What to consider when selling your home

If you are thinking of selling your home because, for example, you need more space, you may want to compare the costs of selling your home with the cost of adding an extension, doing a loft conversion, or converting the basement into an extra living area. These renovations can even add value to your home. 

If you still decide that a sale is the right thing for you, you should be wary of property prices in the housing market. While it is very difficult to predict whether the market is likely to increase or decrease in value, you can speak to an estate agent or property valuer to ascertain recent trends and selling prices in your area. 

Depending on your circumstances, you might be better off renting out your home rather than selling it. For more information, read Renting property. 

As is the case when you buy a property, there are financial consequences and things you should consider when selling property. If you have a mortgage on your property then you must notify the lender of your intention to sell. 

You should check your mortgage policy for any outstanding mortgage due and whether there is an early redemption penalties (also known as an ‘early repayment charge’ or ‘early repayment fee) that must be paid if you pay off your mortgage early. Once you value your property, you can calculate how much money you will receive in the sale after you’ve paid off the mortgage. 

If you’re going to buy a new home, you may need another mortgage for this purchase. You should speak to a mortgage broker or your current provider about how much they will be willing to lend you for the purchase of your new home. 

At these early stages, your house value figures and mortgage redemption amount will be approximations only. This is because you don’t know exactly how much your house will sell for and you will only receive a precise mortgage redemption amount once you’ve exchanged contracts for the sale.

Capital gains tax (CGT) is a tax that must often be paid on the profits made from the sales of certain assets - including property. You don’t always have to pay capital gains tax when you sell a property. You won’t pay CGT when you sell (or ‘dispose of’) your property if: 

• you’ve lived in it as your main home for the entire time you’ve owned it 

• you haven’t let part of it out or used part of the property for business purposes only 

• the grounds, including the buildings, are smaller than 5,000 square meters, and

• you did not buy the property solely to make a gain (ie purely as an investment)

If the above factors apply, you’ll be eligible for Private Residence Relief. This is a type of tax relief that, if applicable, means you don’t need to pay CGT on the sale of a property.

Although it is possible to sell your home privately, the majority of people use an estate agent. They bring professionalism and skills that often result in your home selling quicker and perhaps for a higher amount. However, estate agents come with fees. Their fees vary greatly depending on their location and size. The fee is usually a percentage of the selling price and VAT. Look out for any additional marketing costs that the agents add and make sure you agree to costs before engaging an agent. 

If you do choose to use an estate agent to sell your home, you must sign a legally binding contract. Both you and the agent must stick to the terms of the contract. Estate agents are legally obliged to tell you about any offers put on the property, right up until contracts are exchanged.

An energy performance certificate (EPC) is a document containing information about the energy efficiency of a property. It also provides information about the property's energy use and typical energy costs, and recommendations about how to reduce energy use and save money. An EPC gives the property an energy efficiency rating from A (most efficient) to G (least efficient).

When a property is sold or rented out the seller or landlord must provide the buyer or tenant with a valid EPC free of charge before the property is marketed.

For more information, read Energy performance certificates (EPCs).

Somebody who wants to buy your property will make an offer. If you’ve used an estate agent then the buyer must make an offer to the estate agent. A buyer can make their offer directly to you if it’s a private sale. 
Offers for the property can be made verbally (eg over the phone) or in writing. An offer isn’t legally binding in England and Wales until contracts are exchanged. 

Once you accept an offer for the sale of your property, the seller is responsible for drafting the legal contract to transfer the ownership. You can instruct a solicitor or conveyancer to do this. 

The sale contract is up for negotiation. It generally sets out: 

• the sale price

• the property's boundaries

• which fixtures and fittings of the property (like carpets and kitchen units) are included

• any legal restrictions or rights applicable to the property (eg public footpaths or rules about how the property can be used)

• any planning restrictions

• services linked to the property, (eg water and gas)

• when the sale will complete

Much like estate agent fees, conveyancing costs can vary upon whether you are being charged on a fixed fee or hourly basis (fixed fees are recommended). In most cases, the fee is linked directly to the value of your property. Look out for any hidden fees such as photocopying and phone calls costs, fees for filing tax returns (ie Stamp Duty Tax returns (in England), Land and Buildings Transaction Tax returns (in Scotland), or Land Transaction Tax returns (in Wales)), or fees for dealing with your mortgage lender.

Make sure both you and the buyer are satisfied with the contract. Then, you sign a final copy and send it to the buyer. This is a legally binding agreement. Once it's fully signed, usually neither party can pull out without paying compensation. 

After you exchange contracts, you proceed to completion. Money is transferred from the buyer to you for the sale of the property. The legal documents needed to transfer ownership are handed over to the buyer.

You will then move out and leave the property in the state agreed in the contract. You hand over the keys to the buyer and the property then belongs to the buyer. 

You’ll also need to pay off any fees or charges outstanding, such as mortgage payments and any stamp duty due.

For more information, read Conveyancing and transferring property. Note that the process for transferring property is slightly different in Scotland.