There are less conventional routes to securing your next home than simply selling up and buying one.
If you’re already a homeowner, you might be eligible to part exchange your old home for a brand new one.
Here we take you through the basics of home exchange and explain the key points to consider when deciding if this is an option for you.
What is part exchange?
Most people are familiar with the concept of trading in an old car to get a great deal on a newer model.
Part exchange for homes works almost the same way. The idea applies to homes, but only if you want a brand new one which has never been lived in or sold before.
You can’t part exchange your old home and buy a period property, for example.
If a housing developer or builder is selling new homes on a development, you can buy a new home from them and give them your old one as part of the deal.
This means you sign over ownership of your old home to the owner of your new one, and the value in your old home is put towards the payment of your new home.
There are a few rules and regulations, but in theory the process of part-exchange is simpler and faster than a traditional home sale and purchase.
The main downside for sellers is that part exchange often means not receiving the full market value of your old home.
Typically a developer might get your old home for 80% to 90% of the price it might have achieved on the open market.
Is my home eligible for part exchange?
Not every home will be an option for part exchange. There are specific criteria your home needs to meet in order for a developer to agree to part exchange it for a new one.
The criteria varies by developer and you’ll need to fill in a form to work out if your home will be accepted, but broadly speaking here’s what to think about:
You will need to have an independent valuation of the home you want to sell.
Crucially, the home you’re selling shouldn’t be worth more than 70% of the value of the one you want to part exchange it for.
You need to also have a decent chunk of equity in your old home, although the exact amount varies.
The location of your home also needs to be approved by the developer.
The condition of your old home needs to be good, and this includes the state of the boiler, gas, heating and electrics.
The home should have a working kitchen and bathroom.
Your home should be of a standard construction style, so if you have quirky turrets or vaulted ceilings the developer might not be keen.
If you are a leaseholder, your lease should be longer than 85 years.
How does part exchange work?
Once you’ve agreed with a developer to part exchange, the process is broadly similar to any other home sale and purchase.
You will need to instruct a conveyancer (a property lawyer) and manage all the other logistics of a move.
While you won’t have to pay estate agencies’ fees, you may still have to pay a deposit to secure your new home.
Remember to account too for other costs such as mortgage arrangement fees, stamp duty and moving fees.
How do I find a home for part exchange?
The key thing to remember is that part exchange is known as an incentive offered by developers selling new-builds.
Housing developers might not offer part exchange at all times of the year, or at all.
As a result, it can be hard to find out if homes are available for part exchange.
While some of the biggest name housing developers do offer part exchange, they rarely advertise it loudly.
This means you’ll need to identify a development where you’d like to live, find out the name of the company behind it, and get in touch directly to see if part exchange is an option.
Start by checking out the websites of some of the biggest construction companies, from Berkeley Group to Barrett, Persimmon, Bellway and Taylor Wimpey.
Find a new-build home
Looking for a sparkling new-build home? We've got thousands to choose from.
Other incentives offered by developers include paying your stamp duty, paying your deposit and free fixtures and fittings.
It’s always worth asking about incentives and getting on their mailing lists so you’ll be first to hear about any deals.
Step by step guide to part exchange:
Find a developer with a part exchange policy and a development you’re interested in
You fill out a form detailing the eligibility criteria of your current home
If your eligibility is confirmed the developer will visit your home and take a look
The developer will then make a preliminary offer on your home
You can then accept or negotiate on the developer’s preliminary offer
The developer will perform legal and credit checks
You can then choose your home within the development (here’s what to look for)
After you have chosen, you’ll pay a reservation fee to secure the home
The developer will instruct a chartered surveyor to value your home
You will instruct a surveyor to value the home you’re buying
Both you and the developer will then make formal offers on the properties
Once accepted, you should both instruct independent legal advisors (conveyancers)
Final financial assessments and mortgage arrangements can now be made
You will need to ensure you have a mortgage or cash to cover the 30% or more value not covered by the exchange of your old home
The conveyancing process will now take an estimated eight to 12 weeks
Exchange and completion can take place as it would with any home sale or purchase
Leave your old home clean, tidy and in a good state of repair
Get the keys and move into your new home.
What happens to my old home after part exchange?
Usually the property developer will sell your own home on the open market.
The benefit of this system for property developers is that they can make sure the part exchange takes place on a date that suits them.
It may then take longer to sell the exchanged home, but this might be worth it to them for the additional 10 to 20% they might achieve on the price.
Homes that are part exchanged may be modernised by the developer, which might also help them improve on the eventual sale price.
Pros and cons of part exchange
Pros
You won’t pay estate agency fees
Less hassle finding a buyer for your old home
You won’t get stuck in a chain
The process can be faster than a traditional sale
Your new-build will be under guarantee
The 70% rule means you’ll probably need to upsize
Cons
You might not achieve full market value
Part exchange homes can be hard to find
Not every home is eligible
The 70% rule means you probably can’t downsize
You may need to pay a reservation fee
Thinking of selling?
Get the ball rolling with an in-person valuation of your home. It’s free and there’s no obligation to sell if you change your mind.
