Property Blog and News / What is house part exchange? And how does it work?

What is house part exchange? And how does it work?

27 June 2024

Author

Jamie Obertelli
Head of PR & Communications

You’ve probably heard of trading in your old car or mobile phone for a new model through part exchange or ‘trade in’ schemes. Well, you can do exactly that with your home through house part exchange. 

We’ll take you through the ins and outs, pros and cons, and nitty gritty details of property part exchange to help you decide whether it’s the right option for you. 

What is house part exchange?

House part exchange, also known as home exchange or property part exchange, is the process of exchanging your current property as part payment for a new property. Exactly like trading in your old mobile phone for a deal on the latest model, developers and builders will often use this part exchange approach to sell new build homes.

How does house part exchange work?

The house part exchange process doesn’t differ too much from any other home sale and purchase after the developer agrees to a part exchange. When going through a developer, you can only part exchange a property that is worth at least 30% more than your current property, therefore, unfortunately, you can’t buy a cheaper home than the one you’ve already got.

Part exchange through a new build developer has certain criteria and is only available for select plots, however, it’s an easy process.

Step-by-step guide to property part exchange through a new build developer

  1. Find a developer that offers property part exchange
  2. Fill out an eligibility form for your current home
  3. If eligible, the developer will arrange a home visit to assess your property and make a preliminary offer
  4. You can either accept the offer or start negotiations on the price
  5. The developer will conduct legal and credit checks on you
  6. You can then choose your new home on the development and pay a reservation fee
  7. The developer will hire a chartered surveyor to value your property
  8. You will do the same for the property you’re looking to buy
  9. You and the developer will then make formal offers on the respective properties
  10. Once the offers are accepted, you both instruct conveyancers for the property transaction
  11. Mortgages can now be sorted, with either the mortgage or cash covering 30%+ of the value that’s not covered by the exchange of your old home
  12. It will take approximately eight to 12 weeks for the conveyancing process
  13. After this, you can exchange and complete like you would with a typical home sale

Is your home eligible for property part exchange?

If you’re looking to sell your home and part-exchange it for a new build, then there are strict criteria you’ll need to meet. While the criteria will vary from developer to developer, here’s the key considerations:

✔ You’ll need an independent valuation of your current home

✔ Your home should not be worth more than 70% of the value of the home you want to buy

✔ You’ll need a substantial amount of equity in your current home

✔ The developer must approve the location of your current home

✔ The condition of your current home must meet good standards, notably boiler, electrics, and gas

✔ Your home must have a working kitchen and bathroom

✔ Your home must fit standard construction styles, rather than unconventional designs

✔ You must either be a shareholder or have a lease of more than 85 years

What are the best ways to find a home for part exchange?

While you can purchase a home through part exchange with cash home-buying companies, the best way to find a home for part exchange is through new home developers. Many of the most popular housing developers offer house part exchange, however, it’s not always available year-round.

If you find a development you like and don’t see part exchange listed on their website, it’s always worth getting in touch with the developer directly to enquire. We’d recommend you start with the biggest names in new home development, such as  Persimmon Homes, Taylor Whimpey, Berkeley Homes, and Bellway Homes.

What are the pros and cons of house part exchange?

There are both positives and limitations of house part exchange. Let’s explore both in more detail…

The benefits of house part exchange

  • No estate agency fees
  • Less time and money spent trying to find a buyer
  • No property chain to worry about
  • A guaranteed sale for your old home
  • A quick selling process for your old home
  • Home part exchange is a fantastic opportunity for upsizing
  • Your new build home comes with a guarantee

The limitations of house part exchange

  • Your old home might not be sold at market value
  • There are a limited amount of part exchange homes available
  • There are strict eligibility criteria for home part exchange
  • Part exchange is not suitable for downsizing
  • You will need to cover the new home reservation fee

What happens to your home after you’ve part-exchanged it?

In most cases, after you’ve sold your home to the developer through part-exchange, they will then sell it on the open market. Developers may choose to refurbish your old home to improve the resale price or they might take longer to sell the property in order to achieve a profit on the price they bought it for.

What should you look out for when part-exchanging your home?

When it comes to part-exchanging your home, you want to know that you’re getting a good deal, but you also want to make sure you’re dealing with reputable developers. This is particularly important as the home part exchange industry is unregulated.

You should expect to receive around 80-85% market value for your property, however, some developers will offer even closer to the market value if they really want to incentivise you to buy a new home from them.

We also recommend checking that the developer is buying your property with cash funds, and not relying on mortgages or investors. To do so, you can check the company’s finances online.

Does house part exchange sound like the right option for you? Browse thousands of new build properties for sale across the UK and find your dream home.