There are many circumstances in which you may wish to sell a share of your house. For example, if you want to help one of your children get onto the property ladder, selling a share of your property means that they don’t have to pay as much money as they would for the entire property, which can be extremely valuable.
Likewise, if you are living under a joint tenancy or tenancy in common arrangement, you may wish to sell your share of the property to someone else.
Whatever your situation, read on for an outline of selling a share of your house in the UK.
Can I sell my 50% share in a house?
When you agree to the joint ownership of a house with another person, the rights of each party should be outlined in a contract.
If the property is owned under tenancy in common, you have the right to sell your percentage of the house without the permission of the person you are living with. Therefore, yes – you can sell your share in a house.
If the property is owned under a joint tenancy, then you can only sell your 50% share with the other tenant’s permission. As long as you have their blessing, there will be no problem selling your share.
This scenario is why many people prefer a tenancy in common, rather than a joint tenancy. In the event of a breakdown of relationship with the other tenant, a tenancy in common prevents you from being held hostage by the other.
Can you sell your shared ownership house?
There is nothing stopping you from selling your shared ownership house, just like any other property you own. However, before doing this, many people opt to buy the remaining share of the property from the housing association that owns it, so they own 100% of the property before selling. If you are unsure about how to reach this stage, then you should consult a legal professional with experience staircasing to 100% ownership.
The lease of your shared ownership house will outline the steps you must follow to sell your home. These steps will typically include:
- Informing the housing association that you wish to sell
- Undertaking a RICS red book valuation
- How to instruct the housing association to sell your home
- Transferring the lease to a buyer of their choice
In some situations however, you will not be required to transfer the lease to another buyer, but to instead place the property on the open market. In either situation, the price you can put it up at will be no more than the current market value of your share in the property. Then, the housing association will typically charge for the resale process – which is referred to as a ‘nomination fee’.
Can you sell a share of your house to your children?
To sell a share of your house to your children, you will have to apply for a ‘Transfer of Equity’. This process involves adding your children to the mortgage and deeds, while staying on yourself. To achieve this, you will either have to approach your existing lender for permission, or you can consider remortgaging to a new lender.
To determine whether you are allowed to sell a share of your house to your children, the lender will review the affordability of the loan. They will also consider the income of your child, which is a significant factor in getting their permission (just like any other house purchase).
Can I leave my share to my children in my will?
Yes, you can leave your share of your house to your children under most circumstances. For example, under a tenancy in common, you can bequeath your share of the property to your children in a Will, and it will legally become theirs.
On the other hand, under a joint tenancy agreement, you will have to get your co-owners permission to sell your share of the house to your children. Therefore, it is still possible to do this – as long as you have permission.
It is for this reason that, when you decide you want to sell a share of your house to your children, you may be advised to switch to a tenancy in common, if you are not under that arrangement already. This transition will allow you to sell a share to your children.
Joint tenancy vs tenants in common
When you own a property under a joint tenancy, all owners hold the same share. In most cases, this means that you and one other tenant hold 50% – but if there are more than two tenants, the share you hold will vary accordingly.
Tenancy in common is by far the most popular form of joint ownership. This is when tenants own a share of the property – but this does not necessarily have to be the same size share. Therefore, one (or several) tenants can hold a greater share than others.
There are several advantages of a tenancy in common agreement, including:
- You have full access to the property, no matter your share
- You do not need the other owner’s permission to transfer ownership
- You can use your share as collateral for a loan without permission from the other tenant(s)
On the other hand, while joint tenancy can be valuable for avoiding expensive probate, it can come with other disadvantages.
Firstly, you cannot leave your share of the property to an heir (e.g. in a Will), like you can with a tenancy in common. Instead, if you pass away, your share passes immediately to the other tenant.
A joint tenancy also means that you cannot sell your share of the property without the permission of all other owners. And lastly, if the other tenant files for bankruptcy, you may have to sell your share so they can pay the debt.
These three disadvantages to joint tenancy explains why tenants in common is the most popular type of shared ownership.
