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How occupiers of shared ownership property can 'staircase', or increase the share of the property that they own.

Increasing the leasehold share

The leasehold share of a shared ownership property can normally be increased in blocks; this is known as 'staircasing'. The minimum share that needs to be purchased varies between schemes. Often, staircasing is prohibited during the first year of the term of the lease. There may also be restrictions on staircasing in designated protected areas[1] and in certain rural areas. The cost of staircasing is determined by the valuation of the property at the time staircasing takes place. Applicants will usually be responsible for the cost of the valuation, and the cost of their own and the landlord's solicitors. Applicants who staircase to 100 per cent may also have to pay stamp duty.

The landlord will not usually give consent to staircasing if there are any rent arrears on the property. If the property is a house, the freehold is automatically transferred when the leaseholder owns 100 per cent of the equity. However, in designated protected areas in England, certain leases must contain a requirement for the leaseholder to sell her/his property back to the original landlord or its nominee when s/he wishes to sell the property.[2] If it is a flat or maisonette a long lease at a nominal ground rent will be granted, usually 99 years for the first owner.

Downward staircase

It may also be possible to 'downward staircase', or request the registered social landlord to buy back shares, if the occupier has difficulty paying the mortgage. See the page Shared ownership: repossession for more information.

Buying the freehold

If all the leaseholders of flats in the same scheme have staircased to 100 per cent, the private registered provider of social housing (PRPSH) landlord may decide to dispose of its freehold interest. Disposal is likely to be to a management company formed by the leaseholders themselves who would then be responsible for the management of the properties and landlord obligations under the lease.

100 per cent leaseholders of flats in existing shared ownership schemes also have the right to collectively buy the freehold if they can satisfy the required conditions under the legislation[3] See the page Collective enfranchisement for details. Leaseholders with smaller shares would then have to lease back their properties from the new freeholders.

[1] Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009 SI 2009/298.

[2] Housing (Shared Ownership Leases) (Exclusion from Leasehold Reform Act 1967) (England) Regulations 2009 SI 2009/2097.

[3] s.1 Leasehold Reform, Housing and Urban Development Act 1993.

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