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The records you don't want to lose.

We have been advising for years about the need for accurate asset and liability registers and the importance of retaining records through the life of a Property. The need for documents may arise on a sale, equity investment, portfolio transfer or property charging transactions. Although some missing documents can be obtained from third parties, there is one record that is very difficult to find if missing: shared ownership staircasing information.

Staircasing records are not publicly registered

Whilst initial and final staircasing lease sales or transfers are registered at the Land Registry, interim staircasing transactions are not. Shared ownership record keeping remains surprisingly analogue. Typically it requires the Memorandum of Staircasing (MoS) to be physically attached to the back of the original lease. The RP freeholder then has the responsibility of updating its internal housing database with the new staircasing percentage sold and the revised rent payable and ensuring the original MoS is filed with the original lease.

The updated staircasing information must be accurately recorded on the housing database.  Purchasers, investors looking to acquire shared ownership reversionary portfolios and funders are particularly interested in the accuracy of this information given it is a core factor in the value and management of the stock.  You may be required to warrant the accuracy of this information to third parties on a transaction.  If this information is missing or incomplete you may be misrepresenting the position and it may also mean that RPs are not collecting the correct rent on the leaseholder's share. 

Reconstituting staircasing records

If missing, this important information needs to be reconstituted, but how?

If an external lawyer acted for the RP on the staircasing, they would be the best place to start.  However staircasing is typically dealt with by an RP's in-house specialist staircasing team.  

The leaseholder may be enjoying the 'rent break' and may not be minded to assist. 

If the information cannot be located internally, we suggest two initial steps:

  1. approach the solicitor who acted for the leaseholder to request certified copies of the MoS and
  2. approach the valuer who valued the Property to provide the valuation.

Protect staircasing records

On all staircasing transactions we recommend:

  1. Accurately filing original leases so that the MoS can be attached and placed with the relevant lease.
  2. File the MoS promptly.
  3. Ensure your housing database is updated correctly after each and every staircasing.
  4. Ensure IT records are routinely backed up.
  5. Retain records of who represented the tenant and who carried out the valuation.

After reading this, do consider checking existing data so steps can be taken to complete any information gaps. The sooner this is done the better as information, and the possibility of reconstituting it, is easier when memory is recent.  Uncovering deficiencies in records in the middle of a sale, charging transaction or portfolio transfer, when timetables must be met can, and does, cause unnecessary delays, risks of price chipping and increased costs.