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Buying part of a home through the Shared Ownership scheme can be a great way to get your foot on the property ladder, especially during a period of time when owning a home is becoming more difficult.
Before deciding if Shared Ownership is suitable, most people think ahead and ask questions about what the resale process will look like should they want to sell in the future. One of the most common questions we hear is, “Will I make a profit from my share of a Shared Ownership property?”
The short answer is, that it’s possible to make a profit on a Shared Ownership property, just as it is any other home. However, it’s important to remember that any profit you make would be relative to the share you’re selling.
For example if you are eligible to buy a 35% share in a home worth £150,000, at the time of purchase your stake would be worth £52,500.
If you later sell that share and the property turns out to be valued at £175,000, your share would be worth £61,250 which is an increase of £8,750. This number could be a profit but there are factors you need to consider, such as the cost of selling and the cost of moving.
Shared Ownership properties must be sold at a price determined by a RICS valuation rather than buyers making offers against an asking price. So, any profit you make will be purely determined by that valuation.
Whether your Shared Ownership home’s price has elevated by the time you come to resell, depends on lots of different factors and there is never any guarantee. Most often, property prices are based on demand within the area.
It is very important to keep in mind that Shared Owners need to approach their housing provider before they sell, at this point the provider has the opportunity to find a buyer for the home. After a period which will be outlined in a contract, if the provider doesn’t find a buyer, then a Shared Owner can approach other companies to sell the home. There may be a cost associated to this process which could impact any potential profit.
However, you may not need to approach your Shared Ownership provider to find a buyer if you own 100% of your property and in this case, you may be able to sell your home on the open market.
Here at Plumlife, we’re proud to have a Shared Ownership resale estate agency that helps lots of people through the resale process, ensuring customers maximise their assets and reduce any hassle. If you are looking to sell, why not speak to our Plumlife Move team?
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