Shared ownership was designed to bridge the gap between renting and owning, giving households the chance to buy an initial stake – often 25% to 50% – and pay rent on the rest. Over time, they can purchase additional shares, a process we call staircasing.
It sounds simple, even inevitable: step by step, residents buy more of their home until they reach 100% ownership. But here’s the uncomfortable truth: most never do.
The Numbers Don’t Lie
Research by UCL shows that in London, fewer than 1% of shared owners ever part-staircase, and only a marginally higher number reach full ownership.¹ Nationally, Parliamentary evidence suggests just 2–3% of households achieve 100% staircasing in any given year.²
Yet despite this, we still see appraisals and financial models that assume staircasing will take place. That assumption is not just optimistic, it’s misleading.
Why Staircasing Has No Place in an Appraisal
1 It’s optional, not inevitable
Residents may want to staircase, but affordability, mortgage access, and life circumstances often prevent it. Assuming they will is wishful thinking.
2 Appraisals must reflect the present, not the possible
RICS valuation principles are clear: appraisals should be based on current ownership, lease conditions, and restrictions. Future behaviour, however attractive on a spreadsheet, does not belong in today’s value.
3 The costs and caps matter
Valuation fees, legal bills, remortgaging costs, and sometimes stamp duty all add friction. Many leases even restrict staircasing to 75–80%. Ignoring these realities paints a falsely rosy picture.
4 Market risk is real
House prices fluctuate. A 25% share today could cost dramatically more or less in the future. Building this uncertainty into an appraisal undermines its integrity.
The Consequences
When staircasing is included in valuations, everyone loses:
- Residents are given unrealistic expectations of equity growth.
- Lenders are exposed to distorted risk profiles.
- Housing associations risk flawed financial planning models.
The result? Failed sales, disputes, and reputational damage for the entire tenure.
A Better Way Forward
At SDS, we take a clear stance: staircasing should be modelled as a scenario, not a certainty. If providers want to show potential outcomes, they should do so separately, fully costed, with caveats, and labelled as hypothetical.
Valuations, by contrast, must remain rooted in the here and now. Only then can they support robust governance, protect lenders, and deliver fairness to residents.
The Bottom Line
Staircasing is a valuable option within shared ownership. But it is not the default journey, and it should never be written into appraisals as if it were. In a housing sector facing unprecedented scrutiny over transparency and trust, accuracy matters.
We owe it to residents, lenders, and ourselves to keep appraisals honest. And that means leaving staircasing out.
References
1 UCL Bartlett, The Shared Ownership Market in London, 2020
2 House of Commons, Shared Ownership Inquiry Report, 2021
