Shared Ownership property seems a great idea to get your foot on the property ladder, with it making house buying a lot more affordable than buying on the open market. However, one thing a lot of people don’t think about is selling Shared Ownership property and how hard it may be…
Selling a Shared Ownership property is quite a complex process if you haven’t staircased your way to own 100% of the property. Lucky for you, we have a ‘how to’ guide, so you won’t be left clueless when it comes to selling.
We’ve also detailed whether or not Shared Ownership property increases in value and problems you may face when selling Shared Ownership properties.
Ready to get started? Use this menu to help you get stuck in:
- What is a Shared Ownership property?
- Is it easy to sell Shared Ownership properties?
- Selling Shared Ownership property: A ‘how to’ guide
- Do Shared Ownership increase in value?
- Selling Shared Ownership property problems
What is a Shared Ownership property?
A Shared Ownership property is one which is under a Shared Ownership scheme run by a Housing Associations. The aim of Shared Ownership is to give first-time buyers, or those that don’t currently have a property, the opportunity to purchase a share in a new build or resale property and get their foot on the property ladder.
The share in the property can be anywhere from 25% to 75%, meaning the buyer must pay the Housing Association rent for the remaining percentage of the property. The buyer will only need to get a mortgage on the percentage share that they own.
For example, if a buyer buys a 60% share in a property, then they will only get a mortgage on this 60% and will pay rent on the remaining 40%, as this is still owned by the Housing Association. As a result of this, the money needed for a deposit will also be less.
The buyer has an option to increase their share over their time in the property and this is through a process known as ‘staircasing’. Staircasing allows you to increase your share up to 100%, which will mean you no longer need to pay rent, just the mortgage.
If you want to learn more about Shared Ownership, including the pros and cons, have a read of this.
Is it easy to sell Shared Ownership properties?
The process of selling a Shared Ownership property differs from that of selling a property on the open market, as you must consult your Housing Association before selling.
If you have staircased your way to 100% of the property, then the property will be easier to sell as you can sell it on the open market with an estate agent, with no need to go through any Housing Association and the buyers don’t need to meet any ‘affordable homes’ criteria, as you own the property outright.
If you don’t own 100% of the property and you wish to sell, then you will ultimately find selling a much more challenging experience, with selling Shared Ownership property described as ‘doable’ but more complicated than selling a ‘normal house’.
First, you will need to contact your Housing Association to give them first refusal on the property. If they decide they don’t want to sell the property, then you have free reign to put the property on the open market.
Due to the fact when selling Shared Ownership property you can only sell to people who meet the guidelines, the pool of available buyers will be smaller than selling a ‘normal property’ so this will naturally make it more difficult.
When selling Shared Ownership property, you will only receive a share of the sale price in proportion to your owned share of the property. For example, if you sell the property for £100,000 and you have a 30% share, you will receive £30,000.
Looking at selling Shared Ownership property? We have our ‘how to’ guide coming up next…
Selling Shared Ownership property: A ‘how to’ guide
If you’re looking at selling Shared Ownership property and you don’t own 100%, you’re going to need a little extra help as it’s not going to be easy. Lucky for you, we’ve got our selling Shared Ownership ‘how to’ guide right here, to help you on your way…
- Contact Housing Association – The first step of selling Shared Ownership properties is to get in contact with the Housing Association to notify them that you want to sell and give them first refusal
- Get a valuation – The next step of selling a Shared Ownership property is to get the property valued. You will have to choose a surveyor who will value the property for you, and you will have to pay for this service. Once the house is valued, a report will be sent to your Housing Association, who will arrange for you to sign a contract, agreeing to the valuation and detailing how your property will be sold
- Contract of sale – If you’re happy with the valuation, you will need to complete and sign the contract of sale, where you will need to include details of your solicitor who will be acting on your behalf once a buyer is found
- Get an EPC certificate – Your next step is to instruct an Energy Performance Certificate (EPC) provider to produce an EPC. Once you have confirmed an EPC has been commissioned, then you will be able to get on with selling your Shared Ownership property
- Photo ready – Next in the process of selling Shared Ownership properties is to organise for professional photographs to be taken to allow your property to be advertised online
- Find that buyer – Your Housing Association will be responsible for finding you a buyer, should they want to take your property on. If they’re unable to provide you with a buyer, you can sell your property yourself. It’s important to bear in mind that if you haven’t staircased to own 100% of the property, you will have to find a buyer who fits all the ‘affordable homes’ criteria
- Completing the sale – Once a buyer has been found, they will go through a series of financial checks before the conveyancing process can begin. Once the buyer passes the finance checks, both your solicitor and the buyer’s solicitor can work together to agree on an exchange and completion date. Once the completion day arrives, congrats – you can drop off your keys and move onto your next house!
Do Shared Ownership properties increase in value?
If you’re here for a quick answer and want to know ‘can you make a profit on Shared Ownership property?’ then – yes you can, providing the value of the property has gone up.
Investing in a Shared Ownership property is just the same as investing in any other property. As property generally tends to increase in value, a Shared Ownership property will increase the same.
As with Shared Ownership properties you own a share of the property, you will only benefit from the property increasing in value on your share.
Selling Shared Ownership property problems
When it comes to selling Shared Ownership properties, there are always going to be some problems which you will have to overcome. To make sure you know what you may face, we’ve got a list of the possible problems which come with selling Shared Ownership properties listed right here:
Negative equity is one of the problems you may face when selling Shared Ownership property. Negative equity is when the mortgage you have on a property is more than the property is valued at, meaning after selling a Shared Ownership property you may struggle to repay the mortgage.
Valuation must be agreed with Housing Association
When selling Shared Ownership properties, the Housing Association must agree on the property’s valuation. It’s in the Housing Association’s interest that the property has a lower value, especially if they’re looking to find a buyer themselves or they’re buying the property back.
If you feel the valuation given by the Housing Association is too low, you can ask a district valuer to come and value the property. The district valuer’s valuation will be final, and you do risk their valuation coming in lower than your current one.
A limited number of buyers
When selling Shared Ownership properties, you must find a buyer who fits the guidelines for a Shared Ownership scheme. This naturally makes the pool of potential buyers a lot smaller, and you will also have to have your buyer approved by the Housing Association.
Housing Association has first refusal
A problem you may face when selling Shared Ownership properties is the Housing Association having first refusal on your property, meaning you have to offer your property to the Housing Association first before being able to put it on the open market.
As the Housing Association has first refusal, this will slow down the selling process, as they have 8 weeks once offered to provide you with an answer as to whether or not they want the property.
Continue to pay rent
The final problem you may face when selling Shared Ownership properties is that you will have to continue paying the rent right up until the property sale is completed. Like with most property sales, you will almost definitely face delays, making the time you have to pay out much longer.
Selling a property is never easy, whether that’s selling Shared Ownership properties or selling a ‘normal’ property. Following our guide will mean selling a Shared Ownership property becomes that little bit easier.
Do you have any insight to give? Or a question you want to ask? Get in touch with our editor today!