** Price Inflation & Surveyors Report **

Taffy1234

Advice welcome please.

I agreed a price for a new build property £185k which I thought was a reasonable price given the property and postcode. I used the mortgage broker that the developer recommended as they are specialists in new build mortgages. I was also limited due to only one mortgage provider (Skipton) doing 10% LTV. The mortgage was approved in principal and I was told to instruct my solicitor which I did and paid for the searches etc. Since then the Skipton's surveyor has been out and valued the property at £170k and thus Skipton are not prepared to borrow at £185k. I was slightly surprised by the valuation compared to similar properties in the area. The mortgage broker went back to the developer who I had spoken to and they told me not to worry, they would sort it out and it would more than likely fall in my favour. The mortgage broker has today come back to me with a proposal from the developer which is this:

I go with the Nationwide and they will pay for another valuation. They will then inflate the price to £195k pay my 5% deposit (Nationwide accept this) taking the price back to £185 then I will pay the 10% (albeit on £195k so it's another £1k for me!)

I have told them that I am not prepared to do this for several reasons:

1) My career requires vetting including financial vetting and my integrity cannot be questioned.

2) It feels like financial fraud, doesn't feel right and I don't like the idea of inflating the price.

3) The original surveyor may be right and I could be paying £15k over the odds? Plus £1k more on the 10% and slightly more stamp duty.

4) What makes them think that the Nationwide surveyor will value at £195k some £25k more than the Skipton surveyor? This feels wrong to me.

5) I have been waiting several weeks for the mortgage to be sorted. Have since sold my property, moved in with parents and have the deposit in the bank.

I am prepared to walk away and the broker will now go back to the developer and see what they say. It looks as though Skipton will only formally offer the mortgage at £170k. I've also paid a deposit on the house (which I know is refundable by law and they have said that) as well as the valuation fee, mortgage application fee etc (which I'll probably loose). I feel like I've paid out all of this for nothing. Is what they are asking me to do illegal... Feels so wrong to me. Interesting because I grilled the broker from the outset and set out my stall. They assured me they were a responsible company and didn't allow any type of shenanigans. When I challenged the integrity of this proposal the broker just said they were passing on the developers proposal but needed my permission to run the financial checks again (proving that they would be and/or get involved).

All feels so wrong to me.... Any advice welcome please...

Thrugelmir

Doesn't the independent surveyors valuation of £170k tell you something?

Taffy1234

Thrugelmir wrote: »

Doesn't the independent surveyors valuation of £170k tell you something?

Tells me one persons professional opinion nothing more at the moment. What if Nationwides came back at £195k... Is the price inflation illegal?

Is the Skipton surveyor being over cautious?

Lots of issues...

Thrugelmir

Taffy1234 wrote: »

What if Nationwides came back at £195k...

Personally I would use the Skipton valuation as a a basis for negotiation.

How many other units are for sale on the site?

Taffy1234

Thrugelmir wrote: »

Personally I would use the Skipton valuation as a a basis for negotiation.

How many other units are for sale on the site?

Around 20 but only 3 of this type. Of the other two, one (another end one) has been sold cash for £185k and the middle one is still up for £180. The other end one is mine (hence block of three, three story properties).

brit1234

Sounds like land registry fraud to me. The builders use to do it all the time during the house price bubble with gift deposits. When the credit crunch came the banks got very burnt and didn't accept them any more.

Go with the Skipton evaluation or walk away. Don't go into negative equity for the builders.

You will also find the builders would con other buyers with your distorted sale to challenge lower surveys.

kingstreet

You may wish to read this. It's the Nationwide policy on valuation of newbuilds;-

New Build Flats & Houses - Valuations
The maximum loan to value on New Build Flats is 75%.
The maximum loan to value on New Build Houses for existing borrowers is 90%, with an 85% maximum for new borrowers.

Please ensure you refer to the current product rates as product LTV restrictions apply per application type. Products may not always be available up to maximum LTV lending limits above.

In some areas of the country, heavy investment and development has led to a large supply of new properties. This, combined with falling property prices, more buy to let activity and developers' incentives has led to difficulties in assessing the true value of these properties as new homes for owner occupation.

As a result, Nationwide instructs it's valuers to value all new properties (flats, houses and maisonettes) as if they have already been occupied and are being resold for the first time.

This reflects Nationwide's desire to protect both the lender and the borrower from the potential risks in this market. It will help protect borrowers of new build properties from the risk of negative equity by ensuring that the valuation given is a true representation of a property's resale value. The 'resale' value is based on comparable evidence of properties that have been occupied which may result in some new build properties being valued at below the purchase price.

Where a new build property is valued at below the purchase price, and the loan is affected, a copy of the report can be provided to the customer, who will then have the option of a reduced loan or renegotiation of the purchase price. The valuation fee is non-refundable once a valuation has been carried out.

The definition of a 'new flat or house' includes maisonettes and means one that has not been occupied within two years of construction, conversion or refurbishment. This includes properties being bought off plan.

kingstreet

Worth pointing out, if the valuation is "panelled" to the same surveyor again, as it may be, the valuation is likely to be less than Skipton's £170k due to Nationwide's policy on newbuilds...

FraudBuster

has been sold cash for £185k

Bought by a "friend" of the developer to artificially inflate prices?

Taffy1234

Any other ideas from anyone?

Henry_P_Chester

Taffy1234 wrote: »

Around 20 but only 3 of this type. Of the other two, one (another end one) has been sold cash for £185k and the middle one is still up for £180. The other end one is mine (hence block of three, three story properties).

How do you know what the other one sold for? I doubt it's on the land registry database yet so I'm assuming the developer told you, and they probably told you cash so you don't think that they artificially inflated that price too.

Offer Skiptons valuation or walk away. Don't put yourself into instant negative equity.