How to Value a Shared Ownership Property

Shared ownership has been a popular way for people to make their way up the property ladder. With it being affordable and allowing for gradual increases in percentage of ownership, the part buy, part rent scheme has helped many.

When you decide to sell, though, there are a few things you will need to do differently compared to when you may have sold before.

The property valuation process is just one part of the difference, and below, we explain how this stage of selling your home works.

Types of shared ownership valuation

Depending on whether you want to sell or just staircase will depend on the valuation.

Staircasing

Staircasing refers to when you are looking to buy a further percentage of your shared ownership property. You will need to get a valuation to show you much the next portion of the property will cost.

Selling shared ownership property

This refers to when you’re deciding to sell. You will need a valuation carried out to assess the value of the percentage you currently own.

These valuations are not part of a home buyer’s survey, and will not consider any defects to the property.

How is a shared ownership valuation different?

With shared ownership properties being owned by a housing association, there are several requirements that must be met.

When selling via a traditional estate agent, you may be offered a free valuation. With shared ownership, this isn’t possible unfortunately. The housing association would require the following:

  • A valuation provided by a qualified RICS valuer
  • A valuation reported on RICS headed paper
  • That the valuation is independent to you
  • A valuation that shows 3 comparables where possible

The 3 comparable properties must have been sold within the last 3 months. Alongside these comparable properties will also be the market value of your current property.

What is a RICS valuation?

With any shared ownership property, the valuation must be carried out by a qualified RICS valuer. RICS (Royal Institute of Chartered Surveyors) valuations look at how the property was built, its size, overall condition and age. Even though a full valuation of the house may be given, you will only be selling your percentage of that valuation. Therefore, if the property is valued at £500,000 and you own 25%, upon selling, you receive £125,000.

Using the same example, if you are staircasing and wanted to buy an additional 5% of the house, it would cost you £25,000.

How long does a shared ownership valuation last?

Once a RICS valuation has been completed, it will normally last for three months. If there has not been a sale after this time, you have 3 options:

  • Renew the valuation – you should give around 2 weeks’ notice if you have this intention
  • Obtain a letter of comfort (sometimes known as a retype). This verifies the original value as still correct and the housing market has not changed significantly in the time period
  • Decide that you no longer wish to sell

How much does it cost to value a shared ownership property?

These vary and the gaps between pricing can be quite large. They can be under £200, but can be as high as £600 in some cases.

One thing to always remember with a RICS valuation is that it does not highlight property defects and is not a property survey. With the variety of paperwork involved with selling a house, this is something worth remembering!

Can I dispute a shared ownership valuation?

A dispute can be raised by you or the housing association if you disagree with the value. However, it must be raised within three months and show three comparable properties in the area that have sold for significantly more than your property.

Could I sell my shared ownership property on the open market?

You may think there is a higher chance of selling your house on the open market rather than via the housing association. When this is the case, you must have tried selling it via the housing association first.

To start with, inform the housing association of your wish to sell. They will present it to their list of buyers. As you will only be selling a percentage, it will be advertised as such. The lower price can be quite appealing to first time buyers.

However, if no interest is shown and it doesn’t sell during the set time that your lease agreement states, you are welcome to sell on the open market.

It is important to remember here that you still own a percentage, not the full house (unless you have staircased significantly!). So, once on the open market, whatever it sells for, you only keep the cash for the percentage you own.

With your valuation in hand, offers may come flooding in, some above the RICS valuation. If this is the case, and these offers are accepted, you may owe more money to the housing association. For example, if your house receives an offer £20,000 higher than its value, and you own a 50% share, you receive £10,000 whilst the association takes the other £10,000.

If all offers come in under the valuation and you choose to accept, you will still owe the association the full value of any percentage they own.

Our 24/7 team at Doorsteps appreciates the stresses connected with selling your house. That’s why we make it as easy as possible for you. We can give a detailed property valuation and help with conveyancing, EPC’s and listings. Contact the UK’s best online estate agent today so we can get you moving!

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