Can I Sell a Share of My House?
Estimated reading time 7 minutes
When you purchase a property, it is unlikely that you have started to consider whether you will be able to sell a share of the home in the future. There may not be any likely need that you can think of, but it’s a common practice for many occupants living under joint tenancy, or those that are part of a tenancy in common agreement. You can sell a share of your home; you just need to be aware of how the rules apply to your current living situation. Are you tenants in common, do you hold joint tenancy, or do you live in a shared ownership property? Perhaps you own the property by yourself.
In this blog, we explain how the process of selling a share in your house works and what you need to know.
Are you joint tenants or tenants in common?
If you have started considering selling a share in your property, you should first look at your ownership status. The difference between the two will determine what you can do.
Joint tenancy is the typical home ownership status when up to four people take legal ownership of a property. There can be any number of owners but, once there are more than four, ownership is through a trust. Each person owns an equal share of the property, and no majority share can be held by anyone. This then gives each owner equal rights to the property for the time they live there. As a result, everyone has a 100% stake in the value of the property.
In the event of death, a joint tenancy sees the ownership passed on to the remaining owners in what is known as the “right of survivorship”. This can often be a common option for married couples or long-term partners.
Tenancy in common
Tenancy in common is where ownership is split among the legal owners and where each can hold a varied share of the home. This could see someone who perhaps invested a little more into the property, holding 60% of the ownership whilst the other person would have 40%.
A tenancy in common will normally have a deed of trust drawn up to help ensure transparency over things such as how costs are split, what happens in the event of a sale and more. In the result of a death, ownership is passed on as determined by the will.
With both ownership types, a sale must be agreed upon by the collective owners. However, things are a little different when selling a share.
If you live in a property that has a joint tenancy ownership structure, you can sell your share as long as you seek the other owner’s permission. If permission is given, you can proceed with selling your share as normal.
This can prove difficult at times and can be a headache for many. Especially during times like divorce. If one party won’t give consent to sell your share, you can be stuck in an uncomfortable situation where the only option is often to go via the courts.
It can also prove to be tricky should one person contribute more financially than the other. The split remains 50:50 no matter what, so even if you have contributed to 70% of the costs, you will only receive 50% when you sell.
The ownership of the property cannot be passed on in a will and is instead handed to the other owners.
If your property is under a tenancy in common ownership, you have the right to sell the share you own without needing to seek the permission of the other owner(s). However, common decency would be that you let them know of your intentions. The steps to selling a share in a tenancy in common property are as follows:
- Inform your co-owner(s) of your intention to sell your portion of the property.
- Find an estate agent
- List your home with the estate agent and sell.
Remember, you do not need to have the other owner agree to you selling your share. You may even find that they decide selling is the best idea for all involved. If so, you will need to divide the sale proceeds among yourselves, remaining aware that the split will not necessarily be equal.
Shared ownership is a little different. Normally you own a percentage of the property with the remaining share owned by the housing association. You can, of course, purchase additional shares over time in what is known as staircasing.
It is common for owners of a shared ownership home to staircase to 100% before selling so that they own the entire property rather than just a share. This can be full of complications so it is best to seek the advice of the housing association and legal experts before proceeding.
If you can obtain 100% of the property, you can sell it as you would sell any other home.
If you choose to sell when owning a lesser share, you will sell the property via the housing association which will attempt to find you a buyer through their network of interested parties. If within eight weeks no buyer has been found, you will be allowed to advertise the property with an estate agent.
To sell a share of a shared ownership home, you will need to:
- Check your lease to find the specific rules for selling your home.
- Contact your housing association and inform them of your wish to sell.
- Get a valuation carried out by a RICS surveyor.
- Appoint a solicitor and instruct them to proceed with the actions for a sale.
- Complete all paperwork from the housing association.
This can be a costly process and there are often handling fees and other associated costs payable to the housing association as well as to the estate agent, surveyor and solicitor.
Shares of property can be sold to your children, but this does require specific applications to be made. Firstly, you will be required to apply for what is known as a transfer of equity. This allows for you to stay on the mortgage and property deeds with the children also added.
Not all lenders will approve of this so you would need to speak with your current lender to see if this is a viable option. They will review the affordability of the loan as well as the income of the children you are adding to the mortgage. Should the lender’s requirements be met, the child or children then become part owners of the home. You will then need to look at the options of being tenants in common with a split being determined by you and your child or children.
You can also look to sell the home at a price below market value but keep your legal interest in the home. This is where the property becomes a concessionary sale, and you gift equity in the home so they can afford the purchase on a smaller mortgage. You would no longer appear on the deeds of the property but would be able to retain a legal interest in it. Legal advice is recommended in this situation as it can be quite complex to navigate.
Selling property, whether it is a share of it or the whole home can be a stressful time with complex dealings having to take place to make sure it goes well. Why not speak to Gaffsy. As fast house sale experts, we can remove the headache of the traditional market and have cash in your account in as little as seven days. Working as cash house buyers, we offer a seamless, quick and easy route to sale that avoids the typical hassles and instead has you selling quickly and for free. With no fees to pay, we offer the smoothest way to sell a house fast.