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Written by Ruban Selvanayagam
Ruban Selvanayagam
Ruban Selvanayagam is a professional cash homebuyer, private rented sector landlord, auction specialist, blogger and media commentator.
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Edited by James Durr
James Durr
James Durr is a passionate property entrepreneur with a strong foundation and background in business.
Owning a shared ownership property may have been a fantastic way for you to get on the housing ladder in a relatively affordable way.
If the time to sell has arrived, you might be worried about the government scheme causing complications. Yet bear in mind that, whilst there are a few restrictions to keep in mind, in most cases you should still be able to go through a smooth property sales process.
In this article, Property Solvers run through the basics of shared ownership properties, what you should expect when selling one and all the rules you need to know.
How Shared Ownership Properties Work
Let’s start with the basics (just in case you’ve forgotten!)…
A shared ownership property is a home bought through the UK government’s Shared Ownership scheme.
This initiative makes housing more affordable by letting buyers split the cost with a shared owner – a housing association or local authority – sometimes referred to as the “landlord”.
For example, you might own 60% of the house – while the housing association owns 40%. It’s sometimes called “part buy, part rent” since you’re effectively paying rent for the portion of the property you don’t own.
Sometimes, you can increase your ownership up to 100% by buying back shares over time – called “staircasing”. Note also that some housing associations cap ownership to 80%.
Naturally, you have to consider the shared owner when you want to sell the property, meaning things can get a little tricky.
Restrictions When Selling Shared Ownership Properties
First of all, let’s cover the bad news – the obstacles you’ll face when you want to sell a shared ownership property…
Right of First Refusal
The whole point of the shared ownership scheme is to make homes more affordable and help first-time buyers get on the property ladder. As a result, local authorities and housing associations want the property to go to another buyer who can take advantage of the government scheme.
Most shared ownership leases give the housing provider a right of first refusal, meaning they can find an eligible buyer before you can list the property on the market. Check your lease to find out how these restrictions apply to you.
Shared ownership leases usually also outline an agreed procedure to determine the house’s value and where responsibility lies for the costs involved in selling.
Designated Protected Areas
Even if you own 100% of a shared ownership property due to staircasing, selling the house on the open market or through an auction isn’t allowed if the lease is classed as a “designated protected area” or “mandatory buyback”.
In this case, the shared owner either buys the property back or sells the property to a new buyer.
You can check the “Key Information Document” (issued when you first purchased the property) to see what type of lease you have.
Fewer Buyers
Another potential restriction you could face is a smaller pool of buyers. Not everyone is eligible for the program. To be a shared ownership buyer, you must have a household income of £80,000 a year or less (or £90,000 in Greater London).
Also, not all banks lend out mortgages for shared ownership properties.
Vested Interests in the Property
With public funds effectively invested in the property, don’t be surprised if their priorities get placed above yours.
The situation can get even more complex if there are mortgage arrears or any risk of repossession.
How to Sell a Shared Ownership Property
Not fazed by these restrictions? Let’s break down all the steps involved in selling a shared ownership property…
1. Read Through the Shared Ownership Lease
Checking through the lease is crucial to avoid any surprises during the sale process. Shared ownership leases will contain clauses that run through factors such as valuation (see below), fees and restrictions like those mentioned above.
You may have also emails from when you first bought the property where the conveyancing solicitor explained specific aspects for you to be aware of. The same solicitor may be able to provide you with some advice on selling the property (albeit with an associated fee).
2. Inform the Shared Owner and Understand the Nomination Period
First, tell your housing association that you want to sell the house.
Assuming the right of first refusal applies, this triggers a nomination period of 4-12 weeks during which the shared owner tries to sell the property. Often, shared owners have their own (in-house) regulated estate agency or a partner selling agent they wish to use.
Note that the nomination period may not apply if someone on the lease dies or there is a court order asking you to transfer ownership.
If the shared owner was unsuccessful at selling the house, you can then go ahead and dispose of the property yourself. This more commonly involves listing on the open market using an estate agent.
3. Complete the Required Forms and Requirements
These include:
- Providing the “intention to sell” and “sign-off” forms
- Paying an admin fee to the housing association
- Forwarding an Energy Performance Certificate (EPC).
4. Get a Professional House Valuation
When selling a house with a shared owner, a professional from the Royal Institution of Chartered Surveyors (RICS) must carry out the valuation. You’ll have to cover the cost of this valuation survey, although the landlord may be able to give you a list of approved surveyors.
When you have the valuation, you’ll know what your share of the house is worth. You may even have the option of buying back your share in rare cases.
You’ll then send the valuation to the local authority, and it’s valid for three months (if the house takes longer to sell, you’ll need to obtain and pay for another report).
If you want to sell your house for lower than the RICS valuation, remember you will need to make up the shortfall. The housing association will expect to receive their share of the agreed valuation.
Note that you are under no obligation to sell after getting a house valuation (if you change your mind, for example).
5. Sign the Contract of Sale
The next step is signing a sale contract to outline the terms. Everyone on the lease must sign this, such as a spouse or civil partner.
A contract of sale includes details about the conveyancing solicitor being used, legal fees and other costs.
6. Selling a Shared Ownership Property on the Open Market
Should the nomination period pass and there are no proceedable buyers, you can proceed with the normal open market sales process.
Most sellers typically use a traditional (high street) or online estate agent. They will organise the photos, floorplans and property description for the property to go live on the property portals (like Rightmove and Zoopla) and other marketing channels.
7. Accepting the Offer
Should you wish to proceed with the buyer, it’s important to advise the housing association of the agreed price.
The buyer will need to pay a non-refundable fee to reserve the property. The agent will then issue and circulate the Memorandum of Sale (MoS) amongst the buyer and sellers’ conveyancing solicitors.
Note that you will have to advise the shared owner – and there will probably be an issue if you try to sell the house for below market value. This is why it’s difficult to sell a shared ownership property using an auction house or homebuying company like Property Solvers.
8. Checking the Shared Ownership Buyer’s Eligibility
It’s important that the buyer meets the (often strict) eligibility criteria under each shared ownership scheme.
The mortgage lender will also undertake affordability checks, based on household income and the ability to keep up with future payments.
9. Confirming the Sale
Once you have found a buyer, the process goes broadly like any home sale process. You’ll need to go through the following steps:
- Financial assessment of the buyer with the mortgage broker
- Memorandum of Sale
- The buyer’s solicitor raises enquiries
- Extra checks are undertaken if the property is leasehold
- Complete the TA6 (property information) and TA10 (fixture and fittings) forms
- Complete the Leasehold Information Form (TA7) and pay associated fees for the landlord (freeholder) management pack
- Conveyancers issue contracts
- Buyer’s conveyancer raises any enquiries
- Mortgage provider issues finance agreement
- Exchange of contracts
- Completion
- Pay solicitor fees (and possible legal costs to the housing association, also known as assignment fees)
There also can be further complications if you are buying another property that is not chain free, particularly when mortgages are involved.
10. Exchange and Completion
As with any standard home sale, this process can take some time – and it will likely take a while to find out your exchange and completion date.
Also, remember things can fall through at any point before the exchange of contracts.
Selling a Shared Ownership Home – Process Outline
Here are the essential steps summarising the sale of a shared ownership property:
Step 1
Advise the housing association that you are looking to sell
Step 2
Complete the necessary forms and pay associated fees
Step 3
Obtain a valuation report from the Royal Institution of Chartered Surveyors (RICS)
Step 4
Sign forms confirming the sale price
Step 5
Housing association markets the property through its own channels (within the nomination period)
Step 6
If the nomination period ends, you can market the property through an estate agent
Step 7
Offer made and accepted
Step 8
Check that the prospective buyer is eligible for the property and passed affordability checks
Step 9
Sale confirmation and Memorandum of Sale (MoS)
Step 10
Payment of reservation fee
Step 11
The conveyancing process starts (legal due diligence and buyer enquiries)
Step 12
Exchange and completion of the sale
Shared Ownership FAQs
Still have questions? Here are a few final clarifications about selling a shared ownership property.
You can expect to incur legal fees, marketing fees alongside the costs involved in valuations, obtaining the relevant forms, an energy performance certificate (EPC) and assignment fee (payable to the housing association). Bear in mind that you also might have to pay the housing association’s legal fees in addition to your own.
In some unusual cases, you can sell 100% of a shared ownership home despite not owning 100% of the house. This is called “back-to-back staircasing” or “simultaneous selling”. It allows the seller to finish staircasing as soon as the buyer purchases the home.
While rare, it may be possible if you’re struggling to find a buyer, you own such a large share of the house that it’s hard to find other potential buyers, or if you disagree with the property valuation. However, there may be additional costs or restrictions.
We would strongly advise seeking legal advice if you are thinking of going down this route.
Another potential option is to ask your housing association to buy shares back from you, so that you effectively become a renter. This is known as flexible tenure – but again, it’s relatively rare.
You can always ask for another valuation report, though you’ll have to pay again and an RICS surveyor still has to do it. However, in many cases, professional surveyors use similar models and databases meaning that your chances of getting a higher valuation are pretty slim.
However, if you have checked HM Land Registry’s sold prices and you still feel things are not right, you can also make a complaint to the Housing Ombudsman (which is free).
This will always vary. The speed of the sales process depends on how quickly the conveyancing process goes and the demand from buyers. Having a short lease (of less than 80 years) may slow down the process since it causes complications for shared ownership buyers.
Should a higher price be achieved, the shared ownership partner is entitled to its share of the gain (minus costs that you will incur). If a lower price is achieved, there is a requirement for you to take on paying back the shortfall.
It’s often hard to predict how long it will take for things to turn, but it’s worth keeping abreast of the broader economic factors that affect the property market (both at local and national levels).
You may feel that patience is all that’s needed or it may be time to think about instructing an alternative estate agency.
Yes, especially when the housing association has a buyer that’s eager to proceed. They also have much of the required paperwork already prepared meaning that things can move forward quicker.
Yes, but we would only suggest doing this once you already have a firm offer for your shared ownership property in place.
Typically, the housing association may help find another buyer if you remain within the nomination period.
Most estate agencies will also be willing to continue marketing your property. Be sure that your agent is doing a good job. If the house is still struggling to sell, it may be worth it reducing the asking price.
The housing association’s website should have a complaints procedure alongside the contact details of the appropriate department.
Should they fail to act, you can approach the Housing Ombudsman.
Make that House Sale Fast
Selling a shared ownership property might come with a few extra hurdles to jump through, but don’t let that deter you. The first step is checking your lease to know where you stand – then, be prepared to work with your housing association and follow the fixed procedures.
Property Solvers are unfortunately not able to buy shared ownership homes nor sell them via our auction service.
However, should your nomination period have come to an end, our express sale service is a great way to optimise the price you achieve within a much shorter time frame compared to a traditional estate agency.