Sell My Assignable Contract UK

How to sell an assignable property contract before completion

If you have entered into a UK property purchase contract and the agreement allows you to transfer your contractual rights, you may be able to sell or assign your position to another buyer before completion.

This can be particularly relevant to off plan property, where the original purchase contract was agreed before construction was completed. However, an assignable contract is not the same as owning and selling a completed property. The ability to transfer the contract depends on its terms and the circumstances of the transaction.

HMRC treats certain transfers of contractual rights before completion as pre-completion transactions. An assignment of rights can involve transferring the benefit of the original purchase contract to another purchaser.

Check whether your contract can actually be assigned

Before advertising an assignable contract, review the original purchase agreement carefully.

Look for provisions covering:

• Assignment of the purchaser's rights

• Developer or seller consent

• Assignment fees

• Deadlines for requesting consent

• Restrictions on marketing the property

• Requirements for the replacement purchaser

• Whether the entire contract or only certain rights can be assigned

• Procedures for completing the assignment

Do not assume that describing a property as "assignable" means you can automatically transfer it.

In some circumstances, contractual rights can be assigned while contractual obligations require separate arrangements or consent. The exact wording of the agreement therefore matters.

How the sale of an assignable contract works

The process will usually involve establishing the terms of the original purchase before finding a suitable incoming purchaser.

For example, suppose you originally agreed to purchase an off plan apartment for £300,000 and have already paid a £30,000 deposit. If the contract permits assignment, you might agree to transfer your contractual position to another purchaser for an agreed assignment payment.

The incoming buyer would then continue towards completion under the relevant contractual arrangements.

The exact structure can vary, so the solicitor handling the transaction should confirm how the assignment should be documented.

Work out your asking price

Your assignment price should be based on the actual economics of the contract rather than simply adding a desired profit to the original purchase price.

Consider:

• Original purchase price

• Deposit already paid

• Amount remaining at completion

• Assignment premium

• Developer assignment fees

• Legal costs

• Finance costs

• Expected completion date

• Current comparable property values

• Current rental market

• Property specification

• Service charges

• Lease terms

• Any incentives attached to the original purchase

A contract purchased at an earlier stage of a development may have changed in value by the time you want to assign it. Buyers will normally want evidence that the overall deal makes financial sense.

Prepare the information a buyer will need

A serious buyer will usually want to understand exactly what they are taking over.

Prepare copies of relevant documents, subject to advice from your solicitor and any confidentiality restrictions, including:

• Original purchase contract

• Reservation agreement

• Deposit information

• Developer correspondence

• Property specification

• Floor plans

• Expected completion date

• Assignment requirements

• Service charge information

• Lease information where available

• Details of any outstanding contractual obligations

Being transparent about the contract can reduce delays when a buyer and solicitor begin their due diligence.

Understand the SDLT implications

Selling an assignable property contract can have Stamp Duty Land Tax implications.

HMRC's rules specifically cover assignments of rights as pre-completion transactions. Under the rules, the consideration relevant to the incoming purchaser can broadly include what they give under the original contract together with what they give for the assignment.

HMRC provides an example where an original property contract is £1 million and the purchaser assigns their rights for £100,000. The eventual purchaser's chargeable consideration in that example is £1.1 million.

There are also circumstances in which relief can be available to the original purchaser, subject to the statutory conditions.

The tax position depends on the structure and timing of your particular transaction, so obtain advice from a UK property solicitor or qualified tax adviser before agreeing the sale.

Find the right buyer

The potential buyer pool for an assignable contract can be different from the market for a completed property.

Potential buyers may include:

• Property investors

• Buy to let investors

• Cash purchasers

• New build investors

• Developers

• Property companies

• Buyers looking for a particular location or development

Your marketing should clearly explain that the buyer is acquiring a contractual position rather than an already completed property.

Do not wait until completion is too close

Timing can be important.

If the completion date is approaching, there may be less time to market the opportunity, find a buyer, obtain any required consent and complete the necessary legal work.

Check the assignment deadline in your contract early and discuss the proposed transaction with your solicitor before marketing it.

You should also consider what happens if you cannot find a buyer. The original contract may still leave you responsible for completing the purchase, depending on its terms.

Selling an assignable contract through Fraser Bond

Fraser Bond can support property investors and owners assessing UK property opportunities, including off plan and investment transactions where appropriate.

If you want to sell an assignable contract, the important first step is to establish exactly what the contract permits, what financial obligations remain and what type of buyer is likely to be interested.

Fraser Bond can provide property-focused support around the opportunity and help you assess how the contract fits within the wider UK property market. Legal documentation, assignment consent and tax treatment should be handled with the appropriate solicitor and tax adviser.