The Metropolitan Staircasing
Process - Guidance Notes
As a shared ownership leaseholder you can buy further shares in your
home when you can afford to, this process is known as ‘Staircasing’.
Staircasing enables you to own a greater
proportion of your home. The greater
the share you own in your home the less
rent you will pay. If you Staircase to 100%
ownership you become an outright owner,
and will no longer have to pay rent to
Metropolitan. You may still have to pay a
service charge depending on the type of
property you own and the type of services
provided to you.
The minimum share that you can Staircase
by varies but is generally not less than 10%
of your home’s value and you Staircase in
multiples of 5%. It is important to refer to
the Staircasing provisions of your lease for
confirmation of the maximum share that you
can own. The majority of our leases allow
Staircasing up to 100%; however we have
also granted some leases which contain a
preserved equity clause which will only allow
COST
Staircasing up to a minimum and maximum
of 60%, 70% or 80%.
The maximum number of times you can
Staircase is three times. Each time you
Staircase you will be liable for costs, such
as a valuation fee, legal fees, and (if you’re
funding your staircasing with approved
additional borrowing), mortgage/specialist
financial advice fees. It is advisable to
Staircase in one tranche if you can afford to
so you can keep these costs to a minimum.
It is important to consider the costs
associated with Staircasing at the beginning
of the process. Mortgage/Independent advice
fees for buying extra shares are funded
through approved additional borrowing.
These costs are outlined
in more detail below:
FEE (£)
Independent Valuation
Varies between £200-£400 (plus VAT)* dependent on
your property value and location.
Your appointed solicitor fees
Approximately £300-£500 (plus VAT)*. Your appointed
solicitor will be able to provide you
with an exact quotation. Remember to ask for a quote
for any extra work outside the original quotation as
legal costs can escalate quickly.
Mortgage administration fees
Varies depending on lender.
Specialist Financial Advisor fees
Varies between £295 to £497 (see next page)
Monthly mortgage payments.
Refer to your lender for confirmation of any
fees payable.
Mortgage costs, interest charges, interest rates and
conditions will be outlined in your mortgage quote.
It is important to read this carefully.
Specialist Financial Advisor application fee (payable
where a mortgage product is arranged)
Quoted upon application.
*Prices given are correct at time of publication (06/2016) but may vary by legal service provider.
MAY 2016
The process
Step 1: Find out if Staircasing is affordable for you
Before you make a formal application to
purchase a further share of your property it is
advisable to find out if you can Staircase (you
can do this by contacting us), understand the
fees that apply and whether you can afford to
Staircase.
You may wish to speak with your current lender,
who will assess your current mortgage terms and
advise you whether or not you are able to borrow
additional funds on your existing mortgage in
order to own a larger share of your property.
Your lender may charge a fee for this service.
You may also want to contact a new lender
directly and find out if it would be better to take
out a new mortgage loan with them (paying
off your current lender as part of the process)
to achieve a better interest rate; this process
is called Remortgaging. The new lender will
assess your financial circumstances and issue a
mortgage promise, this is not a formal mortgage
offer, but gives you an idea as to whether or not
you are able to purchase a further share and
an approximate idea as to what the repayment
terms will be without having to formally commit
to the new mortgage. When remortgaging it is
important to check with your current lender first
to ensure that there are no penalty charges for
early repayment.
Another option to consider when weighing up
your financial position is to contact a Specialist
Financial Advisor who will assess your financial
circumstances, before searching across a number
of lenders who specialise in Shared Ownership
mortgages to find the right mortgage for you.
Below you’ll find details of our panel of Specialist
Financial Advisors who can assist you with your
Staircasing application.
Specialist Financial Advisors will offer you a free
financial assessment over the phone; should
you choose to use the advisor, you will only pay
an administration fee when the advisor finds a
suitable mortgage product that you proceed with.
You can also contact a Specialist Financial Advisor
of your choice.
Clark Marshall Associates Ltd
De Havilland Group (Quote ‘MHO’ when calling)
CMA House
5 Summerhill Rd
Dartford
Kent, DA1 2LP
2 Skylines Village
Limeharbour
London
E14 9TS
T: 01322 223331
W: www.clarkmarshall.co.uk
FEE:
£395*
VAT inc
T: 0207 517 0700
W: [email protected]
TMP Sherwins
SRC Financial
Chesham House
Lower Street
Kettering
Northants, NN16 8BH
4 Lords Court
Cricketers Way
Basildon
Essex, SS13 1SS
T: 01604 780 586
W: [email protected]
FEE:
£399*
VAT inc
*Prices correct at time of print but may be subject to change
2.
T: 01268 280096
W: [email protected]
FEE:
£295*
VAT inc
FEE:
£497*
VAT inc
Important:
Securing the funds to purchase a further share is often the most prolonged part of
Staircasing, if you are relying on additional mortgage funding, we would always advise
you to check that you are able to Staircase before obtaining a valuation.
It is important to note that whilst instructing a valuation does not commit you to proceed
with Staircasing, your valuation is valid for three months, and a new mortgage
application can take an average two to three months, so we would encourage you to
apply for a mortgage before instructing the valuation to reduce the risk of additional
costs that could arise from having to instruct a subsequent valuation.
Step 2: Instruct a valuation
Once you have had confirmation that you
are able to purchase a further share in your
home, you will need to instruct a surveyor to
provide you with an independent valuation
of your home. This valuation will determine
the price of the share that you are buying.
An independent valuation is required under the
terms of your lease. Please select one of the
surveyors from the list enclosed, or your own
qualified, independent surveyor. You will need
to ensure the following guidelines are adhered
to when instructing your valuation:
The valuer must be registered with RICS, with
a recognised RICS qualification.
Any works you have completed which have not
been pre approved by Metropolitan will not be
considered within the Staircasing valuation.
We may consider providing retrospective
consent, though you will need to provide
evidence that the works were carried out.
If you are unable to provide evidence we will
be unable to consider your improvements.
The valuer must be independent to an
estate agent.
We are unable to accept Estate Agent
valuations since they are not RICS qualified.
The valuer should provide at least three
comparable properties and sale prices. The
comparables must be dated within the last
six months.
The valuer must not be related or known to you.
The valuer must inspect the interior of the
property and provide a full valuation report.
Valuations carried out for bank or mortgage
purposes will not be accepted.
3.
Metropolitan will require a copy of the
valuation report; the validity of the valuation
must be shown on the report and the report
must state that Metropolitan can use the
contents of the report.
On the day of the appointment, you must
confirm to the valuer (accurately) the number
of years remaining on your lease as this can
affect the valuation figure.
In addition, because the valuation is being carried
out for Staircasing purposes, the valuation should
include the following information:
The Staircasing value which excludes any
significant improvements made (see below)
The open market valuation will include any
improvements made.
When going through the Staircasing procedure
we use the figure which excludes any
significant improvements. This in turn means
you will not pay for the improvements in the
percentage that you buy from Metropolitan.
Significant improvements include:
Any change to the floor plan/ layout of the
property (which has been formally approved
by Metropolitan under the terms of the lease).
Newly fitted kitchens and bathrooms which
have added value to the property in the
valuers opinion. It is important to note that
fitted kitchens and bathrooms will depreciate
over time and so may not impact on the
valuation where the work has been completed
more than three years ago.
General upkeep and maintenance to the
property (to include improvements such
as gardening, fence panels, boilers, fitted
wardrobes etc) will not be discounted, since
this is a requirement under the terms of
the lease. We will be unable to accept a
valuation with any of these improvements
listed, please ensure this is made clear to
the valuer when they conduct their report.
Please refer to the FAQ section at the end
of the pack for further information.
The above guidelines must be adhered
to, you will be required to liaise with the
valuer for any necessary corrections to the
valuation and any additional costs incurred
will be your responsibility. A valuation which
does not meet the above criteria will not be
accepted by Metropolitan.
If you are not happy with the valuation you
can dispute this directly with the surveyor
who will require comparable evidence before
reassessing your valuation.
If you are still not happy with the final
value, you can instruct a further valuation
through a different surveyor. You will however
be responsible for any additional costs.
Metropolitan will accept the most up to
date valuation.
An accurate valuation is key to your
Staircasing transaction as it defines the
amount that your home is worth and the
amount that you will have to repay when
you staircase.
Important:
The valuation is valid for a period of three
months from the date of the report. If the
transaction is not completed within this time
period a further valuation will be required.
This may result in a change to the value of
your property and the amount you have to
pay to staircase. This figure could go up
or down. The property market is currently
experiencing value increases so it is critical
that you follow up with your lender and
solicitor to get the property sale moving
to complete within three months. You will
also have to pay for the new valuation,
which is an extra cost. It is therefore
important that you do not instruct the
valuation until you are certain that you
are in a position to proceed.
Step 3: Send your valuation report to Metropolitan
Once you have received your valuation report,
you should complete the Confirmation of
Valuation Form, which is attached to the
bottom of this information pack, and send it to
Metropolitan along with a copy of the report.
Upon receipt of both documents we will forward
you a letter documenting the Staircasing details,
which includes confirmation of the premium
payable for the additional share.
4.
The letter will also contain a form which you will
need to complete with your solicitors details in
order to formally proceed with the Staircasing
transaction, so now would be a good time to
research potential solicitors that you would like
to act on your behalf (if you have not already
done so).
Staircasing calculator
The amount you will have to pay is based on the current market vale of you property. To
help explain this we have produced a table which shows what extra shares would cost if the
value of your property fell, increased, decreased or stayed the same. For the example below
we are assuming:
1. You originally purchased 40% of your home and that you wish to buy a further 60%.
.We have then looked at what the extra shares (10%) would cost in a rising market,
2. Where prices have not changed, and
3. Where prices have gone down by 10%.
Staircasing calculator
1. Property value 10% increase:
Original valuation £200,000 + 10% increase in property market
£200,000 + £20,000 (10%) = £220,000
Current % Share 40% (£88,000)
Share available to Purchase 60% (£132,000)
+
£132,000 is the price payable to Metropolitan for the additional 60% share.
2. Property value remains the same:
Original valuation £200,000
Current % Share 40% (£80,000)
Share available to Purchase 60% (£120,000)
NO
CHANGE
£120,000 is the price payable to Metropolitan for the additional 60% share.
3. Property value 10% decrease:
Original valuation £200,000 - 10% decrease in property market
£200,000 - £20,000 (10%) = £180,000
Current % Share 40% (£72,000)
Share available to Purchase 60% (£108,000)
£108,000 is the price payable to Metropolitan for the additional 60% share.
5.
-
Step 4: Request to proceed:
Please complete the “Request to Proceed”
form; this confirms your solicitors’ details and
the percentage you wish to Staircase by.
Please be advised that at this stage you are
formally confirming that you wish to proceed
with Staircasing and, as such, your solicitor
and our solicitor may charge an abortive fee
should you withdraw from the transaction at
any stage.
Step 5: We instruct our solicitors:
Once we receive your “Request to Proceed
Form” we will instruct our solicitor,
Penningtons electronically to ensure all
documents are processed securely, and
without postal delay.
Penningtons act on behalf of Metropolitan,
and will be responsible for managing the legal
proceedings of your Staircasing. From this point
on you will need to liaise primarily with your
solicitor who, in turn, will liaise with Penningtons.
Step 6: Memorandum of Staircasing
Once your additional funds have been
approved, Penningtons will produce a
Memorandum of Staircasing for approval.
This is a legal document which is inserted into
the lease and confirms completion of your
further or final Staircasing. The document will
be sent to Metropolitan, for our Director to sign,
this is then returned to Penningtons who will
forward to your solicitor for approval. You will
be required to sign the document and consent
to the Staircasing provisions. Your solicitor is
responsible for inserting the document into
the lease following completion and will explain
this process.
6.
Step 7: Completion
Staircasing is a legal process and therefore
our solicitors will liaise with your solicitors to
ensure all legal documentation is completed
before agreeing a completion date.
They will also arrange for the payment of your
Staircasing premium to be paid to Metropolitan,
along with any arrears that are outstanding
on your rent and service charge account at
the time of Staircasing. It is important you
keep your rent and service charge account
balanced. Once we have received confirmation
of completion from Penningtons we will contact
you within 10 working days to advise you of
your new monthly charges. Depending on
how many shares you have purchased, these
charges will be a combination of rent and a
service charge or just service charges.
Following completion your solicitor is
responsible for contacting the Land Registry
and making any necessary amendments to the
legal documents held there.
Please note:
Metropolitan require 10 working days
notice to arrange the completion of your
Staircasing transaction. Your solicitor
will contact our solicitor to arrange this.
The 10 working days allow us time to
provide accurate figures and arrange for
the completion statement to be finalised
ahead of completion. You will not be able
to complete with any outstanding arrears
on rent and/or service charges.
You are at risk of losing your home
should you fail to keep up your mortgage
and service charge payments.
Staircasing in summary
Our visual guide to the key steps of Staircasing:
Step 1: Find out if Staircasing
is affordable for you
Speak with your current or new lender
Contact a Specialist Finacial Advisor
1 - 2 weeks
Step 2:
Instruct a valuation
Step 3: Send your
valuation to Metropolitan
Check you are able to Staircase
before obtaining a valuation
Complete ‘Confirmation of Valuation’ form
Valuer must be RICS registered/regulated
Research solicitors to work on your behalf
Valuer must provide the
comparable properties and sales
prices within last six months
Recieve confirmation of premium payable
5 working days
1 - 2 weeks
Step 6: Memorandum
of Staircasing
Step 5:
We instruct our solicitors
Step 4:
Request to proceed
L
GA
LE
Sign legal document (Memorandum)
and consent to Staircasing provisions.
5 working days
Step 7:
Completion
Liaise primarily with your solicitor
who will, in turn, liaise with Penningtons
(Metropolitan’s solicitors).
Complete ‘Request to Proceed’ form
and send to Metropolitan. This formally
confirms that you want to Staircase
5 working days
5 working days
Step 8:
Shout about it
Step 8:
Shout about it
Huz
zah
!
Solicitors ensure all legal
documentation is completed
and agree a completion date.
7.
Fill out our customer satisfaction survey to
give us feedback on how your Staircasing
went, get involved with our customer forum
or even volunteer for publicity to help raise
awareness of Staircasing to current
leaseholders and future Shared Ownership
home buyers.
Fill out our customer satisfaction survey to
give us feedback on how your Staircasing
went, get involved with our customer forum
or even volunteer for publicity to help raise
awareness of Staircasing to current
leaseholders and future Shared Ownership
home buyers.
Staircasing FAQ’s
How many times I can staircase?
The maximum amount of times a leaseholder can
Staircase is three times. Each time you Staircase
you will be liable for costs, such as a valuation fee,
and legal fees, and so it is advisable to Staircase in
one tranche if this is possible.
also finalise the transaction with Land Registry
upon completion. You should keep up to date with
your solicitor; it is in both yours and Metropolitan’s
interest for the Staircasing to complete as soon as
possible.
How much can I staircase at one time?
The minimum share you can purchase is outlined
in your lease, usually you are required to buy a
minimum share of 10% and in multiples of at least
5%. Except the final share which should take you
to 100%.
Can Metropolitan give advice regarding which
solicitor to use?
At Metropolitan we are unable to make a
recommendation; however we have provided you
with a list of solicitors who are familiar with the
Staircasing process and can offer their expertise
and advise you accordingly.
When can I staircase?
Older shared ownership leases prohibit you from
being able to Staircase until you have owned the
property for at least three months, so if you’re
buying a resale home this is a clause you may
want to check. More recent shared ownership
leases allow you to Staircase immediately provided you can afford to.
Can Metropolitan recommend a surveyor?
Metropolitan provide a panel of surveyors who are
familiar with the Staircasing process. They are not
however recommended by Metropolitan, they are
independent, you are welcome to use a valuer of
your choice. The valuer should be RICS qualified
and regulated. You should check this when
instructing the valuation.
What happens to my rent and service charge
following completion of staircasing?
If you are completing an intermediate Staircasing,
your rent will decrease, the Service Charge, Long
Term Maintenance, Management Fee and Buildings
Insurance, plus any other charges will remain the
same. If you are Staircasing to 100%, your rent will
cease. Service charges may or may not be payable,
dependent on the below:
Will I have to pay Stamp Duty?
You may or may not have to pay Stamp Duty,
depending on how much, if any, was paid when
you bought your home, and also what the current
Stamp Duty threshold is. Your solicitor will advise
you further on this.
Flats - the Service Charge, Long Term Maintenance,
Management Fee and Buildings Insurance, plus any
other charges, will remain the same.
Properties purchased through the DIYSO scheme All charges will cease.
Houses- For houses where you acquire the
Freehold title upon final Staircasing, most charges
will cease. However we do have some houses
which form part of a communal estate and will be
subject to communal charges. A document called
a TP1 will be executed upon final Staircasing to
confirm this. Your solicitors will be able to advise
further.
How long does the staircasing process take?
On average a Staircasing transaction takes two to
three months from when the valuation
is instructed.
Why do I have to appoint a solicitor to act on my
behalf?
Staircasing is a legal transaction, further to which
there are legal formalities which need to be
checked and completed during the purchase by
a qualified legal representative. Your solicitor will
8.
What happens if I want to add or remove another
person to/from the property ownership?
If you are staircasing to 100% ownership you
will need to include the details in your forms
confirming who should be added and the details
will be added to the instruction to our solicitors.
If you were interim staircasing not to 100%
ownership then the person being added will need
to register and be approved by the local homebuy
agent to confirm their eligibility for the shared
ownership scheme. Once approval is received,
forward the approval to our team and we will
include their details to the instruction.
Once I own the property outright, can I sell it on
the open market?
Yes, but your solicitor will need to contact
Metropolitan to change service charge details.
Once I own the property outright can I rent it out?
Yes you can but only when you own the property
outright and not before.
Which home improvements are considered by
Metropolitan when Staircasing?
When Staircasing, some home improvements,
which have been pre-approved by Metropolitan
will be discounted from the valuation to ensure
you are not paying for the cost of the work
within your Staircasing premium.
Home improvements are defined below:
Addition of a conservatory
Extension
Loft conversion
Porch
New Garage
Newly installed central heating (if there was
no central heating prior to this)
Installation of double glazed windows (if
there was no double glazing prior to this)
Newly fitted Kitchens and Bathrooms (Where
value has been added to the property in
the valuers opinion. It is important to note
that fitted kitchens and bathrooms will
depreciate over time and so may not impact
on the valuation where the work has been
completed some time ago.
Repairs and maintenance are defined below:
Redecoration of your home
Floor coverings
Fitted wardrobes
New fencing
New patio/decking
Garden landscaping
Garden structures (shed/summerhouse)
Replacement/upgraded central heating
Replacement/upgraded double glazing
Boiler replacement
Boiler repairs
Rewiring or re-plumbing
Replacement windows.
Panel of registered surveyors
Below is a list of surveyors who are qualified with
and regulated by the Royal Institute of Chartered
Surveyors (RICS). The surveyors listed are also
familiar with the Shared Ownership scheme.
The valuer should provide at least three
comparable properties and sale prices. The
comparables must be dated within the last six
months.
The surveyors are independent and we have no
influence over the valuation figure provided by
them. We can use the contents of your valuation
report for reporting and analytical purposes.
The valuer must not be related or known to you.
Below are the requirements for the completed
report. You must ensure the report meets
our requirements. If you need further
explanation of the requirements, email us at
[email protected]
The valuer must be regulated by RICS, with a
recognised RICS qualification.
The valuer is independent to an estate agent.
We cannot accept Estate Agent valuations as
estate agents are not RICS qualified.
Please note:
The valuer must inspect the interior of the
property and provide a full valuation report.
Valuations carried out for bank or mortgage
purposes will not be accepted
We will require a copy of the valuation report;
the validity of the valuation must be shown
on the report and the report must state that
Metropolitan can use the contents of the report.
On the day of the appointment, you must
confirm to the valuer (accurately) the number of
years remaining on your lease as this can affect
the valuation figure.
The above guidelines must be adhered to, you will be required to liaise with the valuer for any
necessary corrections and any additional costs incurred as a result will be your responsibility.
A valuation which does not meet the above criteria will not be accepted by Metropolitan.
9.
Panel of registered surveyors
MAP Surveyors:
Areas covered:
All: BR, CR, DA, SE, EC, E, TW, UB
EN 1, 2, 3, 4, 5
IG 1, 4, 8
TN 1, 2, 4 ,8 ,9, 10, 11, 13, 14, 15
ME 6, 14, 16, 19, 20
T: 01322 223331
W: www.mapsurveyors.co.uk
Aspect Surveyors:
Areas covered:
All London postcodes and majority postcodes
within the M25
Telephone: 0208 446 4808
FEE:
£250
plus VAT
T: 0207 517 0700 (Quote Metropolitan)
W: www.aspectsurveyorslimited.com
Capital Chartered Surveyors:
Castles Surveyors:
Within the M25, Please refer to Website
for full coverage.
Areas covered:
N1-N22, NW2-NW7, E2-E17, EN1-EN4.
T: 0208 875 0035
W: www.capitalchartered.co.uk
Price quoted upon value of property.
T: 0208 804 5678
W: www.castles-surveyors.co.uk
FEE:
£300
plus VAT
Gold Crest Surveyors:
Tim Stubbs Limited:
Areas covered:
Areas covered:
London, Birmingham, Derby,
Nottingham, Leicester & Manchester
DE1, DE3, DE21, DE23, DE7, DE75, DE5,
DE55, DE56, DE72, NG10, NG9, NG8
T: 01332 678416
W: www.goldcrestsurveyors.com
T: 0208 804 5678
W: www.timstubbs.co.uk
Price quoted upon value of property.
Price quoted upon value of property.
Watsons:
Sheppard & Co Chartered Surveyors:
Areas covered:
Areas covered:
NR, IP & PE Postcodes
All CB Postcodes & PE 16,19,26,27,28,29
T: 01603 751577
W: www.watsons-property.co.uk
T: 01223 460258
W: www.sheppco.co.uk
FEE:
£200
plus VAT
10.
FEE:
£250
plus VAT
FEE:
£195
plus VAT
Staircasing - Confirmation of valuation form
Please complete this form and email with a copy of the completed valuation report to:
[email protected]
Contact Details:
Names of owners:
Confirm Address:
Post Code:
Daytime number:
Evening number:
E-mail Address:
Percentage share of your property you currently own:
%
Preserved Equity YES/NO? (Please circle)
I hereby declare that the information provided above is correct at the time of writing.
Client full Name/s:
Client Signature/s:
Date:
If the property is jointly owned, we require the signatures of all co-owners.
11.
Panel of solicitors
We strongly advise you appoint a solicitor with knowledge of affordable housing conveyancing.
Included in this pack are a panel of solicitors with experience in this field, but you are of course
free to choose your own solicitor.
The solicitors on the panel are independent to Metropolitan and we do not endorse their services.
Cavendish
Tinklin Springall Solicitors
188-190 Hoe Street
Walthamstow
London
E17 4QH
Devonshire House
Elmfield Road
Bromley
BR1 1TF
T: 020 8509 6800
E: [email protected]
T: 020 8402 6222
W: [email protected]
Direction Law
Key Conveyancing Solicitors
31 Watling Street
Canterbury
Kent
CT1 2UD
Northampton
St Edmunds House
St Edmunds Road
Northampton, NN1 5DY
T: 01227 764 141
E: [email protected]
T: 01268 280096
W: [email protected]
Contact us
If you have any questions about Staircasing,
would like to give us feedback or make a
complaint please get in touch:
Metropolitan
Home Ownership After Sales Team
The Grange
100 High Street
Southgate, London, N14 6PW
mho.co.uk
[email protected]
0203 535 2666
You can call us Monday to Friday, between
09:00 to 17:15 on 0203 535 2666, select
option two.
12.