Everything You Need to Know About Property Part Exchange Schemes

What is a property part exchange?

Construction companies’ property part exchange schemes allow you to trade your existing home in partial payment for your next property. In effect, the company buys your home directly from you and subtracts the agreed price from the cost of your new property.

If you want to move quickly and with minimum fuss, this is a possible option. There’s no need for estate agents, marketing, property viewings or complex conveyancing processes. And there’s no need to worry about a property chain.

Property part exchange schemes

Of course, there is a trade-off to consider. First, you’re given the headache of selling your house to the property developer. And for that, you should expect to receive considerably less than you might receive on the open market.

How do property part exchange schemes work?

Part exchange schemes aren’t for everyone. For a start, you must be prepared to buy a new-build property. If you decide to go ahead, the process tends to be almost identical across the entire industry.

  • Find a new-build home you want — built by a company that offers a part exchange.
  • Get at least two independent house valuations.
  • Accept or decline the developer’s offer. Note: any bid will be subject to a satisfactory survey
  • Arrange or confirm your mortgage
  • Hire a conveyancer/solicitor
  • Pay the necessary reservation fee
  • Finalise contracts and exchange
  • Pay 10% deposit on exchange of contracts
  • Take possession of your new home once the funds are released

Am I eligible for a part exchange scheme?

Housebuilders have their own eligibility rules when it comes to part exchange schemes. However, there are specific criteria most developers insist on:

  • You must own your home and have the legal right to sell it
  • The property must be worth at least 65% of the new-build property you want to buy
  • The property you’re selling should be structurally solid and in a reasonable condition
  • If your home is leasehold, you’ll need a fixed-term agreement with at least 80 years remaining

Depending on the developer, you might need to demonstrate that there’s a reasonable chance of selling your property. A home’s saleability and location might preclude you from a part exchange offer — and this is often at the developer’s discretion.

And there may be specific exclusions imposed by developers. For example, some builders will not consider flat-roof homes for their part exchange schemes.

Is a part exchange right for me?

Before you decide whether to part exchange your home or go down the traditional house selling route, consider all the advantages and disadvantages:

Benefits of part exchange schemes:

  • Avoid the unpredictable open market.
  • Avoid estate agents’ fees.
  • Avoid a property chain.
  • Avoid hosting property viewings.
  • A guaranteed sale without delay.
  • Avoid the stress of selling a house the traditional way.

Disadvantages of part exchange schemes

  • Expect to receive up to 15% less than the market value for your property.
  • There is less chance of negotiating a discount on your new-build home.
  • Not all types of homes are eligible for part-exchange schemes.
  • Part exchange homes generally have to be worth at least 65% of the value of the new house purchased.
  • Newer homes tend to be smaller and “less substantial” than older properties.

property part exchange schemes

If you need to move quickly, opting for a part exchange deal is a possibility. But it’s not without its drawbacks so consider carefully.

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