Buying a part exchange house from a developer

Is it a good idea to part exchange your home? House builders make a part exchange house sound like a great deal. So we decided to explore the reality - pros and potential pitfalls - so you know what buying a part exchange house from developers really involves.

Angela Kerr Director, Editor

Buying and selling a house is extremely stressful – so avoiding the process completely might seem very attractive. When buying a part exchange house from a developer, you essentially ‘trade in’ your home with the builder and use it as part payment for your new home. But is buying a part exchange house from a developer a good idea and what should you beware of?

What does part exchange mean when buying a house?

When you’re buying a part exchange house from developers, you use your existing house as part payment towards your new home. As a result, you’ll avoid having to sell your home in the traditional way via an estate agent. You’ll stay in your current home until the purchase of your new home completes, at which point you’ll hand over the keys of your current house and collect the keys to your new one.

It is an appealing option for many people, particularly those who want to move but are struggling to sell their homes.

How common is buying a part exchange house from developers?

The popularity of part exchange certainly seems to be on the rise. The number of housebuilders offering part exchange deals increased from 150 in 2021 to 165 in 2022, according to a recent report in The Times. While Persimmon made part-exchange deals on 25% of its sales in the first eight weeks of 2023 compared with 6% in 2021.

Get advice on new build mortgages from our fee-free mortgage broker partners at L&C. They know which lenders will make your new build purchase go smoothly.

How does part exchange on a house work?

While schemes vary by developer, when you part exchange a house for a new build, the process typically works as follows.

1. You’ll start by looking at new build developments in the area you want to buy in. While some developers make it clear on their websites that they offer part exchange, others may not publicise it but may be willing to offer part exchange in certain circumstances. So whether you see it advertised or not, it’s advisable to speak to the sales staff for more information.
2. Assuming you find your perfect property and the developer will accept part exchange, the next step is for the sales staff to ask for details of your current home to make sure it meets their part exchange criteria. Read on for more on this.
3. When buying a part exchange house from developers, the next step is for a valuation of your current property to be carried out. Developers will usually ask at least two independent estate agents to value your home. But bear in mind they will usually be asked to give a ‘selling price’, rather than an asking price. This selling price means the amount the developer should be able to achieve within a few weeks of marketing the property – this valuation could be much lower than you are expecting. However, some developers are offering more competitive valuations in a bid to boost house sales.
4. Once they provide you with an offer it’s for you to accept or not. The developer might not budge on the price it offers you for your current property (although there’s no harm in trying to negotiate). But don’t assume you can’t negotiate on the price of the new build you are buying. It’s also important to ask what they would sell the new build house to you for if you weren’t using the part exchange scheme.
5. If you want to proceed, you’ll start the conveyancing process. The new build conveyancing process is slightly different so make sure you choose a conveyancer who is experienced in the process and also read our guide New build conveyancing explained.
6. Once your house is ready and the legal work is completed you hand the keys to your old home over, collect your new keys and move in.
7. If you haven’t already had your snagging survey completed, arrange for this to be done as soon as you move in so that you’re aware of any faults and can get these fixed.

Is part exchange on a house a good idea?

In 2024, when buyers are struggling with affordability given the higher mortgage rates, selling your old home as part of a part exchange for a new build home may be a good option. It’s also a good idea if you’re keen to avoid the stress of selling and buying a home at the same time and all the complexities that entails, from working with estate agents, to desperately hoping your chain holds together. And if you were looking to buy a new build house, and are prepared to pay a new build premium anyway, then this may make your move much smoother.

But the fundamental counter-argument is that you may not get as much for your house in part exchange as you would have got from persevering with selling on the open market. Read on for more on this and other pros and cons to part exchange.

How much will I get for my house?

One criticism of buying a part exchange house from developers has been that some house builders have been accused of being less than generous with how much they will offer for your property in part exchange. As we explain above, the key thing to know is that developers will usually ask at least two independent estate agents to value your home. But they will usually be asked to give a ‘selling price’, rather than an ‘asking price’. This selling price means the amount the developer should be able to achieve within a few weeks of marketing – so this could be much lower than you’re expecting.

However, we have also heard of cases where developers are offering more generous valuations because they want to boost their house sales.

So always do your own research on how much your house is worth first. That way you’ll know how fair the developer’s offer is.

There are three essential steps to establishing how much your house should sell for.

1. Get an idea of what you could sell for with an instant online valuation
2. Research local house prices and wider market conditions
3. Find the best local estate agents and invite at least three agents for a free, no-obligation valuation of your home

By using this information you can calculate a best estimate of the likely sale price the house might achieve.

Pros and cons of buying a part exchange house from developers

There are pros and cons to buying a new build home which we won’t cover here.

But you should make yourself aware of the common issues that new build homebuyers face and tips for avoiding them.

The following table sets out the pros and cons of buying a part exchange new build house from developers.

Benefits of using part exchange

1. Your purchase won’t fall through

When you’re buying a house in the traditional way, your sale can fall down for all sorts of reasons. And it’s quite common: 25% of property sales fell through before completion in the second quarter of 2023, according to figures from Quick Move Now.

Common reasons for sales falling through can be as simple as a buyer changing their mind. In today’s volatile mortgage market, your buyers could ‘gazunder‘ you and reduce the amount they offer at the last minute. And if you’re in a housing chain things can get even more tricky and drawn-out. This won’t be the case if you’re doing part exchange as the developer will buy your house as part of the deal.

2. Speed of transaction

In February 2023, it took an average of 64 days for an offer to be accepted on a home and an additional 111 days to reach exchange, according to analysis by Hamptons estate agency. Hamptons estimates that this timescale was 50-75% shorter when using a part exchange scheme.

3. Smoother process

If there is a delay in your new home being ready, you can stay in your current home until it’s ready. This is a considerable benefit when you look at the number of problems people face when buying a new build and buying off plan. Delays to the new build being completed can cause significant additional expenses and hassle. Buying a part exchange should mean you dodge all of that.

4. You won’t have to pay estate agent fees

Average estate agent fees in 2023 are typically 1.42% including VAT. So on a typical £275,000 house this would mean estate agent fees of around £3,900. By buying a part exchange house from developers you’ll avoid the need to use an estate agent so you’ll save on this fee. To see how much you’d save exactly, use our estate agent fees calculator below. You need to weigh up this saving against any reduction in the sale price you will receive from a developer versus selling via an estate agent on the open market.

Cons of a buying a part exchange house from developers

1. You might get less than market value for your existing property

As we explain above, when you’re buying a part exchange house from developers, some house builders have been accused of being less than generous when offering a value for the existing home. Make sure you know your home’s value before you start speaking to developers so that you can assess their offer properly. However, if you want to sell quickly you may find you get a better price and a better outcome overall compared to using a quick house sale firm.

2. Part exchange makes it harder to negotiate

Entering into a part exchange deal with developers is likely to make it harder for you to negotiate as effectively on the purchase price of the new property compared to if you weren’t using the scheme. Before you get swept away with how easy the part exchange process is, do your research and all the calculations to make sure you’re not overpaying for the property. Read our guide on how to negotiate the price of a new build.

Making sure you don’t pay over the odds for your house should reduce your chances of the property getting a down-valuation when your mortgage lender carries out the mortgage valuation too.

3. You’ll pay a new build premium

Just like a new car, a new build house or flat will depreciate in price the minute you turn the key in the door. You may not get your money back when you buy a new build home if you have to sell within a year or two. So plan to stay put for at least a few years.

And compare the new build home you are looking at with similar “old” properties in terms of value, space and rental value in the local area. Check the price per square foot. Compare it with the resale market so you understand the extent of the premium you will be paying. For more information, read our guide on Top tips for buying a new build home.

Selling on the open market is a hassle, it’s stressful and costly, but it might prove the more financially savvy options. See our step by step guide to selling to guide you through the process.

4. Always read the small print

Terms will vary by developer so read the small print carefully. For example, one developer offering a part exchange scheme says buyers will need to pay an additional £500 which will be returned to them if the property they’re part exchanging is in a good condition that doesn’t require cleaning.  

5. Don’t forget your snagging survey

You will want a snagging survey on the new build home you are buying. A snagging survey is a visual survey to check the quality of workmanship against applicable standards. A good snagging inspector should check every aspect of the property that is visible, covering both the interior and the exterior of the property as well as garden, driveway and garage if relevant. The ideal time to get a professional snagging survey done is before you exchange contracts, but if this isn’t possible, book in the snagging survey as soon as possible after you’ve moved in.

Part exchange house rules

When it comes to buying a part exchange house from developers, each builder will have different part exchange house rules. However these are some of the more common ones:

• Limits on type of property: When buying a part exchange house from developers, builders will usually have strict criteria on the type of property they will accept as part exchange. For example, many won’t consider ex-local authority properties.
• Must be in the right location: Typically, developers will usually only accept a property if it’s in certain locations. So if you’re relocating from somewhere that isn’t covered you won’t be able to use the scheme.
• Upsizing criteria: If you’re buying a part exchange house from developers, you’ll typically be required to buy a new home worth at least 30% more than the home you want to part exchange.

Do you pay stamp duty on part-exchange properties?

If you’re buying a part exchange house from developers, you will be liable for the same stamp duty costs as you would if you weren’t buying through the scheme. In England and Northern Ireland, from 23rd September 2022, no stamp duty will be paid on the first £250,000 of the property’s value. For more information, read our guide Stamp Duty: Who pays it? When? And how much?

When you buy a new build, developers will sometimes offer to pay your stamp duty or subsidise it to secure the sale. However, developers are typically less likely to offer any more incentives if you are using their part exchange scheme. But it’s always worth asking.

How can I find builders’ part exchange properties for sale near me?

If you’re interested in buying a part exchange house from developers, where do you start? Most major new home developers allow buyers to part exchange, for example Persimmon, Cala, Bovis and Linden, Barratt and David Wilson.

And some offer different variations of part exchange schemes. For example, with Miller Homes, as well as Miller Homes Part Exchange, the builder also offers Miller Homes Part Exchange Plus. This lets you sell on the open market with an estate agent it nominates (and whose fees it pays). And if your home doesn’t sell by 10 weeks before the completion date of your new home, the developer we will buy it from you at ‘a fair market value’ so you can still buy your brand new Miller Home.

Can you part exchange a house in Scotland?

Yes. Buying a part exchange house from developers is offered in Scotland too.

Part exchange house calculator

You won’t be able to find a part exchange house calculator that will give you an accurate figure. That’s because the price you’re offered for your home from the developer will be based on valuations.

Should I read part exchange house reviews?

Yes. If you’re considering buying a part exchange house from developers always do your research and this includes reading reviews of different companies that offer this scheme.

However, while research online is important, if you’re unsure about anything make sure you ask your conveyancer. Read our guide on how to Find the right solicitor or conveyancer

Can I get 100% part exchange new homes?

You may see developers offering 100% of market value for your home if you buy via its part exchange scheme. But bear in mind developers’ valuations are typically based on a ‘selling’ price, not an asking price, and this may be lower than you feel your house is worth. That said, there is no one size fits all and some developers are more generous in their valuations so it’s a case of doing your research to find out.

Can you part exchange and downsize?

This will depend on the developer. Most require you to buy a house that is worth more than the one you are part exchanging. So if you are downsizing in terms of size – and happy to go up in price, this may be an option. But if you want to downsize in price, this may be harder to find, although some developers may offer some assistance to help make your move happen. However, each scheme is different so it’s worth asking the question. If you’re considering downsizing, read our guide on The pros and cons of downsizing your home.

Frequently Asked Questions