 
  
• Basic Information – some of the basic facts pertaining to the property which are likely to have an impact on the valuation arrived at include the year in which it was built and the number of storeys it contains. The size of the property will also be a factor. For survey and valuation purposes, the surveyor will use the RICS standard code of practice when noting the measurements for a property. Under this code the Gross Internal Area (GIA) measured is used for a flat, and the Gross External Area (GEA) measured is used for a house.  The finished report will also detail whether the property has been maintained to a high standard and is in a good state of repair.
  
• Type – the type of property will be a key factor in determining its market value. There is likely to be a huge difference between the value of a house and flat in the same location, for example, even if both properties have a similar number of rooms. The same applies to different types of house, such as a mid-terrace, end-terrace, semi-detached or detached property and whether a flat has other flats above and/or below it. The number of bedrooms and bathrooms in the property will also be reflected in the valuation arrived at, as will the size of individual rooms and whether the property provides access to an outside space such as a garden.  
  
• Utilities – whether the property is served by the utilities any purchaser would expect, such as electricity, gas and water, will be induced in the valuation arrived at. It should be noted that a RICS qualified surveyor will carry out a visual inspection to confirm the presence of said utilities and services and won’t investigate whether and how these utilities and services function.
  
• Condition – the condition of the property will also play a part in arriving at a fair valuation for staircasing purposes. Factors which might lead to a lower valuation include poor maintenance of the structure of the building, particularly if it has been neglected to such a degree that structural damage occurs.
  
• Tenure – whether the property is leasehold or freehold in nature will impact on the valuation provided, since a leasehold property will generally be worth less than an equivalent property which is freehold. 
  
• The Market – as well as making an  inspection of the interior and exterior of the property itself, a RICS qualified surveyor will base their valuation report on  prices which have been fetched by similar properties in the local area. In this way, the valuation you receive will reflect the housing market as a whole, both generally and in the local area in which the property is located.

Once all of these factors have been taken into account a RICS qualified surveyor will be able to produce a detailed report which sets out the value of the property for staircasing purposes, as well as explaining how that valuation was arrived at. With a report of this kind you’ll be in a much stronger position to decide whether the time is right to opt for staircasing and to challenge any valuation the other party arrives at, if you feel they are over-charging for the increased share you wish to purchase. The independent valuation report will also make it easier to decide whether the rent you’re being charged is a fair rate which reflects the wider value of the property.

If you’re in need of a shared ownership staircasing/equity valuation for your property and are looking for an RICS Surveyor near you, contact us today for a free quote. We specialise in building surveys and valuations and can carry out a professional inspection, so you can rest assured that the equity valuation we arrive at is a realistic reflection of the current value of your property.