Valuation of Shared Ownership Property

gjmartin

At the end of 2005, beginning of 2006 my partner and I bought our first property, it was a shared ownership house near Chichester that was offered on the open market for £120k (50% share), the estate agent selling it had valued it at £240k.

Due to work and long commutes, we have now decided to sell and move closer to our places of work. When looking into selling we have found that we need to sell through the housing association that controls the other 50% of the house, there is a nominations period where they offer the share to people on the Shared Ownership list. Only if they cannot find anybody to purchase the 50% share will we be allowed to sell the share on the open market.

Using the housing association, they organised for our house to be valued by a surveyor. When we found out the value placed on the property we were a bit shocked, we were not expecting to make a profit, but we were at least hoping to recover what we had spent on it. The surveyor returned with a value of £190k for the whole house, a 50% share being £95k.

Maybe with the current climate, and what we have gone through with the financial markets, etc, I’m a bit naïve, but I was not expecting that kind of loss.

I’m not sure if that is due to market conditions or the property was overvalued when we purchased it. I’m hoping somebody can help explain this?

If it is due to the current market, then so be it, but from all reports I had read stated that the south coast did not suffer as much (with house prices), and I was not expecting a £50k loss in that price bracket?

And surely if it was overvalued in the first place, the extra we paid when taking out the mortgage with our own bank for the ‘Homebuyers Survey and Valuation’ would have reported this?

Needless to say we will not be selling now, but I’m still shocked at the difference in values!!

Cannon_Fodder

It will probably be due to a mixture of over-confident valuing in the past, when nearly everyone was brainwashed into expecting a never-ending increase in house values, combined with some under-valuing at the current time, due to the Lenders wishing to protect their position after severe losses.

(Surveyors have a contractual obligation to protect lenders' interests, which they have been taking more seriously of recent date)


If you do not wish to sell at this time, would it be an idea to purchase the other 50%, then when you do sell you get 100% of the gains from this low point...?

(If it turns out to be the low point! There is some debate on that, of course)

haras_nosirrah

Have pm'd you

lincroft1710

Check asking prices of similar house types on market for sale in neighbourhood.

Because it's HA it may be that surveyor has downvalued, is your particular street well kept, neighbours' houses/gardens well maintained. Is your home surrounded by similar houses to yours?

gjmartin

Thanks for all the replies,

The surveyor came round just after we had all the snow, and complained on the state of the roads, had not been gritted so in a terrible state. That probably didn't help, and with snow covering all the houses he would have to guess on the state of the gardens and fronts.

Yes the houses all round us are Shared Ownership, hence my reluctance to purchase outright, I fear that a 100% house, surrounded by shared ownership houses would not sell any better.

Also with now being in negative equity getting a mortgage for the remaining shares might be difficult.

I think the only option is to sit tight, and see what the market does, we could still sell 100% house on the open market and pay the HA back the 50% share, when/if it sells, and hopefully walk away with enough to pay off the mortgage.

There must be lots of people that have been in a similar situations, even with open market housing, it is just scary as a first time buyer, I thought buying shared ownership gave us a better house for our money which we would hopefully be able to sell on really easily for not less than we paid.

Can't predict these things...