In the ever-evolving UK property market market, shared ownership properties have emerged as a beacon of hope for many aspiring homeowners. As property prices soar and traditional lending options become increasingly elusive, shared ownership offers an accessible path onto the coveted housing ladder. Our estate agents Farnham are equipped with the latest market knowledge to help you Buy/Sell/Rent properties best suited for your needs.
Amidst the landscape of co-ownership and partial equity, questions often arise about the ease of selling shared ownership homes in the UK.
Understanding Shared Ownership Property:
Shared ownership homes, as the name suggests, involve ownership of a property divided among multiple individuals. This concept allows buyers and a housing organisation to jointly own a property. This initiative was designed to aid people in entering the housing market, enabling first-time buyers or those without homes to purchase a portion of the property. The organisation retains the remaining equity, and buyers pay a mortgage on the owned portion while paying rent to the housing association for their share. Typically, 25% to 75% of the property is offered to first-time buyers.
Shared ownership is appealing because it requires a mortgage only for the purchased portion, making it accessible due to lower required deposits. For instance, if a buyer purchases 50% of the property and obtains a mortgage for that amount, they would pay rent on the remaining portion owned by the housing association.
The “staircasing” method permits gradual ownership increase, with the goal of reaching 100% ownership to eliminate rent payments. Selling a shared ownership property, however, comes with certain complexities.
Navigating the Sale of Shared Ownership Homes:
Selling a shared ownership property involves more than simply listing it with an estate agent, particularly if you haven’t reached 100% ownership. Here are the steps to consider:
Consulting the Housing Association: If you don’t own the entire property, the housing association must be consulted first. They often have the right of first refusal to repurchase your share, which could complicate the selling process.
Potential Buyer Qualifications: The housing association may opt to repurchase your share through the first refusal process. If they decline, they’ll sell the house to a suitable buyer who meets specific criteria.
Limited Pool of Buyers: Selling to a buyer who meets the housing association’s criteria might narrow the pool of potential buyers, potentially prolonging the selling process.
Ownership Percentage Consideration: When selling, remember that you only receive proceeds for your owned portion. For instance, owning 30% of a home valued at £300,000 means you’ll receive £90,000.
Buyer Prerequisites for Shared Ownership:
Prospective buyers interested in purchasing your share must meet certain criteria, similar to those you met when buying the property:
Household income of £80,000 or less (£90,000 or less in London).
Inability to afford full down payment and mortgage for a suitable home.
Falling under the first-time buyer category, experiencing a change in household composition, or seeking to relocate.
The Process of Selling a Shared Ownership Property
Selling a shared ownership property entails several steps:
Property Appraisal: A qualified surveyor evaluates the property’s value. The housing association might provide a surveyor, or you can choose your own, ensuring they hold RICS certification.
EPC Requirement: If the property is less than ten years old, it qualifies for an Energy Performance Certificate (EPC).
Enhancing Aesthetic Appeal: Employing a photographer to highlight the property’s features enhances marketability.
Mortgage Consideration: Assess financing options for your potential new home based on your property’s valuation.
Marketing Your Property: List your property for sale. The housing association usually seeks a buyer within an 8–12-week period.
Finalising the Sale: Upon finding a suitable buyer, complete the sale following eligibility and financial checks.
Open Market Selling and Associated Costs:
At 100% ownership, you can sell on the open market as with any other property. For lower ownership percentages, the process may vary, subject to lease terms and housing association requirements.
Selling costs include marketing fees (£300–£400), valuation fees (£200–£500), EPC costs (up to £120), housing association and personal legal fees, leasehold pack compilation (up to £300), and an assignment fee (1% of home’s value minus marketing costs).
Shared ownership’s enduring appeal guarantees a bright future for selling such properties. While challenges exist, strategic planning and comprehensive marketing can address these hurdles effectively.
