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Selling a home, famously, is one of life's three most stressful events (along with bereavement and divorce) — and that's when the market is doing well. Selling during a credit crunch, however, with mortgage concerns, worry about the state of the chain and the real fear of gazumping or gazundering, makes everything even more traumatic. One lifeline open to desperate vendors, unable to sell but needing to move, is part exchange, where new-build developers take your old property off your hands and put it towards the cost of a new home they have just built. Given that it is now taking 24 weeks to sell the average home, if it sells at all, it's not hard to see why this option is becoming more popular.
We're used to part exchange when it comes to buying a new car, so could it become as popular a way to buy a new home?
You don't have to pay estate agents' fees or for the Home Information Pack, or spend time doing up your home for a sale. In fact, all you do is hand over your old keys and get a new, shiny bunch in return. The downside is that the developer is likely to offer you a below-market rate for your home, usually between five and 20 per cent less than an estate agent's valuation. Another consideration is that only buyers who are trading up are eligible, so the new-build property you buy has to be of a higher value than the property you sell. A mortgage for a part exchange property is the same as one for a straightforward sale — you get a loan for the difference in value, while covering the amount still outstanding on your old home. You have access to the same amount of mortgage products as you would selling on the open market.
The main developers offering part exchange schemes in London are Crest Nicholson and Barratt Homes. Barratt offers part exchange in some highly desirable areas, including Parkside overlooking King George's park in Wandsworth, where two-bedroom flats start from £325,000. There's also Kennington Park Square with one-bed flats from £262,500, and Dalston Square, close to the new Dalston Junction station, with one-bed flats from £270,000. Crest Nicholson offers part exchange at its GreatWest Gate development in Osterley, where one-bed flats start at £209,950 and two-beds at £244,950.
* The developer buys your existing home and exchanges it for part of a new home it has built. This means there is no chain and you have a guaranteed sale.
* To be eligible you must own a home (old or new) and be looking to move to a more expensive, new-build property. Owners of council property are generally not eligible.
* Developers usually offer 90 to 95 per cent of the market value of your home, but you will be saving on estate agency and HIP fees.
* Normally the developer will take two or three independent valuations and make an offer based on these. You will also need to get a survey, and if any defects arise the developer may lower its offer.
* You can take out a mortgage to cover the difference in value between the house you have exchanged and the property you are buying.
Part exchange property has the same mortgage as one for a straightforward sale — you get a loan for the difference in value, while covering the amount still outstanding on your old home.