Tough Housing Market Means it Pays to be Creative

Built circa 1870 two semi-detached cottages at...
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It’s no secret that the housing market in the UK has been in a poor state for some time. We’ve seen house sales dwindle and prices plummet across the country during the ongoing economic downturn, and a recovery in the property market still appears to be some way off.

Sellers have been frustrated by the flat conditions while buyers have been thwarted by tighter mortgage lending conditions and the need for higher deposits to put down on a new property.

With the market providing such challenging conditions, the key to arranging a successful home or part exchange now lies in being flexible and in not imposing rigid constraints on what you can and cannot do.

And, while the slowdown in traditional methods of buying and selling property continues, I believe that home exchanging – or house swapping – will become a more accepted method for agents and individuals to use when considering moving home in the coming years.

Although the concept of home exchanging has proved popular around the world, especially in the United States following the collapse of the property sector there, it is still treated with some trepidation in the UK. However, with difficult economic conditions still being felt across the country, we are now seeing more people starting to consider the possibilities of exchanging their home.

The popular and widely held view is that an exchange or house swap is something that only takes place when two homeowners want to exchange houses of similar value, but this just isn’t the case. While it is entirely feasible to make a sideways exchange of property – such as swapping a 2-bed flat in one part of the city for a 3-bed semi-detached home of similar value in another area – there is also plenty of scope to trade up or down through home exchanging.

Suppose you have a young couple looking to move into a bigger property, but don’t have much cash or have had trouble securing additional mortgage funding. It might seem that they don’t have many options and there’s no way they could look at a bigger property at the moment. But if they think about things creatively, there might be a solution that could get them moving.

If there’s a larger property owned by, for example, a widow wanting something smaller and looking for income, this could present the ideal solution. She might be quite amenable to retaining an equity stake in the large property for a set number of years until the mortgage market improves for the younger couple, in return for interest payments which would boost her income. Her security is equal to what a mortgage company would hold and all parties achieve the result they are looking for.

Clearly all parties would need to seek legal advice, and a legally binding agreement would need to be drawn up. But there’s no reason why they can’t come to a satisfactory arrangement if they think about achieving a creative solution.

It’s possible that traditional property sellers may be tentative about the concept of home-swapping or see it as a threat to their business, but it’s important to note that this kind of transaction will not replace the service that solicitors and estate agents currently provide. If anything, home exchanging actually presents an additional service that property firms could offer for their clients – and I can see it quickly becoming an established and key element within the range of marketing tactics used by estate agents for a seller.

Also, as home exchanging still requires the services of a solicitor to complete each transaction, it presents legal firms with the chance to secure additional business.

Tough times call for everyone in the business world to think more creatively, and the property market is no different. Indeed, the Office of Fair Trading recently called for the introduction of more innovation to the selling process. And as economic recovery and a revival in the property sector are both likely to be some way from materialising, I envisage more buyers and sellers will turn to alternative methods of marketing property – and especially home exchanging – before long.

Martin Walker is the founder of Swap the House, an online UK home exchanging service.


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  • meet

    According to the Guardian: “In capping housing benefits, the chancellor blamed the housing benefit bill on greedy families who are looking to net over £100,000 a year from the state. But it was two governments and mayors overseeing a fall in the stock of social homes in London that forced the housing benefit bill up in this city, as waiting lists almost doubled in length.”