If you have a shared ownership property, you will encounter some restrictions if and when you want to sell it on. If, however, you have staircased to 100% ownership, then these restrictions may not apply to you, as you are generally considered the sole owner of the property. It’s important to check the details of your lease to see if this is the case for you.
If you do not own 100% of the property, however, then there is a process you must follow when it comes to selling up. This process will be detailed within your lease, but here’s a guide to what you can expect when selling your shared ownership property.
How does shared ownership work when you sell?
If you wish to sell, you must first contact your Housing Association and let them know. This is because they have the option to try and find a suitable buyer for your home first, known as ‘right of first refusal’. This means that you cannot simply put your house on the open market yourself straight away.
Once you have informed your Housing Association of your intention to sell, you will need to have your house valued by a suitably qualified RICS surveyor. This is so that you can determine the value of your share of the property. You will be responsible for meeting the cost of this valuation. You can generally choose the surveyor that values your home, although your Housing Association will often provide you with a list of surveyors acceptable to them for you to choose from.
Once the valuation report has been prepared and you are happy with it, you and your Housing Association will be able to agree on the value of your share of the property. The Housing Association will then offer the property to any potential purchasers they have on their waiting list. Alternatively, they can go straight to the general housing market to find a buyer.
This process exists to ensure that shared ownership properties remain available to those in need of affordable housing. Your property will be put on the market as a shared ownership property and a suitable buyer will need to be found to buy your share of the house.
Let’s say for example that you own 50% of the property. Your buyer must purchase at least that 50% share. The Housing Association will continue to own their 50% share and the new buyer would take up the rent payments on this, as well as the mortgage payments on the share they have purchased from you – in the same way you did when you first bought the property.
To make your property attractive to more potential buyers, you may be able to sell some or all of the Housing Association’s share of the property at the same time as selling your own share. This is through a process known as back-to-back staircasing. You will need the Housing Association’s agreement to do this in advance.
Effectively, on the day of completion of the sale, you buy the additional share from the Housing Association and then sell it immediately to your buyer. The buyer pays you for both shares and you then pay the Housing Association from these funds. Through this method you may be able to offer 100% ownership of the property to a new prospective buyer, thus getting around the shared ownership eligibility criteria requirement for the new owner.
What happens if the Housing Association cannot sell my property?
If the Housing Association is unsuccessful in finding you a buyer for your share of the property within the specified nomination period stated in your lease, then you can approach an estate agent and put it on the market yourself, or sell privately if you wish.
If you have not staircased to 100% ownership at the time of wishing to sell, you will still need to sell your home on a shared ownership basis. This means that your buyer will need to meet all the relevant shared ownership eligibility criteria and be approved by your Housing Association. They will be required to purchase a share equal to or higher than the share you currently own.
If you have staircased to 100% ownership, then it is likely that you will be able to go straight to the open market without the involvement of your Housing Association, and your buyer will not need to meet the shared ownership eligibility criteria. Again, you will need to check your lease in advance to see if this is the case.
How long does it take to sell a shared ownership property?
Typically, the Housing Association will have around six to eight weeks to sell your property before it falls to you instead. Every case will be different, but most Housing Associations maintain a list of all the people who have expressed an interest in buying a shared ownership home. This means they can often find a suitable buyer quite quickly. In fact, one of the largest housing providers in London and South Eastern England reported finding a shared ownership buyer within the eight-week period 98.8% of the time.
If you do find that your housing provider is unable to find a suitable buyer and your property does have to go onto the open market with an estate agent, then it may prove slightly more difficult to sell than a regular property. This is because you will be restricted to finding a buyer who meets all the shared ownership eligibility criteria. The buyer will need to be assessed by the housing provider, and a suitable mortgage product will also need to be sourced.
What costs are involved in selling a shared ownership property?
The costs you will encounter when selling your shared ownership property will depend on where you live and the value of your property. Generally though, here are the costs you should budget for:
- Housing Association marketing fee – otherwise known as a ‘nomination fee’. This is a fee for the Housing Association’s marketing costs. This fee will depend on the Housing Association but can vary up to around £350
- Valuation fee – as previously mentioned, you will be required to cover the cost of a suitable valuation. This will depend on the location and size of your property but you can expect it to come in at around £250-500
- Legal fees – you will need to cover your solicitors/conveyancers’ fees and any legal fees incurred by your Housing Association. Budget around £1,000-2,000 for this
- Leasehold Information Pack – your buyer’s solicitor may request a Leasehold Information Pack which contains details of your obligations as a leaseholder. This generally costs around £200
- Energy Performance Certificate (EPC) – you will need to provide a valid EPC before your house goes up for sale. Your Housing Association may charge you between £50-100 for this
- Assignment fee – if your Housing Association sells your share of the property within the initial nomination period, then they may take a small percentage of the sale price of your share as their assignment fee. This can be around 1.5% of the sale price of your share but they vary and can be set fees
- Estate agent fee – if, however, you end up selling through an estate agent, then you will pay estate agent fees instead. It is recommended to book three estate agents to come and take a look at your property before enlisting one, as all their costs are set differently.
Although you will face some restrictions when selling your shared ownership property, your Housing Association will do a lot of the work for you. Provided they are successful in finding you a buyer, as they are in most cases, then it shouldn’t prove too painful.
Need advice on the next step of the journey with your shared ownership property? Whether you are sticking with the scheme or purchasing your next property without the scheme, we can help you with your mortgage. Give us a call on 01908 597655 or contact us via our website.