Selling your share in a shared ownership property presents its own set of challenges, distinctly different from traditional house sales. In this guide, closely linked to our broader discussion on how to sell your house, you'll find specialised advice, touching upon unique scenarios like how do I sell part of my garden. With insights mirroring our tips for selling your home, this article demystifies the process, equipping you with strategies to make your sale both smooth and successful. Dive into understanding the specific benefits and considerations unique to your situation.
Introduction to shared ownership
What is shared ownership?
Shared ownership is a government scheme in the UK designed to assist first time buyers and those who don't own a property. It offers a way to buy a share of a home and pay rent on the remaining part.
Typically, you buy between 25% and 75% of the property, with the option to purchase more shares later. This method makes the first step onto the property ladder more accessible for many, balancing ownership with affordability.
How does shared ownership differ from full ownership?
In shared ownership, unlike full ownership, you own a portion of the property while a housing association owns the rest. You pay a mortgage on your share and rent on the remaining part. This setup differs significantly from full ownership where you own 100% of the property.
Most shared ownership leases include specific conditions, such as a landlord's nomination period, affecting how you sell the property. Understanding these nuances is vital for shared owners contemplating selling their share.
Preparing to sell your shared ownership property
Review your shared ownership lease
Shared ownership leases contain unique clauses vital to your selling process. It's essential to understand these details. Your lease outlines rules about selling your share, including any restrictions and necessary steps. Reviewing your lease helps you prepare adequately for the sale.
Contact your housing association or local authority
Your housing provider plays a significant role in the selling process. Contact them early to discuss your intentions and understand their requirements. They can provide crucial information about the nomination period and their role in finding a buyer.
Valuation and energy performance assessment
Getting your property valued
Obtaining an accurate valuation of your shared ownership property is the first step in setting a fair price. A professional valuation reflects the current market value, ensuring you list your property at a competitive yet realistic price.
Understanding energy performance certificates (EPC)
An Energy Performance Certificate (EPC) is a legal requirement when selling property. It assesses the energy efficiency of your home, a factor increasingly important to buyers. Ensure you have a valid EPC before listing your property.
Organizing essential documents for sale
Leasehold information form
The Leasehold Information Form is a key document in the conveyancing process. It provides details about your lease, service charges, and ground rent. Having this form ready streamlines the selling process.
Property information form
The Property Information Form contains details about your shared ownership home, including boundaries, disputes, and alterations. Completing this form accurately is crucial for transparency with potential buyers.
Marketing your shared ownership property
Choosing the right estate agent
Selecting an estate agent experienced in selling shared ownership properties can significantly influence your selling journey. Estate agents with a deep understanding of shared ownership schemes effectively target the right audience.
They're skilled in showcasing your property's unique features while adhering to the nuances of shared ownership. Look for an estate agent with a proven track record in this area, one who demonstrates a robust marketing strategy and a detailed understanding of shared ownership buyers' needs.
Effective advertising strategies
Effective marketing transcends mere listing; it's about engaging the right audience. Shared ownership properties attract a specific buyer group, often first-time buyers or those with limited financial resources.
Capitalize on this by highlighting affordable aspects of your home, such as lower deposit requirements and the potential for gradual equity increase. Emphasize these benefits in your advertising materials. Use diverse media channels, including online platforms, to reach a broader audience. Incorporate high-quality photographs and clear, concise descriptions to make your listing stand out.
Setting convenient viewing times for potential buyers
Flexibility in viewing times can be a decisive factor for busy buyers. Offering a range of viewing times, including evenings and weekends, accommodates the schedules of potential buyers, increasing the likelihood of a sale.
Ensure your home is presented in its best light during viewings – tidy, well-lit, and inviting. This not only creates a positive impression but also helps buyers envision themselves living in the space.
Legal aspects of selling shared ownership
Selecting a conveyancing solicitor
Selecting a conveyancing solicitor is a foundational step in selling a shared ownership property. This professional plays a pivotal role in overseeing the legal aspects of the transaction. It's essential to choose a solicitor experienced in shared ownership sales, as this area of property law has unique nuances.
Your solicitor will handle the legalities, from drafting and reviewing contracts to liaising with the housing association. They also ensure compliance with the terms of your lease and shared ownership scheme.
Understanding the sales process
Understanding the sales process when selling a shared ownership property involves a series of steps, similar to selling any property but with additional specificities due to the shared ownership nature. Initially, you'll need to inform your housing provider of your intent to sell.
They may have a buyer waiting or might exercise their right to buy the property back. Your solicitor will guide you through the process, ensuring all legal requirements, including those set by the housing association, are met.
Exchange and completion: Key dates and procedures
Exchange and completion are critical stages in the sales process. The exchange of contracts legally binds both parties to the sale. At this point, a completion date is set, usually within a few weeks. Your solicitor will handle the exchange, ensuring all contract terms are agreed upon.
On the completion date, the property ownership officially transfers to the buyer. It's vital to coordinate with your solicitor and housing association to ensure these steps progress smoothly.
Addressing housing association's legal fees
Addressing the housing association's legal fees is a necessary aspect of selling shared ownership. These fees are for the services the association provides during the sale, such as administrative tasks or legal work related to their portion of the ownership.
These fees should be clearly outlined in your lease agreement. It's important to factor these into your financial planning for the sale. Your solicitor can help negotiate these fees and ensure they are fair and in line with your lease terms.
Financial considerations in selling shared ownership properties
Calculating selling fees and costs
Selling a shared ownership property involves various fees and costs. You'll need to budget for the estate agent's marketing fees, legal fees for conveyancing, and possibly a mortgage broker's fee if you're buying another property. Remember, these costs reduce the profit you make from the sale. A detailed financial assessment is essential to understand the total costs involved.
Assessing affordability for potential buyers
Potential buyers of your shared ownership property must undergo a detailed financial assessment. Housing associations assess affordability to ensure buyers can sustain the shared ownership scheme. This process includes reviewing the buyer's income, credit history, and other financial commitments.
Negotiating with your housing provider
When selling your shared ownership property, communication with your housing provider is key. You'll discuss issues like the market value of your share, selling terms, and any fees they charge. Negotiating these terms early in the process helps avoid surprises later.
Eligibility and restrictions
Eligibility criteria for shared ownership buyers
Eligible buyers for shared ownership properties must meet specific criteria set by housing associations. These criteria often include income limits, first-time buyer status, or local connection requirements. Ensure you understand these criteria to find a buyer who's eligible.
Understanding the nomination period
The nomination period is a critical timeframe in selling your shared ownership property. During this period, your housing provider has the right to find a buyer for your property. This period typically lasts around eight weeks. If they can't find a buyer, you can then sell on the open market.
First refusal rights and implications
First refusal rights are a standard clause in shared ownership leases. These rights allow your housing provider the first opportunity to buy back your share before you can offer it to others. Understanding the implications of these rights is vital for a smooth selling process.
Selling a partial or full share
Can you sell 100% of a shared ownership property?
Selling a shared ownership property, whether partially or fully, requires navigating specific procedures. When considering selling 100% of a shared ownership property, the process mirrors a typical property sale in many aspects. Initially, shared owners need to decide if they want to staircase to 100% ownership before selling or sell their existing share. Selling 100% involves staircasing, where you increase your ownership share to the full 100%.
This step necessitates obtaining a valuation report to determine the property's market value. Moreover, engaging a mortgage broker can be beneficial if additional financing is required. Remember, staircasing to full ownership might incur extra costs, such as paying off the remaining share to the housing association.
Options for selling a partial share
Selling a partial share of a shared ownership property presents unique challenges and opportunities. Firstly, you must inform your housing association of your intent to sell. They might have a right of first refusal or a preferred method for finding a buyer.
For example, some housing associations use their own platforms to exclusively market your shared ownership property. The agreed nomination period, typically around 8 weeks, is crucial.
During this time, the housing association tries to find an eligible buyer. If they can't find a buyer, you can then sell your share on the open market. Additionally, it's important to be aware of service charges and fees that may apply during the sale process.
A valid Energy Performance Certificate (EPC) is also essential before marketing your share. Finally, you'll need to engage with your own legal team to handle the conveyancing process, covering your own legal fees.
Frequently asked questions
How can I ensure a smooth selling process?
Selling a shared ownership property involves several key steps. Firstly, contact your housing provider for any specific requirements they have. Next, get a RICS valuation report to determine your property's market value.
Prepare all necessary documents, including a leasehold information pack and fixture and fittings form. Choose a reliable estate agent who understands shared ownership sales. Finally, liaise with your buyer's solicitor to ensure all legal aspects are handled efficiently.
Is selling a shared ownership property more complex than a standard sale?
Selling a shared ownership involves additional steps compared to a standard property sale. You must coordinate with your housing association and adhere to specific shared ownership rules. For instance, you might have to offer the property first to the housing association or a similar process to find a shared ownership buyer.
Legal procedures, such as handling the mandatory buyback lease, also add complexity. However, with good preparation and advice, you can manage these complexities effectively.
Can you make a profit on shared ownership?
Profit potential in selling a shared ownership home depends on various factors. The market value of your share, as determined by a RICS valuation, plays a crucial role. Market conditions, improvements made to the property, and the terms of your lease can also influence profit.
Remember, any increase in value is shared proportionally with the housing association. Selling when the market is favourable can increase your chances of making a profit.