Advice

 

 


 

Part Exchange

What is part exchange?
Part exchange is when one item is traded against another. It is most commonly used when people want to buy a better car or property.

The existing item is used as ‘part payment’ for the new item you want to purchase. So, you want to buy a new house, you can part exchange your existing property.

Although this is sometimes done when you are buying a ‘second hand’ home it is rare. Few people selling a house have the ability to offer a part-exchange deal. Far more common is the use of part exchange to help you buy a brand new house from a house builder.

The builder of the new property will buy your current property and will deduct this from the price of your new home.

Not all builders offer this type of part exchange scheme so you do need to check before you make any commitments.

We do offer part exchange at Larkfleet Homes to people who meet certain criteria.

  

Who is eligible to part exchange a property?
Each builder will have their own sets of ‘rules and regulations’ for part exchanging a property so the best thing to do is talk with them.

It is important to remember that the property developer is looking to make a profit (yes, even at Larkfleet Homes!) so you need to read the small print and make you are fully aware of what the scheme involves.

It is not guaranteed that a property developer will buy your old home but it is likely if the property fits the criteria which the builder has set.

The basic requirement is that you are a home owner and want to purchase a new build home!

The criteria for agreement on a part exchange scheme usually include the following:

  • The property is in a good state of repair – a property developer is very likely to become uninterested in a property that requires any structural repair as this will cost them money and make it harder to sell on.
  • As a general rule, the exchanged property is often required to be no more than 70 per cent of the value of the new-build property.

  

How do I start the process?
To start the part exchange process, firstly you will need to find a property or development that you would like to proceed with and then simply get in touch with the builder. Some builders/developers have a search option on their websites which will enable you to search for new-build properties available on a part exchange scheme. But you can’t beat picking up the phone and talking through your options to get the ball moving quickly.

Each property builder/developer will have their own procedure but, as a general rule, the process goes like this:

  • Qualification - Does your existing home match the criteria of what the property developer wants? You will be asked questions such as location of the property and its approximate value.
  • Valuation - The developer will arrange for a minimum of two independent agents to value your existing home on its behalf.
  • Reservation - Once the valuations have been made, the developer will make you a verbal offer and then confirm in writing. You don’t always have to accept the first offer!
  • Sale process - Once you have confirmed you are happy with the offer, the sales process will then go ahead.

 

What are the pros of part exchange?
Part exchanging a property does not suit everyone but it does have some great benefits for those that choose this option:

  • It is a guaranteed sale! You do not have to wait for your property to sell on the market which will reduce a lot of unwanted worry and help speed up the ‘selling process’. [Drafting note: Link to Selling your home page]
  • The property developer will want to get it turned around quickly and efficiently which is also great news for you!
  • You will minimise any issues that can arise when you find yourself in a ‘property chain’. [Drafting note: Link to ‘How to break the chain’] The developer/builder will be happy to reserve your new home for you, confident that you will be able to exchange contracts and move in on the agreed date.
  • As you will be dealing with the property developer/builder, you won’t have to pay any estate agent fees.
  • It is often viewed as an easy way of upgrading your property to a brand-new home and is a great way to bag your dream home!

  

What are the cons of part exchange?
Before you decide to make any big commitment, it is always best to weigh up the pros and cons.

Part exchanging your property can seem like a ‘quick win’ but there can be some disadvantages too:

  • Firstly, there is no guarantee that your property will be accepted on a part exchange contract.
  • You might get less money for your property than you would get in the open market.
  • You might have a limited selection of properties to choose from (builders will not offer a part-exchange option on all the houses that they build).
  • When you buy your new home you will be taking on a bigger property with more commitment. 

Getting advice
Everyone’s circumstances are different. An independent financial adviser (IFA) with experience of part exchange (it is worth checking that they do have this experience – not all of them do) will be able to assist you to consider the options.

 

 


Help to Buy

Help to Buy is a government scheme that means you could move home with a deposit as low as 5 per cent of the purchase price.

The Help to Buy scheme allows you to own 100 per cent of a newly-built home with just a 75 per cent mortgage and a 5 per cent deposit. The remaining 20 per cent of the purchase price is paid for with a loan from the government (subject to approval).

The loan is interest-free for five years and can be repaid at any time or on the sale of the home.

The scheme is available only in England. The Scottish, Welsh and Northern Irish governments have similar schemes, however – check their websites for details.

What are the benefits of a Help to Buy loan?

  • 75 per cent mortgage.
  • Only 5 per cent deposit required.
  • 20 per cent equity loan from the government - interest-free for the first 5 years.
  • Equity loan can be repaid at any time or on the sale of the home.

How does the Help to Buy loan work?

  • You put down a deposit of at least 5 per cent.
  • The government lends you up to 20 per cent of the property's value as an equity loan.
  • You take out a mortgage on the rest of the property's value (so, if your deposit was 5 per cent and your equity loan was 20 per cent, you would then take out a 75 per cent mortgage).

Help to Buy in London
In London you can get a loan of up to 40 per cent of the value of the home, not the 20 per cent on offer in the rest of England, because of the high cost of housing in London. There are details of the London Help to Buy scheme are here.

Help to Buy Shared Ownership
If you can’t afford the mortgage to buy 100 per cent of a home – even with a Help to Buy loan – Help to Buy Shared Ownership offers you the chance to buy a share of your home (between 25 and 75 per cent of the home’s value) and pay rent on the remaining share. If you wish, you can buy a bigger share later on when you can afford to.

Details of Help to Buy Shared Ownership are at https://www.helptobuy.gov.uk/shared-ownership/ .

More information
There is more information about all aspects of Help to Buy on the government’s official website for the scheme at https://www.helptobuy.gov.uk/

 


How to break the chain

How to break the chain
A housing ‘chain’ can be an unfortunate place in which to find yourself.

Moving to a new home is stressful enough. You really don’t need the added worry of relying on other home-buyers to sell and move on schedule so that you can move on your desired date.

Chains can sometimes be lengthy with a whole series of buyers/sellers needing to co-ordinate the exchange of contracts and the actual process of moving. The longer the chain, the greater the chance of something going wrong. A ‘break’ anywhere in the chain means no-one can move.

Breaking the chain
There are many reasons that the chain might break.

Among the most common is that one of the buyers finds that he or she cannot get a mortgage on the property he/she was planning to buy – for example, if there is a bad survey report. Or personal circumstances change – someone loses a job (or gets offered one somewhere else), has an accident, becomes ill or any one of a number of things.

Sometimes this will just lead to a short delay. Sometimes it will be a permanent break that means your chain needs to be built up again ‘from scratch’.

Some market experts say that one in four planned property transactions falls through for one reason or another.

Being in a chain is not only stressful but it can also be expensive. Non-refundable mortgage fees, survey costs and solicitors’ fees may all be lost if someone else in the chain pulls out.

You might even lose your dream home if you are not able to buy when you planned to do so and the seller finds another buyer. Then you really are back at the start of the house-buying process all over again!

Break the chain yourself
It is possible to break the housing chain yourself – but in a positive way. This might actually put you who in a stronger position with buyers who often prefer a quick and certain transaction rather than waiting for a third party who may or may not move on time.

However, as with most things when it comes to housing, there are also drawbacks to breaking the housing chain – so make sure you get plenty of advice from professionals and look at all of your options before you decide.

Read below for some helpful ways of breaking the chain.

Selling your property before you buy
If you want to buy a new home and be completely ‘chain free’ you could consider selling your home first. If you have time on your side and don’t feel the pressure to sell quickly, you might be in a better place to accept the offer you want rather than feel you ‘have to go for it’.

The downside of selling before you buy is that you might have to rent for a while (or live with kind family and friends) before you purchase your new property. You will also have two sets of moving costs (from your existing home to a rented one and then moving from there to your new home). If you opt to move in with friends or family you will still have to move your belongings into storage and back out again - and, of course, you will have the storage costs to pay.

Use a bridging loan
Bridging loans are designed to help people complete the purchase of a property before selling their existing home by offering them short-term access to money. However, they are usually provided at a high rate of interest.

It is called a ‘bridging loan’ because you use it to ‘bridge’ a gap between you buying a new house and selling your previous house. However, because it is a stop-gap measure, it can be significantly more expensive than a ‘normal’ loan. The lender cannot secure the loan against the value of your existing property if that is already mortgaged so will see the loan as relatively ‘high risk’ – and charge interest accordingly.

If you want to take out a bridging loan, it is advisable to go to an FCA-regulatedbroker because they will only recommend a bridge if it is appropriate for you and your circumstances.

Extending the mortgage on your existing home
If you don’t want to be stuck in a housing chain, you might consider extending the mortgage on your existing property and using that money as a deposit on your new home.

Once you have exchanged the contracts and you move into your new home, you can then rent out your other property and use the rent from that property to cover the new mortgage payments.

This is known in the industry as ‘let to buy’ and will give you the opportunity to sell your existing property at your own pace, aiming to get the best price.

Part exchange 
Part exchange is when one item is traded against another. If you want to buy a new house, you can part exchange your existing property.

Although this is sometimes done when you are buying a ‘second hand’ home it is rare – few sellers are set up to handle a part exchange. Far more common is the use of part exchange to help you buy a brand new house.

The builder of the new property will buy your current property and will deduct this from the price of your new home.

Larkfleet Homes will offer this and other schemes to help buyers who meet certain criteria- see the details here.

 


New built or used home

When it comes to moving home, you have two choices - new-build or used. Both come with their own advantages.

We’ve put together a list that will help you to decide whether to buy a new home or go for a used home. 

Of course, at Larkfleet we reckon you’re better off with a new-build home (well, we would say that, wouldn’t we?) but we’ve tried to ‘put both sides of the argument’ in the following list.

  • New-build homes today are often 20 per cent smaller than homes built in the 1970s.
  • Parking is often limited in new developments.
  • A new-build property is often cheaper than a broadly equivalent used home.
  • Newly built homes are often very close together so you may not feel you have the privacy you want with, for example, windows over-looking your garden.
  • For first-time buyers, buying a new-build is a good idea as you won’t find yourself in a property chain because there will be no one living in the property - you can take your time and negotiate a mortgage to suit you.
  • New-builds are particularly attractive to first time buyers because a 20 per cent interest free loan for five years from the government means you only have to find a 5 per cent deposit under the Help to Buy scheme.
  • When you decide it is time to move on, a new-build might be easier to sell than a used home.
  • Energy costs will be lower in a new-build property because it must meet tougher building regulations for things such as insulation and double glazing than older properties did when they were built.
  • As new-builds are built under the housing legislation of the 21st century, they are generally a lot safer than older homes. They will usually come fitted with safety devices such as smoke alarms.
  • Most new-builds will have a ten-year warranty that gives you security in the face of any major problems with the property. Even if you get a full survey done on a used home (which can be expensive) there is no guarantee that it will uncover all the potential problems with the property and you will not get any warranty from the seller.
  • Used homes can have more character, individuality, history and charm. They are also often part of an established community – which you may fit into or you may not. A new-build home is generally part of a development where everyone is moving into the area for the first time and it can be easier to make friends.
  • Used homes usually have more space and storage which is great if you have a big family.
  • Used homes usually also have bigger gardens. Great if you enjoy gardening or need space for the kids to run around – not so good if you don't!
  • You will have fewer hidden costs and less maintenance work straight away in a new build. A new-build home may come with new appliances such as freezer and dishwasher and it will certainly have a new heating system – all of which will be under warranty. A used home may not have appliances and, if it does, they will be old – as will the heating system.
  • If you enjoy DIY and want to make your home unique, then you may favour an older property so you can really make your own mark. If you don't have the time, money or enthusiasm for DIY, a new-build home may be best as it shouldn't need any work for the first few years.
  • You will get after-sales service with a new home that you won't get with a used one. It should be perfect when you move in (see our advice on 'snagging' but if there are minor problems such as windows that don't lock or taps that leak, the builder will sort them out. In a used home, you're on your own from the day you pick up the keys. 

 


Age Exclusive Developments

Age exclusive developments are a great way for people of a certain age to enjoy independent living along with economic, health and social benefits. And when we say ‘of a certain age’ we’re not being obscure – each such development sets its own lower age limit. Typically, the limit is 50 or 55 years of age.

Age exclusive developments are not ‘old people’s homes’ and many of their residents have not yet retired from work. By providing homes exclusively for a more mature group of people, though, the developments tend to be quieter than an average community – and often more friendly, engaging and supportive.

Let’s be frank, though. These developments are for people who have an eye to the future and the possible problems that getting older can bring. And though they may be in their 50s (but are often older) when they move in, they don’t get any younger. So many residents tend to be in their 60s, 70s, 80s or more.

Why should I live in an age exclusive development?
Research by organisations such as The Joseph Rowntree Foundation demonstrates that age exclusive developments can reduce social isolation, with consequent benefits to health, well-being and quality of life.

Living in purpose-built and efficiently heated housing removes many of the difficulties and dangers of living in inappropriate accommodation, in particular problems using the stairs and the risk of falls anywhere in the house.

Research has shown that age exclusive communities can provide a range of different resident-led interest groups and the benefits of a wider pool of people from which to draw friends and companions.

Studies have also found real community support for residents. For example, neighbours will often collectively provide assistance with activities such as shopping and meal preparation for people coming out of hospital. The community as a whole will provide support for its members through formal or informal ‘neighbourhood watch schemes’ and similar arrangements.

Downsized living
Most age exclusive homes are designed for minimal upkeep. External maintenance is provided and there are services such as handyman and cleaning available if residents need them, usually in addition to the services of a full-time estate manager. The usually spacious grounds and gardens are tended by staff to keep the whole development immaculate.

Some age exclusive properties have gardens for residents who wish to have their own and even allotments which provide an option for taking on a horticultural challenge that can later be handed back if looking after it becomes too much hassle.

Community facilities
Many age exclusive developments have a community facility which provides a comfortable lounge, rooms for clubs and societies to undertake activities and space to simply meet friends and relax.

Some larger developments may have on-site facilities such as a restaurant, bar or hairdresser and guest accommodation for visiting family and friends.

Location
Most age exclusive developments are located close to local facilities such as shops and health centres and are situated on bus routes to assist those residents who are not able to drive or who do not have a car.

The economics
Many residents at age exclusive developments have banked substantial amounts of money to fund their new lifestyle by selling a family home which is much larger than their current requirements.

However, there is usually a monthly 'management charge' to pay for the staff, facilities and upkeep of the development.

 


Age Exclusive Developments

Age exclusive developments are a great way for people of a certain age to enjoy independent living along with economic, health and social benefits. And when we say ‘of a certain age’ we’re not being obscure – each such development sets its own lower age limit. Typically, the limit is 50 or 55 years of age.

Age exclusive developments are not ‘old people’s homes’ and many of their residents have not yet retired from work. By providing homes exclusively for a more mature group of people, though, the developments tend to be quieter than an average community – and often more friendly, engaging and supportive.

Let’s be frank, though. These developments are for people who have an eye to the future and the possible problems that getting older can bring. And though they may be in their 50s (but are often older) when they move in, they don’t get any younger. So many residents tend to be in their 60s, 70s, 80s or more.

Why should I live in an age exclusive development?
Research by organisations such as The Joseph Rowntree Foundation demonstrates that age exclusive developments can reduce social isolation, with consequent benefits to health, well-being and quality of life.

Living in purpose-built and efficiently heated housing removes many of the difficulties and dangers of living in inappropriate accommodation, in particular problems using the stairs and the risk of falls anywhere in the house.

Research has shown that age exclusive communities can provide a range of different resident-led interest groups and the benefits of a wider pool of people from which to draw friends and companions.

Studies have also found real community support for residents. For example, neighbours will often collectively provide assistance with activities such as shopping and meal preparation for people coming out of hospital. The community as a whole will provide support for its members through formal or informal ‘neighbourhood watch schemes’ and similar arrangements.

Downsized living
Most age exclusive homes are designed for minimal upkeep. External maintenance is provided and there are services such as handyman and cleaning available if residents need them, usually in addition to the services of a full-time estate manager. The usually spacious grounds and gardens are tended by staff to keep the whole development immaculate.

Some age exclusive properties have gardens for residents who wish to have their own and even allotments which provide an option for taking on a horticultural challenge that can later be handed back if looking after it becomes too much hassle.

Community facilities
Many age exclusive developments have a community facility which provides a comfortable lounge, rooms for clubs and societies to undertake activities and space to simply meet friends and relax.

Some larger developments may have on-site facilities such as a restaurant, bar or hairdresser and guest accommodation for visiting family and friends.

Location
Most age exclusive developments are located close to local facilities such as shops and health centres and are situated on bus routes to assist those residents who are not able to drive or who do not have a car.

The economics
Many residents at age exclusive developments have banked substantial amounts of money to fund their new lifestyle by selling a family home which is much larger than their current requirements.

However, there is usually a monthly 'management charge' to pay for the staff, facilities and upkeep of the development.

 


Guarantees and Warranties

When you move into your new home, you want to ensure that you are fully protected. One of the benefits of a new-build home over a second-hand one is the fact that the building is protected by a warranty.

Warranty
A new home warranty is an insurance policy, usually lasting ten years, which protects buyers of new homes from structural defects. 

Having a warranty gives potential buyers that much-needed peace of mind that their home has been built to the highest standards.

Within the industry, it is also a condition of most mortgage applications that a structural warranty is in place for newly built or converted properties.

Consumer Code for Homebuilders
The Consumer Code for Homebuilders is a code to make home buying fairer.

Standards
The National House-Building Council (NHBC) is an independent organisation that maintains a register of builders of new houses.

Before being accepted onto the NHBC register, a builder must be able to show that they are technically and financially competent. They must also agree to abide by the NHBC Rules and Standards which cover technical requirements and guidance on practical design, suitable materials and quality of workmanship. NHBC technical staff examine homes at the design stage and carry out inspections at key stages of construction.

NHBC is not the only warranty provider. Others include LABC and Premier Guarantee.

If your builder is signed up to the Consumer Code page it must have a suitable warranty in place. So check that your builder is signed up. If you buy a new Larkfleet home you are, of course, fully covered.