Selling any type of property can be difficult. The chains, the valuations, the viewings and the delays can all lead to a frustrating period for a homeowner. What if your house is part of a shared ownership scheme? Well, unfortunately, this can be more complicated. Selling a shared ownership property can be hard. It isn’t impossible but it can certainly be a little more complex than selling property under other types of ownership.
What is shared ownership property?
A house or flat that falls under the shared ownership title is one where ownership, as the title suggests, is shared. In the instance of shared home ownership, the property is owned in part by a housing association and in part by the buyers.
Introduced as a way to help people get their foot on the property ladder, the scheme gives first-time buyers or those without a home the chance to buy a percentage of the property whilst the association retains the rest. With 25%-75% of the property available to the first-time buyer, a mortgage is paid on the part that is owned whilst rent is paid to the housing association for the part that they still retain.
It is welcomed by many thanks to a mortgage only being required for the portion that is being bought, the value of the deposit required is therefore much less and as a result easier to obtain.
To give an example, the buyer could take a 50% share in the house and needs a mortgage to cover half the property value. The other half would be owned by the housing association but require rent to be paid by the buyer.
Over time, the percentage of ownership can be increased in a process known as staircasing. This can be done in varying increments and once you reach 100%, you will only pay the mortgage and no rent.
Selling a shared ownership property
There may come a time that the property you own a percentage of needs to be sold, perhaps you want to downsize or maybe you plan to relocate. Whatever the reason, it won’t be as simple as heading to your estate agent and getting it on the market. Unless you have staircased to the 100% mark.
If you own less than 100% of the property you will need to consult the housing association first. They need to be given first refusal on the property, after all, they still own a portion of it. They may be willing to take it back, but they may decide not to.
It is at this stage that selling a shared ownership property can become a little tricky. If the housing association want to buy your share back, they will through the process of first refusal. If they decide not to buy it back, they will instead find an eligible buyer for the property. However, the people eligible to buy your share must meet certain criteria.
This can mean that the selection of buyers is limited and as a result, the time it takes to sell could be a little longer. Furthermore, your house value may have increased substantially but you must remember that you only own a percentage so should your property now be worth £300,000 and you own 30%, you will receive £90,000.
What are the criteria a shared ownership home buyer must meet?
Much like when you bought the property yourself, and you had to meet certain criteria, this is the same for people looking to buy your share. They must:
- Have a household income of £80,000 or less per year (£90,000 or less in London)
- Be unable to afford all of the deposit and mortgage payments for a home that meets your needs
Then one of the following must also apply:
- They are a first-time buyer
- They have owned a home but cannot afford to buy one now
- They are creating a new household after a relationship breakdown or relocation
- They are already in shared ownership and are looking to move
- They own a home and wish to move but cannot afford a new home that meets their needs
Selling shared ownership properties
We have already mentioned how you would need to contact your housing association should you decide to sell your property but that isn’t all. Before doing that, you should probably check your lease. It will give you an outline of the processes behind selling that your housing association has.
Once you have rechecked your lease and contacted the housing association, you can proceed to the next stages that will get your property sold.
How to sell your shared ownership property
- Get a valuation on the property – in most cases, this will be via a surveyor nominated by the housing association, but you are free to find one of your own. Just ensure they are RICS certified. Once the report with a valuation comes through, you will need to send it to the housing association. A RICS report is valid for three months so you must submit it to the housing association within this time frame otherwise you will have to pay for another valuation to take place. If the housing association are happy with the valuation, you will be sent a contract to sign indicating you also agree with the valuation.
- Get an EPC for the property, it needs to be less than ten years old. This is another expense you need to cover so shop around for an EPC provider before committing. Before obtaining a new EPC you can check the EPC register for the status of the most recent EPC.
- To Make the property sellable you will need to hire a photographer to enhance the selling points of the property.
- Look at your mortgage options for the new home you may be looking to buy. The valuation will show you how much your share of the property is worth. Which in turn, gives you a good idea of the level of deposit you could put down on a new home.
- Get that sale by having your house marketed. There is commonly an 8–12-week period where the housing association will actively look for a buyer on your behalf. They may advertise on their platforms or reach out to people on their waiting lists. Even though this is often an 8-12 week period, it can be significantly quicker.
- Complete the sale once a buyer has been found and you are almost there! The new buyer will be subject to finance checks and eligibility checks one last time and should they pass, you can move to the conveyancing stage. Your solicitor will complete the conveyancing process with the solicitor from the buying party and together they will agree on an exchange and completion date.
Can I sell my shared ownership house on the open market?
If you have staircased to 100% then you can sell on the open market like you would with any other property. However, you may also still be able to sell via a traditional estate agent if you own a smaller percentage. When the property does not sell within the 8–12-week period you may have the option to go for an open market sale with an estate agent. This will all depend on the terms of your lease and any restrictions put in place by your housing association.
Costs of selling a shared ownership home
The costs you could encounter will vary per housing association but as a guide, you can expect to pay the following:
- Marketing fees can be between £300-£400 and in some cases are non-refundable. These cover the cost of the housing association promoting and trying to sell your property
- A valuation fee can cost anything from £200 up to £500 and is needed for your RICS surveyor to carry out their valuation
- EPCs vary per provider but can set you back up to £120
- Legal fees can be a huge expense and in the case of shared ownership, you pay for both the housing association and your own legal expenses to be covered
- Leasehold packs cover an array of information for the buyer and will cost you up to £300 to have prepared
The final cost is the assignment fee which is applied only if the property sells. This is 1% of the property value minus the marketing fees. If your property does not sell, the other charges will still apply.
So, it is not impossible to sell your shared ownership home and in some cases, it can be straightforward. If you have staircased to 100% and want a quick sale, let SOLD.CO.UK take care of your property. We help you avoid all of the fees by helping you sell your house for free. No legal fees, no hidden charges, and we take no commission! Let us provide an online house valuation today so you can sell tomorrow with the leading online estate agent in the UK.