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Trying to sell a house, flat or other type of leasehold or freehold property that does not have a structural warranty can be much more complicated than attempting to interest buyers in a conventional home. This guide explains why the process can be more difficult, but it also offers some important advice on how to secure a speedy and fair offer for your property.
- What is a structural warranty for a house?
- Coverage from a property structural warranty
- Problems selling a home without a structural warranty
- Getting your house prepared for buyers
- Disclosing and fixing structural problems with your home
- Paying Capital Gains Tax on the sale of your home
- Your top choices for selling your house with no structural warranty
- Questions about how to sell a home without a structural warranty
What is a structural warranty for a house?
If you are preparing to sell your leasehold or freehold house, flat or other property then you should check whether your home has a structural warranty (discussed further on architectscertificate.co.uk), which effectively insures a property for any physical problems that might occur over a set period of years.
A structural warranty, also less often referred to as latent defect insurance, protects homeowners from problems that might occur if a home starts to develop a physical issue like subsidence. These warranties are not required by law, but many mortgage lenders will insist that a property have a warranty in place before approving a loan to buy the home.
Typically, structural warranties are included with new build properties, which are homes that are built from scratch (these could be from a house builder or even a self-build house) on vacant land, and the warranties last for 10 years – although the exact duration can be longer or shorter. The exact terms and conditions of the warranty policies can vary from property to property.
The main benefit of the warranty is that it will cover your costs in the event that some type of structural problem emerges, which will save you a lot of time, money and stress.
Coverage from a property structural warranty
A structural warranty for a house, flat and other residential properties can cover a number of potentially negative developments that can occur with your home’s structural integrity for the duration of the warranty, such as:
- Any fees associated with work to repair structural problems
- The cost of insurance for repair work done on the property
- Expenses involved with any rebuilding of part of the home
- Repair costs associated with fixing the drain system
- Paying for work to correct any water damage at the property
- Covering the price of insurance against any future defects
- Out-of-pocket costs for staying elsewhere whilst work is being done
- The price of removing debris after repairs are completed
Problems selling a home without a structural warranty
One of the biggest problems that you could face with trying to sell a home that does not have a structural warranty is that private buyers might not be able to obtain a mortgage.
When a financial institution approves a loan for someone to purchase a property, they assess what might happen in the event that the buyer eventually falls behind on their mortgage payments. The lender might move to take over the home and sell it in order to recoup whatever money is still outstanding on the mortgage. But mortgage providers are wary of issuing loans for properties that they think could be harder to sell at a decent price if needed in the future.
Leasehold or freehold properties that do have structural warranties or do not comply with other building regulations are seen as a riskier investment by many mortgage lenders. If a buyer needs a home loan in order to purchase your property but can’t get a mortgage, the sale will not be able to go ahead.
Don’t be concerned that you will not be able to sell your home because of the lack of a structural warranty. One solution is getting in touch with LDN Properties or any other trustworthy quick home buying company, because they have plenty of experience with buying properties that don’t comply with building regulations, that lack structural warranties, or that have other potentially negative aspects that would make a mortgage provider reject a loan application. You could also read more about retrospective building warranties here on the Buildsafe website.
Another problem with trying to sell a home without a structural warranty is that potential buyers might be wary about their future liability for having to pay to fix any physical issues that might arise with the home once they own it. If a structural warranty is in place then this can help to alleviate such concerns, because potential buyers will know that this will cover them.
Getting your house prepared for buyers
When you’re preparing to sell your home (see this Gov.uk guidance note), with or without a structural warranty, there are some simple and zero-cost or low-cost steps that you can take to increase your odds of attracting buyers.
For the interior of your home, you should focus on removing any clutter from each room and making them look as open as possible, because this will give each room the appearance of looking larger and more spacious, which buyers will see as more valuable. You should also clean and tidy each room, and keep any pets secured if people visit your home on viewings.
For the exterior of your home, you should make sure to remove weeds and mow any lawn, yard or other green space that you might have. Also assess the outside of the property and identify whether there are small fixes that you could make relatively quickly, for example replacing any missing roof tiles, fixing broken windows and painting over any chipped or faded paintwork.
First appearances are crucial when it comes to trying to get people interested in your home, and if they see the house as messy and poorly maintained, at best they will view your property as less valuable and reduce their offer price, and at worst they’ll lose interest in buying it.
Disclosing and fixing structural problems with your home
In addition to the lack of a structural warranty, you will have to disclose to potential buyers any physical problems that your property might have during the selling process.
If a situation such as subsidence has developed since you bought the home, you must tell anyone interested in your home about this, because failure to reveal problems to buyers could lead to you facing major penalties in the event they discover the fault and sue you.
Without a structural warranty in place, you’ll likely be liable for investing the time, money and effort necessary to correct whatever physical problem might exist. Buyers are likely to worry about how much this work could cost them as the owner of your home, and if they make an offer then you can expect them to lower the price by the predicted expense of the repair work.
However, you simply might not have the funds, time or effort available to launch what could be an expensive and lengthy repair project at your property before trying to find a buyer. If this is your situation, your best option |could be to get in touch with LDN Properties or another quick home buying company, because they are known for making competitive and speedy offers to buy almost any type of home, even those that might have widespread structural problems.
Paying Capital Gains Tax on the sale of your home
Capital Gains Tax (discussed at length in this article on the Which website) is a charge that you might have to pay when you sell your home without a structural warranty, and if you are liable for paying it then it will usually be assessed based on the amount of gain, also known as the profit, that you are able to make on the sale.
You should consult with a financial professional to ask them about some options that are available for either completely eliminating your responsibility to pay Capital Gains Tax on the sale of your home, or at least they might know steps that you can take to reduce the amount that you owe significantly.
Your top choices for selling your house with no structural warranty
Now that you are ready to sell your flat or house, even without a structural warranty, you will have to decide on which method you might like to use in order to attract buyers.
Your four typical approaches are using an estate agent, selling to a quick buyer, trying a property auction or selling without any help. Although each of the methods have their unique benefits, you’ll find that some of the choices also have rather prominent cons, for example requiring that you pay commission or taking more than a full year to secure a buyer.
If you’d like help in finding the selling option that might be ideal for you, start by writing down the key aims that you have with finding a buyer, including your preferred asking price, how long you are willing to wait to sell, and whether you can accept paying commission for the sale. Then compare this information against the specific details of the four different methods below and that should assist with identifying the option that best pairs with your needs and wants.
Using an estate agent
You won’t have to do much work when selling your home using an estate agent, because they will handle almost every aspect. This includes creating a listing that features photographs of the inside and outside of your property as well as a description of its main elements, advertising the listing in the office, online and in local newspapers, organising viewings and fielding offers from genuine buyers.
For doing all of this work, estate agents will make you pay commission based on your property’s eventual sale price. This fee will be subtracted right away from the final sale proceeds, which will add to your selling expenses.
This is one of the slowest ways that you can sell a home, and you should anticipate having to wait more than an entire year in certain circumstances before you’re able to get an offer. If your main goal when selling is doing so as fast as possible, you should review other options.
Be aware that some estate agents might not have any experience with selling homes that lack structural warranties, and that suggests they could find it difficult to know how to market your property and generate interest from buyers. Ask specific estate agents about their track records with selling homes that lack structural warranties, and avoid those with zero experience.
Thankfully it’s fairly easy to avoid falling for this trip if you do some basic research, starting with asking many estate agents to give you a free quote sale price for your property. Next, look up the sale prices of homes without structural warranties that are similar to yours on property websites like Rightmove and Zoopla. Finally, calculate the average of all these prices and that should give you a much more accurate estimate of your property’s viable sale price.
Selling to a quick buyer
One of the speediest ways to sell your home without a structural warranty can be to get in touch with a quick buyer like LDN Properties. These companies don’t need to get approved for a mortgage to afford buying your home, as they have the funds available to buy it right away.
This cuts the typical timeline of selling any kind of property to a handful of weeks, which includes the time it takes for exchanging contracts and paying you the proceeds. If you’re looking to find a buyer in the shortest amount of time feasible, a quick buyer is a great option.
Another great reason to sell your home to a quick buyer is that the honest companies will never make an owner pay any commission for selling their property. This means you can keep your selling costs as low as possible because you’re guaranteed to receive the full sale proceeds.
Quick buyers are also open to making fair and swift offers to buy almost any leasehold or freehold home, no matter its location, type, condition, shape, age or size. That means even if your property does not have a structural warranty that you can still get a decent offer, which is ideal for any homeowner whose top priority with selling is lowering their overall expenses.
For example, LDN Properties, which launched more than 15 years ago, has a long and always growing list of highly varied purchases and offers made that includes not only houses that do not have structural warranties but also properties with an infestation of Japanese knotweed in the garden, flats with leaks, uninhabitable houses, half-finished properties, flats with radon, houses with bad roofs, properties that have rot problems, homes that do not have planning permission, flats that are lacking an External Wall Fire Review form, properties with survey problems, and more.
Trying a property auction
Auctioning a home can be something of a gamble because you never know what the final sale price might be. And there’s always the chance that you get zero bids on your property which means it does not sell and you have to start over with finding a buyer, making the process even longer.
You will be asked by the auctioneer to choose a reserve price, which represents the lowest price at which you can agree to sell your home. If you get just a single bid at this price then your home is deemed to have sold, and the winning high bidder can sue you to enforce the sale in the event you try to back out of it. That’s why it’s imperative to select a reserve price that should hopefully make you some profit from the sale even after paying the auctioneer their fees.
The average auctioneer will charge commission as a percentage of the sale price you’re able to get for the property, and this will add to your selling costs because the fee will be deducted immediately from the final sale proceeds. If the top aim with selling your home is keeping your costs as low as feasible you may want to consider another way to find a buyer.
It’s possible that you might be able to negotiate with an auctioneer to either reduce their rate of commission or have the winning high bidder pay some of your expenses, or both. Always check with individual auction houses about whether any of these outcomes might be possible.
You might be asked by the auctioneer to choose between the modern or the traditional method of auction, and whichever method you opt for will be a personal preference.
With the modern method your listing will be active for a set amount of time, usually many weeks or longer, and people will be able to place bids 24 hours a day, seven days a week, until the listing expires, at which time the top bid is deemed the winner and the person buying your home. With the traditional method an auctioneer will advertise your listing for many weeks or months and then host an auction on a set day when people can bid on your property. The top bid at the time that the auction ends is the winner and the person buying your home.
Just as you should check with estate agents whether they have successfully sold a home without a structural warranty in the past, the same is true for auctioneers. Inquire with specific companies about their track record selling this type of property. Don’t sell via an auctioneer that has never sold one, because it implies they will find it hard to attract buyers to yours.
Selling by auction can take quite a long time, starting with a wait of many weeks or months after you list your home for sale and when the auction ends. If your property does sell, the winning high bidder then usually has about 28 days to sign all of their mandatory legal documents and complete the other tasks necessary to finalise the purchase of your property.
Again, you can ask individual auctioneers about whether they’re willing to set a shorter deadline, but beware that some companies might give the buyer even more time than 28 days.
Selling without any help
Yet another way to try selling your home is doing so without any assistance, but this can be very stressful and require a lot of your effort, money and time. You’ll have to prepare and market a listing, schedule and lead viewings, and field any serious offers from buyers.
You should not pursue this option unless you have previously sold a property without a structural warranty or you have a friend or family member with such experience, otherwise this could become very time-consuming. It’s not unusual for properties sold without any assistance to remain on the market for over a year, making it often the slowest of the options.
One clear benefit of selling this way is that you will not have to pay any commission to a third party such as an auctioneer or estate agent. But you can achieve a similar outcome, yet with a much faster sale, by selling your home to a quick buyer like LDN Properties. The legitimate quick buying companies will never make you pay any fees and you will have the extra advantage of the sale being completed in just a few weeks, including exchanging contracts.
Top queries and answers about selling a house without structural warranty
If you are a homeowner considering selling your home quickly, you could have some questions for us, ranging from the extent of repairs required before selling through to selling property to the council. Here are a number of the questions we’re commonly asked when selling property without a structural warranty:
Your top questions when selling a property without structural warranty
A structural warranty is not required by law but it is often seen as a prerequisite for selling a new build property, because it provides cover for a set amount of time, typically 10 years, for any physical problems or other structural defects that might occur in that time. Some new build properties do not have these warranties, which can make it harder to sell them.
It might be very difficult for someone to get approved for a mortgage by a lender for a home that does not have a structural warranty. That’s because the lender will likely have concerns that the lack of a structural warranty will make it hard to resell the home at a profit in the event that the buyer defaults on the mortgage and the lender has to sell the property to recoup their money.
Possibly, but it will depend on various factors including how much profit you might make on the sale. If you sell at a loss compared to the price you paid for the home initially, or you break even by selling close to the original purchase price, then this tax typically won’t apply. Make sure you speak with a qualified tax professional before making this important decision.
You could either sell to a no-fee legitimate quick buyer like LDN Properties or you could sell without any assistance, which means you won’t owe anyone commission. Just beware that if you decide to sell your home through an auctioneer or estate agent that this will increase your expenses because they’ll charge commission that will be taken out of the final sale proceeds.
Your best option could be selling to LDN Properties or another fast home buyer, because these companies can complete the entire process of buying a house or flat within just a few short weeks, and that includes paying you the proceeds and exchanging contracts. Selling on your own or via an estate agent or auctioneer all typically take at least several months.
