Shared Ownership - Valuation Issues - Whos right - HA or Surveyor?

FirstTimeBuyerLondon

Hi All,

Firstly Merry Christmas and a Happy new Year to everyone reading this

So to my post... I need some advise on a issue I have got regarding the purchase of a shared ownership property. Since is Christmas everyones shut down til 3rd Jan so am getting a little stress

I recently found a property for a Shared Ownership (ideally I would love to buy out right but I think its impossible for most in London.)
The property is a new build, 2 bedroom, 2 bathroom and on the 3rd floor. The asking price is £250k and I've been approved for 40% which I am happy with.

My Independent Financial Adviser (IFA) put my mortgage down with one of the banks which give shared ownership mortgages, which with my own research was actually the best deal around. The bank then did their own survey valuation and then advised that the property was only worth £200k and called the Housing Association (HA) valuation excessive!

Therefore:
HA Valuation: £250k
Bank Valuation: £200k
Diff £50k (-20%)

Now having received my valuation on the 23rd December I haven't been able to talk to my HA rep, but my IFA is saying he doesn't think the HA will drop their price and he doesn't think the bank would honour the mortgage they originally advised, therefore he is recommending that we try another bank and new valuation.

I like the property and the area, but I want to pay the right price. Also I was expecting a valuation difference of £5-7k eitherway but £50k seems massive and one of them, Surveyor or HA, is seriously wrong!

My questions...

• Could some one advise what they think I should do next?
• Has anyone been in a similar situation, and if so what was your outcome?

Any help or advise would be greatly appreciated :T

brit1234

It is more likely the surveyor is right not the HA, Shared Ownership is notorious for being overpriced. The problem for the HA is they have bought the property from the developer for too much and will have difficulty dropping the price.

Either they drop their price or you walk away, you don't won't there negative equity.

FirstTimeBuyerLondon

Hi,

Thanks the reply. I guess its better to loose £1k rather then £50k.

Has anyone been able to negotiate a HA down?

lesserspotted

I had a similar situation when I bought my shared ownership - the valuation was £15K less than the asking price and the HA ended up reducing the asking price by £7.5K. They wouldn't reduce it by the full amount as apparently the 'extra' paid for things like carpets, fridge-freezer etc.

This was a few years ago, though, so things may have changed.

FirstTimeBuyerLondon

Thanks lesser.

If the valuation was slightly off I could have lived with but £50K seems alot.
If they do something similar to yours it would be an extra £25k, although I doubt my lender would agree to that.

Anyone one else had a validation difference similar to mine?

brit1234

lesserspotted wrote: »

I had a similar situation when I bought my shared ownership - the valuation was £15K less than the asking price and the HA ended up reducing the asking price by £7.5K. They wouldn't reduce it by the full amount as apparently the 'extra' paid for things like carpets, fridge-freezer etc.

This was a few years ago, though, so things may have changed.

Please say you walked away.

Shared ownership is enough of a scam without overpaying for the property in the first place by £7500 and the 25 year interest on that.

lesserspotted

brit1234 wrote: »

Please say you walked away.

Shared ownership is enough of a scam without overpaying for the property in the first place by £7500 and the 25 year interest on that.

No, and actually I've been very happy with my property. I don't think I've made much money on it, although should walk away with a few thousand if I come to sell, but it's a home not an investment for me. I'd have spent more over the years by renting an equivalent property and at least this way I don't have to deal with BTL landlords

I'm not sure why people think shared ownership is a scam. OK, it's not right for everyone, and you need to think about the disadvantages as well, but for me it's on balance worked out better doing the shared ownership than 100% rental.

FirstTimeBuyerLondon

Brit as much as you advise is appricate, please don't take over the post with post about shared ownership being a scam.
I personal would love to buy a flat out right, but like others its impossible for us, especially living and working in London.

TrickyDicky101

If you are right up to the limit on your financing ie you have £x deposit and can't source any more (non-borrowed) cash, then any valuation difference between HA and mortgage surveyor will likely prevent you from buying the property as the valuation will determine what amount the bank will lend leaving you to pick up the difference.

If you do manage to buy the property eg parents stump up the extra you will likely be storing up problems for yourself if you need to sell in the near future as you could well be in immediate negative equity. I realise the temptation is always to downplay the risks but it could end up being a millstone round your neck.

FirstTimeBuyerLondon

Thanks Tricky. I totally agree with what you're saying. To me this is suppose to be my first step to buying a house, therefore I need to make the right move.

Ideally I would expect the HA to do their own revaluation or show the paper work for the valuation. But will see in Jan.
My plan is to go to the HA and say I'm willing to pay £200k and see what they say.

SouthCoast

New build shared ownership 2 bed flats are on the market near me for £210k....................

but you can buy similar spec flats for around £175k second hand.