Home Sale

In any corporate relocation, speed can be very important, and the most awkward problem of the whole move may suddenly become the "old" family home, and what to do with it. Home Sale programmes release the employee's equity in the old home by providing bridging finance, thus making the employee a "cash buyer" in the new target area. Such programmes enjoyed a brief period of popularity in the UK when the market was buoyant, and virtually anything sold quickly, and easily. As the UK property market crashed, many companies were left holding properties on which they were paying bridging finance, and which they couldn't sell for even close to the agreed "established value" of the property. Home Sale programmes involving bridging finance rapidly declined in popularity because of the exorbitant financing cost in a slowly moving housing market, and industry attention switched to "managed sales", and to rentals. Recent changes in the UK tax treatment of relocation expense have only added to the problem.

In using Home Sale schemes, the main consideration for any client should be the source of finance. External financing may be appropriate for smaller and mid-sized companies, and is available at LIBOR-linked interest rates, subject to credit referencing and contracts. Larger companies will often find it cheaper to use their own financing sources, and most of our clients prefer to do this. Each Home Sale scheme can be tailored to the company, and important factors are the methods of valuation used, any marketing control period, and what happens in any dispute. The most important considerations for both employer and employee are what happens when the house is sold for either more, or less than the valuation, and different schemes treat the surplus, or shortfall, in varying ways.

As part of an overall relocation package, an employer may also offer some form of mortgage subsidy if an employee is moving to an area with higher housing costs. As a consultancy service we can provide Mortgage Differential Reports as the basis for any such subsidy, and can advise clients on the structure of such schemes.

One of our most sensitive tasks is to remind clients that each and every family move is different, and that it is therefore unreasonable to expect, as a simple analogy, different shapes and sizes of pegs to fit into the same hole. Whilst the high cost of a fully managed and bridged Home Sale scheme may be appropriate for a director being moved to a key position, it often isn't justifiable for a junior manager, and an alternative approach is required. For expatriate postings of less than three years duration, it often makes sense to rent a property in the new location, and to then rent out the old family home through our Managed Rentals Service. The overall costs of this option are easily determined, and can often compare very favourably with a full bridging scheme. Our approach is one of flexibility, and whilst we have existing Home Sale, Marketing Assistance, and Managed Rentals programmes in operation, we will always happily advise clients on possible alternative schemes that can reduce overall relocation expense.

Programme Choices

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