Part Exchange House: What Is It & How Does It Work

When you part exchange your house, you are likely buying a new build property without selling your current home on the open market first. Part exchanging a home has many benefits but isn’t suited to every homeowner and every situation. In this guide, we’ll explore the topic and share what part exchange means when buying a house.

In this article:

What is a ‘house part exchange’ scheme?

A part exchange new build scheme involves trading in your house as part-payment for a new build property. The property developer buys your existing house and then deducts its value from the cost of your new home; in some ways, making your home more affordable. A part exchange when buying another house is perfect for homeowners who want to move quickly without first having to sell their home with an estate agent. Another option to eliminate this stress is to sell your home for cash, making it easier to buy your dream onward property – but this all depends on your situation and preferences.

Part exchanging is suitable for anyone looking to buy a property one a new build development. Effectively how it works is that the property developer buys your property and discounts this value from the price of your new home. This benefits the property developer as they have a guaranteed buyer and it benefits you as you’re guaranteed a hassle-free sale.

It’s worth exploring your local area at length, seeing if you can find a part exchange house scheme near you and which new build developments offer this as part of their package. It isn’t something that all developers offer or that all homeowners are eligible for, but by researching your options at the initial stage, you will discover your options and what specific schemes are available.

How does part exchanging your house work?

Part exchanging your house for a new build home works just like a normal property sale, it’s just that the developer is your buyer instead of a new homeowner. Don’t let the title scare you into thinking it’s something big and scary because it’s likely that there are more similarities than you initially think.

Here’s a step-by-step guide through the process.

1. Find a property development and home that you like and make sure that they offer part exchange for your home.
2. Your current home will then be valued – this forms part of our eligibility assessment. Most developers ask for two valuations from independent agents to make sure it’s fair and they will request a selling price, rather than an asking price.
3. The developer will then make you a provisional offer, subject to a survey.
4. If you accept this offer, you can arrange your mortgage for your new property subject to the usual legal and credit checks. We recommend instructing a conveyancing solicitor to assess the new property and handle the logistics on your behalf.
5. You now need to pay a reservation fee on your new home.
6. If the assessment is successful, you can exchange contracts within just four weeks. When you exchange contracts, you are likely to be asked to pay a 10% deposit to secure your new home. Your solicitor will take a percentage of this as part of their fees. Once the money is released, you can complete the sale.

One question that people have when it comes to part exchanging a home, and understandably so, is how long does a house sale take through part exchanging? As exact estimation is tough because each developer has their own time frame. However, because your old home isn’t getting put on the market, you can expect it to happen a lot quicker compared to selling your home the traditional way.

Another area that you may be curious about is the costs associated with part exchanging your home and the answer is that there are a few! Be sure to factor conveyancing and solicitor fees into your overall outgoings – while the process won’t cost as much as a traditional high street agent sale or by selling at auction, there are still significant costs to consider.

What are the rules for part exchange rules, and who is eligible?

Each house developer has their own set of rules regarding part exchange, so it’s worth familiarising yourself with them. Part exchange suits householders who are moving up the property ladder and want to move without the unpredictability of a house chain. To part exchange house for new build, you typically need to:

• Own a home which you can sell to the property developer
• Have a property worth around 65-75% of the asking price of the new property
• Have a home that is in good, sellable condition and is structurally sound
• Consider the property’s location and the saleability of this – it’s an important factor that will come into account. Some homes, those with flat roofs, may be excluded so it’s important to be aware of the terms and conditions included.

Note: If your home is leasehold, you’ll need to have a fixed term, usually over 80 years left on the lease before you can part exchange your home.

Should you part exchanging your home?

As with most things, there are pros and cons to choosing to part exchange. Consider both sides to the argument before you make a decision, so that it works best for you as possible.

Pros

• You can avoid the open market
• No estate agency fees
• No unpredictable chains
• No constant viewing appointments
• Guaranteed sale
• Less stress

Cons

• You may be offered 5 to 10% less than market value for your current home
• You may not be able to negotiate any discounts on the new home
• Not every property is eligible
• Your current house must be worth around 70% of the value of the new property
• Leasehold flats or short lease properties are less attractive
• A new home’s value can drop once you move in. They are often priced at the top of the market

New builds are a great option, but they do tend to have smaller rooms and smaller drives than older properties and they can often be built closer together. This means many are overlooked, have problems with insufficient parking and can be trickier to sell later, and if this isn’t your ‘forever home’ these things worth considering.

The right questions to ask the property developer

It’s difficult to cover every detail when selling or buying a part exchange a house but if you arm yourself with the right questions, it will go a long way to helping put yourself in a good place to make informed decisions.

• What costs are involved in the part exchange scheme?
• What’s the top figure the developer will accept for a part exchange property?
• Do you adhere to the Consumer Code for New Homes?
• Are there any fees if I change my mind after agreeing to part exchange?
• Can I negotiate the price of the new property?
• How quickly can a house sale go through?
• Can I negotiate extras like carpets, fitted wardrobes etc?

Part exchanging your property is a good option if you’d like to move quickly, don’t want the hassle of estate agents and don’t want to be caught up in a property chain.

If one of the reasons that you’re exploring is to avoid a long sale and sell your home fast, a cash buying property company like Good Move could be exactly what you need. We make an offer for your home within 24 hours of your enquiry, which will be around 80% of market value whatever the condition of the property. Why 80% of the market value you ask? Well, there are no seller’s fees associated with us – we cover all of that for you, so you’re left with a clear figure of how much cash you’ll receive.

At Good Move we’ll make an offer for your home that’s up to 80% of the market value, regardless of the condition the property is in and whatever its lease length. There are no seller’s fees, and we’re the only regulated quick sale company. Get in touch with the expert surveyors here at Good Move for a fast, convenient sale.

FAQs

Do you still need a deposit with part exchange?
Yes. While your old home acts as a deposit, reducing the overall price of your new home, unless you are buying that house for cash you will still need a deposit. Your deposit will be what allows you to secure a mortgage – most people aim for 10%.

Do you pay stamp duty when you part exchange your house?
Whether you are part exchanging your home or selling it on the open market, the same stamp duty rules apply. For a house sold for less than £250,000, no stamp duty applies but from that price onwards it does, and rates range from 5% to 12%.

Do you get less for your house if you part exchange?
You should receive a fair price for your home that reflects the current state of the property and the general housing market. The property developer will likely get your home valued two or three times by independent agents to ensure that they get the best price. You will then be presented with a fair offer based on this, leaving you with a final price for your old home that you are open to accepting or rejecting.

Who is legally responsible for a house between exchange and completion?
The new homeowner is responsible for your home between exchange and completion. Payments sit with the current owner; however, maintenance and repairs are the homeowners’ responsibility once contracts have been exchanged, as they are now legally bound to the property.

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