Staircasing is broken – both for shared owners and housing providers

London has the highest concentration of shared ownership homes in the country. For many residents, it is not a stepping stone by choice but the only alternative to an increasingly unaffordable and unstable rental market. These are households who, in a different era, might have accessed a council home, but now face a system with too little supply and too few viable pathways.

Yet staircasing has become increasingly difficult. Many shared owners are already managing a mortgage, rent on their unsold equity and service charges alongside rising living costs. Add valuation fees, legal costs and today’s mortgage rates, and the decision to staircase can feel financially exposing rather than progressive.

“Enabling shared owners to buy additional equity at costs closer to what they already pay in rent on their unsold share would make progression realistic for far more households”

It is therefore unsurprising that staircasing rates have fallen to around 2%, particularly in London, where even small percentage increases represent significant sums.

Tax policy further complicates progression. Stamp Duty Land Tax (SDLT) applies to shared ownership in ways that particularly affect London, where higher property values and share prices shape buyer decisions. Purchasers can choose a Market Value Election (MVE), paying SDLT upfront on the full market value, or opt to pay SDLT in stages based on the share they initially buy.

Following the April 2025 changes – reducing the first-time buyer relief threshold from £425,000 to £300,000, introducing a 5% band up to £500,000 and removing relief entirely above that level – fewer London buyers are likely to choose the upfront MVE option.

Where buyers instead opt for staged SDLT, any staircasing beyond 80% ownership triggers SDLT at standard residential rates, and only the initial share purchase qualifies for first-time buyer relief. This creates a structural disincentive to progress to full ownership.

For resales, the original purchaser’s SDLT choice passes to the next buyer, who inherits that tax position. Where records are unclear or misunderstood, this can lead to miscalculations or HMRC scrutiny, adding friction to both resale and future staircasing.

In a system already operating on tight margins, these tax complexities risk stifling mobility and slowing the recycling of homes and capital that the model depends upon. This is not a failure of aspiration. It is a mismatch between policy design and lived economics.

Why this matters goes well beyond individual households. When shared owners staircase – particularly to 100% – housing associations receive a capital receipt that can be recycled directly into new homes. At full ownership, recycled capital grant is released back into the system, supporting further delivery.

This is one of the few mechanisms that simultaneously supports resident progression and increases supply. In other words, when staircasing works, it helps create the homes that others urgently need.

Recent discussions about government-backed staircasing mortgage products are therefore both timely and necessary. Enabling shared owners to buy additional equity at costs closer to what they already pay in rent on their unsold share would make progression realistic for far more households.

Staircasing at borrowing costs close to the monthly rent on unsold equity would re-anchor the model to residents’ actual financial capacity, particularly in high-value markets like London.

“In London especially, where demand is relentless and options are narrowing, making staircasing work better is not a peripheral issue”

But there is an opportunity to go further with a targeted, time-limited intervention that aligns resident outcomes with government supply objectives. The interesting thing about this proposal is that it combines a demand-side subsidy that would then trigger a massive supply-side boost – enabling social landlords to build thousands of new affordable homes.

And unlike other demand-side initiatives, helping existing shared owners to buy 100% of their home is non-inflationary. All of the capital receipt is recycled within the sector – enabling social landlords to build homes for households in housing need.

A clear policy option would be for the government to allow Recycled Capital Grant Fund (RCGF) to be used to subsidise mortgage rates for existing shared owners for a fixed period to fund the purchase of the unsold equity. This would not eliminate risk, nor would it freeze costs indefinitely. Instead, it would provide a stable, predictable runway during which shared owners could increase equity without being priced out mid-journey.

Such an approach would be time-limited, avoiding permanent subsidy and targeted at supporting households who are progressing rather than static. It would be supply-positive, accelerating release of capital receipts and grant recycling, and fiscally rational, reducing long-term pressure elsewhere in the housing system. And it would provide a welcome boost to the reputation of shared ownership which has suffered due to the inability of residents to staircase.

Crucially, this is not about guaranteeing outcomes. No housing pathway offers complete certainty. What residents need and what policy can credibly provide is confidence: confidence that costs will not escalate unpredictably, that the framework will remain stable and that sustained effort will translate into tangible progress.

For housing associations, increased staircasing strengthens balance sheets and development capacity. For the government, it accelerates the return on existing investment in shared ownership and supports delivery without requiring additional government funding. For residents, it restores shared ownership as a credible pathway rather than a holding position.

In London especially, where demand is relentless and options are narrowing, making staircasing work better is not a peripheral issue. It is one of the most immediately available tools for increasing supply and reducing housing-driven poverty. Staircasing should feel like progress, not a privilege.

With a focused, pragmatic policy intervention, shared ownership can once again deliver for residents, housing providers and the wider housing system alike.

Pamela Newman, vice-chair, G15 residents’ group