Your Guide to
How to sell your SHARED OWNERSHIP PROPERTY-RESALES
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INTRODUCTION We recognise that selling a home can be a stressful experience. We aim to provide you with a comparatively inexpensive service that is as helpful and as hassle-free as possible. Selling a shared ownership home is known as a resale. Under the terms of your lease, if you own less than 100% of your home you must advise East Thames in writing of your intention to sell your property. Our Sales team will then assist you through the process to sell your home. To start the selling process, please complete and sign all of the attached documentation and return them to us. Please note that if the property is owned in joint names, both parties must agree to the sale and sign the instruction form: even if one of you no longer resides in the property. We will require certified identification from all sellers, to include one photo ID (passport/ driving licence) and two proof of address (recent utility bill/bank statement). Certification must come from a mortgage advisor, solicitor, accountant, bank manager, doctor or member of the Clergy. All properties being marketed will need an Energy Performance Certificate (EPC) carried out. East Thames will require a copy of the EPC before marketing can commence. If you bought your property from 2008 onwards, you may have received an EPC as part of your original solicitor’s information, you can check the EPC register online at www.epcregister. com. An EPC is valid for ten years. Under the terms of your lease a valuation must be carried out by an independent RICS qualified valuer, with the valuation accompanied with at least three comparable property values within the locality of your home. This is to determine the current open market value of your property and will be the price the property will be marketed at. As the leaseholder, you are required to meet the valuation costs and any other legal fees incurred in connection with selling your home. Upon receipt of your signed and completed documents, we will instruct your chosen Surveying Company to carry out a report and valuation of your home. They will contact you directly to arrange a convenient time and date and also take your fee. The Surveying Company will issue the report and valuation, normally within five working days from the date of the inspection. When we receive the report we will contact you to
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INTRODUCTION –continued–
discuss the valuation price. Your home will be sold at current market value and is valued as if it were to be sold on the open market. The property will not be valued for any more or less because it is shared ownership. When we have agreed the sale price, we will create your property particulars which will need your approval before marketing can start. If you have made home improvements on your home, when you sell, the valuer will value the property in it’s current condition including all home improvements. You will sell the share you own which will be a percentage of the full market value including home improvements you have made. Not all home improvements will increase the value of your home, but may make it easier to sell. Items such as a conservatory or high specification kitchen may increase the value of your home. If you have done any major home improvements, you will have needed permission from our Housing Management and Asset Management departments. If you have done this, let us know and provide copies of the estimates/receipts for the work to the surveyor, who will advise us if the works have increased the value of your home or not. The property particulars will give your address and contact numbers so that buyers can contact you directly in order to view your home. Details will be sent to you for approval prior to marketing. Once we receive your approval, we will email details to applicants who are registered with us for shared ownership. Interested buyers will contact you directly to arrange a viewing. Buyers who are interested in proceeding with the purchase must contact East Thames before the closing date (normally two weeks after marketing starts) and email all supporting documents so that they can be considered for the property. Once we reach the closing date, we will select the applicant who has the greatest housing need in accordance with our allocation points system. Success is not always guaranteed from the first email. Your property will only be allocated if a suitable buyer is found. If a buyer is not found by the initial closing date, we will continue marketing your property on a first come first served basis. If your home is offered to an existing home owner, they will be given four weeks in which to find a buyer for their property and be in a position to proceed. After this time, if they cannot proceed, we will offer your home to the next applicant in priority need. If you are making an onward purchase, please advise any estate agents of this time period before making any formal offers on a property that you may be considering. It is normally advisable to secure a buyer for your home before offering on something else to avoid possible disappointment. The successful applicant will be called for interview to be briefed on the purchase process
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INTRODUCTION –continued–
and the sale will commence subject to contract. On average the sale should take about eight to twelve weeks to go through, from when the solicitors are instructed. East Thames has 8 weeks (depending on your lease – this may vary) in which to find a suitable buyer for the share of your home. This is known as the nomination period. During this period you should not instruct an estate agent. The nomination period is from the time we have approval and all documents to commence marketing. Our fee for this service is ordinarily 1 % of the equity value you own in your home, plus VAT. Leases do vary so please check this as it may be more. If in the unlikely event that we have been unsuccessful in finding a buyer for your home in the 8 weeks, you will have the opportunity to instruct an Estate Agent to market your property, paying their fee for the services they provide. Alternatively you may continue marketing your home through East Thames. Resale properties were originally sold under shared ownership, which is an affordable home scheme and therefore any potential purchaser must meet the affordable home requirements for a resale home. The sale price is based on the valuation report and is not negotiable. If you did not pay any stamp duty on your original purchase of the property and sell 100%, you may be liable for stamp duty on the additional shares being sold. Please check with your solicitor as to how much you may be required to pay. If the solicitors require replies to leasehold enquiries, the cost to provide a leasehold management pack will be £300 inc. VAT. There must be a current valuation available when your sale completes. Valuations are initially valid for three months. After three months, a desk-top valuation will need to be carried out to update this. If the valuation is more than six months old a re-inspection will be required. If it is over one year old, a new valuation will be required. You will be responsible for the cost of these updates. On completion of the sale, we will request payment of any outstanding rent, insurance and service charges (in some cases we may have to refund you for rent paid in advance). The administration fee for selling will also be requested at this point. The fee for your particular property is detailed on the sales instruction. All monies are requested via your solicitor and deducted from the sale proceeds.
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Costs involved These costs are approximate and may vary
As with all property sales you will have expenses to pay. Therefore before deciding to sell your home it is worth investigating the full costs involved and considering carefully when to market your property. Some of the expenses you will have to pay are:
East Thames fee: East Thames charge a fee of 1% of the full market value of your home plus VAT. This is payable on completion. This fee contributes towards providing a resale service, which includes marketing and selling your shared ownership home. If we are unable to find a suitable purchaser for your home, then you will not be required to pay this fee.
The valuation fee: The price for a valuation is between £200 - £500 + VAT. Please note depending on which valuer you use, this could be significantly higher so please call the valuers for a quote prior to instruction. The valuation fee is paid direct to the valuer. They will contact you when you have confirmed to us which you would like to use. The valuation is only valid for 3 months and if a buyer is not found within this period, a new valuation report will be required at an additional charge. The new valuation will also determine the price and may have changed from the original valuation in a changing market.
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Legal expenses Selling your home will involve changes to your existing lease which will require the professional services of a solicitor. The solicitor will have disbursements and professional fees for acting for you. You are also required to pay East Thames’ legal expenses (usually £450 - £550).
An Energy Performance Certificate (EPC) Selling a home in England and Wales requires an Energy Performance Certificate – There are many companies providing this service now. An EPC will normally cost in the region of £50-£100. We can recommend an EPC provider or you can visit the domestic EPC register at www.epcregister.com for other providers or to get a copy of your EPC if you already have one.
East Thames leasehold management pack Your buyer’s Solicitor may raise detailed enquiries about your property. These take a considerable time for our Leasehold Team. A fee of £300 inc. VAT is payable. Once you have found the solicitors you would like to use and have instructed them, please make them aware that they will need to forward an LPE1 form/ management pack (leasehold properties enquires) to East Thames (to East Thames solicitors or the sales executive in
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Costs involved These costs are approximate and may vary
–continued– charge of the sale). These are around 70 question/queries that need to be answered by different East Thames departments. This can take up to 20 working days. The earlier in the sale this is requested; the more chance there will be of avoiding unnecessary delays. Payment can be through your solicitors, or the executive who receives your pack will call you to take a payment. On occasions, some enquiries need information direct from the external managing agent or the Freeholder (if not East Thames) to answer. These enquiries may incur an additional charge with the external managing agent / Freeholder. On completion you will also be required to pay East Thames legal costs (usually around £300 inclusive of VAT and disbursements). Should you decide to withdraw your instruction to sell, we will only charge you the £150 non refundable fee, plus any legal work carried out up to the date that we receive written confirmation of your decision to withdraw.
Rent and Service Charge arrears: If you have any arrears these must be cleared before completion of the sale. This could include underpayments on past service charges.
Estate Agent Fee: If after the initial 8 week marketing period we have been unsuccessful in finding a suitable buyer, you may choose to instruct an estate agent to market your property for you. In this case you will be responsible for the fees the Estate agent charges for their services. This could include underpayments on past service charges. Information and prices quoted are current at the time of going to print and may be subject to change.
Mortgage fees: You may have to pay penalty charges to your existing lender if you sell your home before the end of the product end date.
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Your responsibilities All leaseholders assigned to the lease must sign and agree to sell the property. The valuation must be carried out by an independent RICS qualified valuer, with the valuation accompanied with at least three comparable property values. The leaseholder is required to meet the valuation and legal costs and any other costs incurred in connection with selling your home.
The leaseholder is required to allow East Thames 8 weeks to market your property from assignment at a fee of 1 % plus VAT The potential purchaser of your property must meet the requirements of the lease and meet the Resale requirements. The purchaser must also meet the selection criteria of East Thames. You must repay any arrears on rent, service charges and any additional costs incurred whilst living in the property.
The leaseholder is responsible for ordering and paying for an EPC (Energy Performance Certificate - this is a Government requirement for all properties marketed in England and Wales and must be available before marketing can commence).
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Select a solicitor as soon as you receive this pack to ensure that that you are ready to act promptly when you receive the valuation report, which is only valid for 3 months.
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The sales process Buying or selling a home is a complicated procedure. East Thames will seek to guide you through the process every step of the way. Once a buyer has been found for your home, you should let your solicitor know immediately. They will need to obtain the title deeds for your property (normally from your mortgage lender) and prepare the draft contract to send to your buyer’s solicitor. They will send you forms to complete; including a fixtures and fittings form, seller’s information form etc. Please return these as soon as possible to avoid any delays. Once East Thames has received details of your buyer’s solicitor, we will send out a sales memorandum to put the solicitors in touch with each other and instruct our own solicitors to liaise with both parties. Your buyer’s solicitor will check through the draft paperwork once received from your solicitor and raise enquiries. Their solicitor will also send off for the searches, including Local Authority search (whether there are any developments/plans in the area that might affect the property), environmental search (matters affecting the land on which the property has been built) and Drainage/ Water search.
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If your existing lease has less than 80 years remaining, your buyer may request a lease extension. In this instance, a specialist valuation would need to be carried out to work out the premium payable to the freeholder to agree this extension. There will also be associated legal fees. Please note, if your lease has less than 80 years remaining, your property may be more difficult to sell. The standard set of enquiries sent to your solicitor will include questions about neighbourhood disputes, boundary disputes, planning permissions, rights of way, restrictive covenants, guarantees, utilities, items included, lease details - term, Management Company, service charges etc. You may be required to answer certain questions on these matters. If you own a flat that is not managed by East Thames, the managing agent may be required to answer some of the enquiries, for which they may charge a fee. If you pay service charges and the year end accounts have not been finalised, your solicitor will request retention to be held to cover any possible shortfall. This could be retained for up to 18 months, until the accounts for the current year have been reconciled.
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The sales process –continued–
Once all the enquiries have been answered and the buyer’s solicitor is satisfied with all the replies, the buyer will be asked to sign their contract and pay a deposit in readiness for exchange.
On the day of completion, your buyer’s mortgage funds will be transferred via the solicitors. Once all funds have been received at the top of the chain, this is completion. You can then arrange to hand over your keys to your buyer directly.
A copy of the contract is sent to you for signature also. Once your buyer’s deposit has cleared and both parties have signed the contract, the solicitors will exchange and set a completion date to be agreed by all parties. At this stage, the sale is legally binding.
You can ensure that the sale of your property goes smoothly by liaising regularly with your solicitors and providing any information as soon as possible. Once a buyer has been found and we have instructed the solicitors, we do not have any direct involvement with the sale, however we are happy to assist if required.
Once contracts have been exchanged, the buyer’s solicitor prepares the draft transfer document. This document transfers the title of the property from you to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller. There will be various matters for you to deal with in the run-up to completion. There will be documents to sign and payments to be made to your solicitor to cover the balance of their fees
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For further information contact our Sales Team on: 0300 303 7333
[email protected] www.east-thames.co.uk
29-35 West Ham Lane, London, E15 4PH
