House swapping

'Swapsies', a popular playground pastime through the ages, has seen millions of marbles, gum, dolls, stickers, and sweets traded like-for-like.
In 2009, plenty of those who used to dabble in such schoolyard deals are now swapping a very different kind of item: their own home.  And where the children choose to barter goods because they have no money, the adults are engaged in swapping their own rather more expensive goods for a not-too-dissimilar reason: tricky market conditions.

Home swapping might sound like a high-risk endeavour but it's fast become a bona fide way to break the deadlock of nervy buyers wanting and waiting for ever-lower prices, and stubborn sellers who – spooked by rising unemployment figures and the economic squeeze - refuse to offload their homes for a penny less than the asking price.

In particular, for those who are forced to move for a new job or to accommodate a baby or growing family, and struggling to move in such a difficult market, a home swap has emerged as a possible lifeline.

Over the last nine months, the numbers coming forward for a home swap have turned from a trickle to a flood as the house price slump has sharpened.
More than 1,200 homes have been 'matched' and are en route to swapping via specialist home-swapping website www.homeswapper4sale.co.uk since last August, while listings website www.Gumtree.com currently has seen a surge to nearly 3,200 ads for home swaps on its website.
"The housing market might be the most unstable it has been for years but economics doesn't stop people needing to move properties due to changes in life stages and status," says Sanjay Balakrishnan, spokesperson for Gumtree.com.  "Since the credit crunch started, Gumtree.com has seen a huge rise - 61% year-on-year - in the number of people posting houses to swap or looking for property exchanges, either as a short-term or permanent measure, as it offers a cost saving and smart solution."

"Avoid the high risk of a buyers and sellers' chain falling apart because of trouble with choppy prices and wobbling valuations, and steer clear of hefty estate agent fees."

Its appeal is twofold: first, in such a shaky market, you avoid the high risk of a buyers and sellers' chain falling apart because of trouble with choppy prices and wobbling valuations. And second, you'll steer clear of hefty estate agent fees of up to 2% on property sales; on a £500,000 house, that's a £10,000 saving.
"There's a short and very strong chain, only two parties who are selling to and buying from each other," says a spokesman for Homeswapper4sale.  "You don't have to worry about what's going on in a chain you cannot control."

So how does it work? In a nutshell, having picked a website you're satisfied with – as well as homeswapper4sale, others include www.swaptogo.co.uk or the 'property exchange' section of www.manningstainton.co.uk - you first draw up and list as many details about your home as you think will help make it an attractive proposition, and post a dozen photographs on site. 

Next, you choose details of the kind of house you're after for the exchange: whereabouts in the UK, what your price range is, and the size you're after (number of bedrooms, say, or reception rooms). Pay a small monthly sign-up fee (from about £20 for three months) and away you go.
With luck, and timing, two sellers using the same site who are interested in each other's houses then receive an email or text 'alert' to indicate that a match has been found, and can then get in touch with each other to arrange viewings and – crucially - continue as if it was a regular house purchase; survey, valuation, exchange, completion.  

For example, a swap might typically involve a couple 'upgrading' from a £320,000 two-bedroom flat in central London, say, and seeking a £450,000 three-bedroom family home in the suburbs to raise a family.  At the same time, a newly-retired couple are keen on 'downsizing' from their large home to a much smaller place in the capital. 

If both have signed up to a site and are keen to do a deal, then the swap is on: as a rule, both properties in any swap will need to be valued to ensure each buyer's mortgage (if they have one) is manageable, and if there's a shortfall between prices – as in this instance, £130,000 - then the difference in property value has, of course, to be paid to the vendor of the larger house.

So far, so simple, but there can be traps for the unwary.

"a couple might seek to 'upgrade' from a £320,000 two-bedroom flat in central London, say, to a £450,000 three-bedroom family home in the suburbs to raise a family; meanwhile, retirees keen on 'downsizing' from their large home are looking for a small flat in the capital."

Don't for a minute think that there's no stamp duty to pay: in the late 1990s, home swapping emerged as a way to buy without any tax to pay but Revenue & Customs cottoned on and put the kibosh on such action six years ago.  Now, you both need to pay stamp duty on the total value of the property you're buying and make sure it's registered with the Land Registry.  Any effort to play around the edges and reduce stamp duty will be met with stern disapproval by tax officials.
Each property's valuation must also be in line with the price that they would normally reach if being sold on the market normally via an estate agent. Of course, if by chance both parties discover an ideal 'swapping' property at the exact same price, a direct swap means there's no need at all to find the difference.
It's clear that home swapping is not an abnormally cheap way to move: although you'll spare yourself thousands in estate agent fees as in conventional purchases and sales, there are still the usual fees to pay for a survey, a Home Information Pack, valuation and Land Registry.   It'll also be worth your while asking a lawyer to arrange a 'contract of exchange' to be drawn up that details every step of the deal to avoid any future confusion.

Plenty will boil down to circumstance: for now, home swapping is a new phenomenon that's catching on and the numbers looking to swap their homes is low compared to the hundreds of thousands on sale via estate agents. 

You could wait for weeks for any kind of match but, compared to the prolonged agonies of the UK housing market, it could be prove to be a slow-burning salvation. 

Sam Dunn