FTB nightmare....valuation problems

sturgeon

I'm buying a one bed flat, new build, with the help of the FTBI scheme. I was approved by the MHO housing association who regulate the london new builds, which was a mission in itself. Pretty horrendous as they try to come up with literally every reason under the sun to decline the application. Then I was agreed in principal for the mortgage with Halifax, cue another horrendous process where they dig into my bank statements to almost every transaction and I had to do an awful lot of work to help them out. Finally they agreed to do a valuation, which was what I was waiting for, and didn't foresee any problems with that at all because I thought the price of the property (£160k) was the best deal I've seen by a margin for what it is....even the mortgage broker mentioned he was surprised I managed to negotiate that price as no-one else in the building has got it close to that.

Perhaps unsurprisingly the property was valued at £150k, though 'weeks before' a one of the same spec was valued at £160k apparently. The developer had to contest this decision, which is understandable as if they dropped the price, then maybe they'd have to drop list prices for all properties in the block. The thing is they've been contesting it for almost a month now and it's driving me insane. I'm also driving my mortgage broker insane as I keep chasing them.

I'm told they chase it daily and the case has been escalated far beyond what any normal mortgage application would be-apparently high up people at HBOS as well as senior execs at the house developers are getting involved to contest this decision and sort it out...because the decision doesn't make sense according to previous valuations, so the developer are particularly irked as other properties were also downvalued recently all by the same valuer. Who's visited 22 times and still apparently asks simple questions i.e. what type of heating do the properties have.

The thing is, at the end of the day, I don't care how many people are involved with this and how 'important' it is they contest the decision. I just need an answer-yes or no. In my eyes, I'm just paying more and more expensive rent when I could be paying the (in comparison) small mortgage payments. The broker completely sympathise with this yet they can't do any more and told me to wait yet another week....though I'm told to wait another week, every week.

Today I mentioned to the broker I don't think they should have contested the decision anyway as house prices have been dropping rapidly and I agreed the price in January. However it seems the developer are being very aggressive and want to contest it. I told the broker that I'm considering telling the developer I can't wait around much longer, so either need a decision imminently or may pull out of buying it. They're very keen to get it off their hands as it's 'old stock' in the building which is already completed (the other building in the development isn't as of yet...) and they were supposed to have sold it by last December. The previous buyer's purchase fell through as he couldn't get authority by the FTBI scheme to be approved for it. This property can only be sold to a FTB as it's a designated plot. As I've been approved for the scheme with 'authority to proceed' (the vital document which is a right mission to get) have a mortgage agreement in principal as well, I'm in a strong position. I'm sure I could theoretically go to another developer armed with this, get a property who's value is more realistic and move in pretty quickly.

The brokers told me it may not be a good idea to 'threaten' the developer with this as they may have other buyers lined up, and know that they will have an answer to this disagreement about the valuation eventually. However, both I, the developer and the mortgage broker know that to even be approved for the FTB scheme, only the first stage, takes a long time and a lot of effort so I doubt they want to wait months more. I doubt they'd tell me to just pull out as they have other buyers waiting. Their own words previously have been 'we don't want to lose you' and they've said twice now they'll drop the price if the valuation contest isn't successful.

I can't wait for weeks and weeks more for this decision to be contested as more and more people are getting involved and they're making a mountain out of a molehill and using this case as a kind of landmark case to oust the valuers that the Halifax use. Sorry for the long post but what should I do? Try and reason with the developer to get them to just accept the valuation and complete the sale? The broker did say this would set a precedant for other properties in the blocks to be lowered but I don't believe this. As mine was a 'stock plot' sold for slightly less than the others anyway, and the appartments in the uncompleted block are being sold from £199,000 still....so if ones in my building are being valued at £160k, that obviously hasn't caused them to lower the other prices.

Thanks!

sturgeon

Oh and also to add....the mortgage broker told me that one of the problems is that it's Halifax, who use this valuer, where they're seeing the problems. Other banks are valuing the properties slightly higher. But on this development, with the recommended broker and the type of mortgage required etc....unfortunately Halifax are the best option. When they tell Halifax that other lenders are valuing higher, they're just told in similar words....to use the other lender in that case as it's tough! However, the situation will at least be the same for others trying to buy in this development.

brit1234

New builds are horrendously overvalued and the banks know it. They are now not going to lend what the developer wants. Prices are falling 2% a month in the fastest property crash ever, why would anyone buy an overpriced new build?

poppysarah

1 bed flat? So no chance of a lodger when you're a bit skint in the future. No chance of having room for a family should you life circs change?

I'd encourage you to think long and hard about how much you want to live in a 1 bed flat long term.

sw_jay

I don't think it's just Halifax valuing properties low.

I've just put in an offer of 160k for my mother's home which is a 4 bed terraced valued at 180k a year or so ago.

I believed that to be a fair price but the valuation came in at only 145k. Must be the cheapest 4 bed house going around here!

Not a major problem for me as my mum is happy to accept whatever the valuation cames in at but if I was buying privately I can't imagine the seller wanting to drop by that much.

sturgeon

That's fair enough, I would have assumed that Halifax wouldn't be the only ones downvaluing. I appreciate it will be difficult to convince a private developer to drop the price but there are many reasons for them doing so.

To the other posters, of course I considered if a one bed is right for me and it is. I don't plan to have any children. The reason I am buying a new build is because it's through a shared ownership scheme, which will save me £500 compared to my rent-I know what I'm doing. And I wouldn't take a lodger ever, even if I ran into financial difficulties. The reason I created this thread is to try and establish what I should do as the valuation is taking so long and there seems to be no end to it.