Shared Ownership Mortgages

Selling a Shared Ownership Property

Selling a shared ownership property can be quite complex and requires considerable thought as to the best way to progress. Unlike a traditional property sale, there are multiple different ways to structure the sale, each of which can work well depending on the requirement of the owner, the landlord and the prospective purchaser.

Completing an Outright Sale
One option available to shared owners is to purchase the entire remaining percentage of the property from the landlord and then to sell the property on as a traditional freehold property. This is advantageous as it does not limit the potential buyers who might be interested in the property. It is possible to sell the property on the open market and not to be restricted to those purchasers who are eligible and / or interested in a shared ownership.

On the negative side, it requires temporary financing of the entire mortgage which may not be available from the lender. Further, even if the money were available, it could place the owner under considerable financial pressure to sell quickly.

Selling a Share through a Housing Association
When a housing association owns the remaining share of a property, the restrictions on the re-sale procedure are much stricter. For example, it is common for the lease to contain a 'nomination period'. This means that once you give notice to the housing association through which you have chosen to sell your property, there will follow a set period (normally around two months) whereby the housing association has exclusivity to locate a buyer from their register. The association will charge a fee for this service, which is usually in the region of 0.75 percent of the value of the property.

If, at the end of the nomination period, the association has failed to locate a purchaser, the owner will then normally be free to sell the property on the open market. Selling on the open market means that the owner can, potentially, achieve a higher price for the property if it is located in a particularly popular area or is highly sought after for some other reason. From a negative point of view, selling on the open market can be both costly in terms of estate agents' fees and frustrating when dealing with buyers who pull out at the last minute.

Hybrid Selling
A combination of the two methods mentioned above is normally available to those who own shared property that was purchased through a commercial company or, in some cases, is also available for housing association shared ownership. In this instance, the owner will not have to purchase the entire property in order to sell and will only be offering the percentage that they currently own for sale, as well as the assignment of the lease for the remainder. This can be conducted on the open market, without going through a nomination period, if the lease allows.

Summary
Selling a shared ownership property requires additional issues to be taken into consideration;
for example, some leases will require that there is a nomination period whereby the landlord is able to locate a purchaser, before the vendor is able to advertise on the open market; and
when advertising on the open market, it will also be necessary to assign the lease for the remaining percentage, which requires landlord consent.