Last Updated on January 18, 2024 by Umer Malik
People have always shown an affinity towards purchasing properties in different parts of the UK. Owning a property is the dream of every individual, and most residents of Britain live in their own house rather than renting it out. Even though purchasing a property is a venture and involves multiple risks, people are still ready to jump into this business. There have always been occasional alterations in property prices due to the faltering economical conditions of the country.
About 27 million properties are present in the whole of Britain. With people owning more than one property and the entry of overseas investors in the country has seen a steady decline in the number of properties in the past decade. Stamp duty holiday that was introduced in 2020 after the year-long pandemic brought in more buyers, which boosted the real estate market all again. The demand for new and pre-owned homes increased to a point, where many people started bidding more and competed for a single property.
Hunting for new properties has turned into a challenging task despite the involvement of estate agents in Rainham, Battersea, Clapham and other boroughs of London. Buying and selling homes is complex, and there are some ways to escape this hassle.
With the ongoing race between the demand and supply for properties, homeowners planning to sell their properties can opt for exchanging their old homes with a new property using the part exchange scheme. People who do not have enough time to indulge in the complete selling and buying of a property can choose this as the next best option.
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PART EXCHANGE SCHEMES IN THE UK
With the property market facing uncertainties in the last few years and demand overriding the supply, people have started looking for more stable methods. Finding the dream home that matches the buyers’ requirements has become a rare scene due to the drop in the number of properties in the UK. All these reasons combined, people are moving towards part exchange schemes. Part exchange programs enable people to buy new properties by exchanging their old property of the same value. This process is quicker and easier than waiting to sell your property first and then buy a new one. Most builders and property developers make use of this scheme to expand their business across the country, which is beneficial for themselves and the buyers.
HOW DOES THIS METHOD WORK?
When buying a property, it is the seller who negotiates the property price with the buyer before proceeding towards closing. The part exchange begins with the buyer or the builder negotiating a fair price on the seller’s property and selling their new-build home of the same value. Considering the market trends at the time of selling, the property price will, however, remain lesser than the expected price, and the difference amount is paid for the new build. Developers have the upper hand in this business deal when choosing the property type customers can purchase.
IS IT A GOOD OPTION?
Any kind of property purchase comes with its own perks and drawbacks. Part exchange schemes are chosen by people who are in a hurry to have their previous homes sold and buy new homes at the earliest. Property builders and developers will enjoy the extra money, while the buyer can save loads of time, hard work and money spent on estate agent fees. The property value that the buyer sells is what they might get back from their new home. The overall process is a simple one where both parties are benefited from a single transaction.
WHO CAN AVAIL PART EXCHANGE?
The popularity of the part exchange scheme has grown extensively over the years. Regions where the property prices haven’t changed much have seen more people choosing the part exchange program. When the number of new builds increases in future, more people who are facing delays in selling their homes will come forward to utilize this scheme. Homeowners who are about to upsize or downsize their property quickly and efficiently will choose the part exchange method. Anybody can make use of the part exchange scheme unless they meet specific criteria like:
- They must own the entire property they are planning to exchange
- The property must be in a good condition
- Building design should be proper and meet the requirements of the builder buying it
- The total property value must be about 65% to 85% of the new property’s price.
- Leasehold properties must have a fixed period that lasts for more than eighty years.
ADVANTAGES OF PART EXCHANGE
People are making the choice of part exchange because they do have many advantages that would benefit the customer in many ways. Many people might be struggling to sell their old properties for a long while. With a part exchange scheme, they can sell their property to the builder in exchange for a new build. All these transactions take less time compared to a normal property deal that would last for several months. This type of property transaction does not have external interferences like an estate agent which makes the entire process a less complex one.
Along with the many advantages comes a few drawbacks of choosing the path of part exchange. Comparing this method with the traditional property deal, not many notable disadvantages or losses occur here. However, a small percentage of financial losses might happen when the buyer negotiates with the seller, where the chances of developers making huge profits with the property sold and the extra sum paid by the customer. Builders have the final word in this type of transaction where the sellers will have to abide by them.
Unlike the usual property sell-purchase, the part exchange has proven to be one of the best ways to close the deal. Although this scheme might not be familiar among many people in the UK, it is growing to become popular in the real estate business. New builders and developers have added this service to their regular property sales to attract buyers.