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Shared Equity repayment and Lease Extension Dilemma

starsky27
Posts: 104 Forumite
Hi all,
I'm after a bit of advice.
We will be putting our property purchased 10 years ago onto the market in 5 weeks. The property was purchased on a key worker scheme with the help of a equity loan. The loan equated to 28% of the total value of the property when first purchased and we have to pay this same percentage back when we sell. To evaluate the cost of this payment a surveyor will determine the value of the property in today's market. We are also in the process of extending the lease and have instructed a solicitor to deal with this after agreeing a valuation with the freeholder. It would be in our best interest financially to have the valuation on the property before we extend the lease as this would value the property at a lower price.
Would it be possible to have the lease extension completed at the same time as the completion on the sale of our property ?
Any advice would be appreciated.
Thanks,
Mark
I'm after a bit of advice.
We will be putting our property purchased 10 years ago onto the market in 5 weeks. The property was purchased on a key worker scheme with the help of a equity loan. The loan equated to 28% of the total value of the property when first purchased and we have to pay this same percentage back when we sell. To evaluate the cost of this payment a surveyor will determine the value of the property in today's market. We are also in the process of extending the lease and have instructed a solicitor to deal with this after agreeing a valuation with the freeholder. It would be in our best interest financially to have the valuation on the property before we extend the lease as this would value the property at a lower price.
Would it be possible to have the lease extension completed at the same time as the completion on the sale of our property ?
Any advice would be appreciated.
Thanks,
Mark
0
Comments
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I'm not too sure about the lease extension but I have also just put my property on the market, which I bought 8 years ago with an equity loan under a keyworker scheme. I would advise you to arrange the surveyor's property valuation asap, because I've heard some horror stories about how they overvalue the property, because they are working on behalf of your equity loan lenders, not for you (even though you have to pay the fee!). If they do this to you, you may then need to arrange a second valuation (again at your own expense) the housing assoc will only accept the new valuation if there's at least a 5% difference. So this could all delay things by a month or so.
The surveyor came round to do my valuation last week and I've been told I won't get the figures till middle of this week, so I've taken a risk by going on the market not knowing how much they have valued my place at, and therefore how much I have to pay them back. So you are doing the right thing in trying to get all this sorted before you go to market.
The surveyor is meant to take any improvements into account and adjust the valuation accordingly, so I would have thought that a lease extension would add considerable value to your property and this should then be reflected by a reduction in the amount of equity you have to repay, but I wouldn't trust a surveyor working for someone else to calculate this in your favour!
I suggest you wait for the valuation before deciding whether it's worth forking out to extend the lease.0 -
Hi Windsorcastle,
Thanks for the reply and advice.
We actually had put our property on the market just over a year ago and had a valuation done then. We struggled to sell the property as the lease was down to 72 years. We decided to take it off the market extend the lease and at the same time save some more money for a bigger deposit on our next property. We had a valuation done for the lease and that estimated a £12k difference between not extending and extending. It costing us £6700 plus costs to extend. You are correct about improvements to the property but Im sure I read somewhere that it doesn't include a lease extension.
Your right about getting a valuation figure before we market the property as this will give us a idea of what equity we have to use as a deposit on our next property. I'm starting to get stressed about this moving malarkey and we haven't even put it back on the market yet. There is also a bit of adverse credit history with my partner to add into the mix !
Good luck with selling your property. What area is your property in ?0 -
Good luck with selling your property. What area is your property in ?
Hi Starsky, mine is in SE London.
Yes, the whole selling thing is a bit stressful to say the least, but you just have to gird your loins! I think the whole valuation thing for the equity loan set-up is dodgy as the HA pretty much dictates the list of surveyors you can use, so it stands to reason these surveyors want to carry on being on their approved list by valuing properties in their favour (i.e. overvaluing!) However, I'm waiting with baited breath for my own valuation to come back this week, and we'll see if I'm proved wrong.
Mine is with L&Q - can't remember seeing that they exclude lease extensions from the list of home improvements, but your HA may be different. I think it's unfair if they do exclude it as it clearly adds value and they are not cheap to arrange.
Best of luck with everything. Windsor.:)0 -
To evaluate the cost of this payment a surveyor will determine the value of the property in today's market.
Hi Starsky, was just wondering whether you thought your surveyor's valuation was reasonable? I just got mine yesterday from Countrywide. It was top-middle of the other valuations I had from EAs, but the 3 comparison sales he had used were all for quite different properties. Mine is a 1 bed freehold house (unusual), and he'd compared it to a 1 bed flat and 2 x 2 bed houses, none of which is a very good comparison.
They also didn't take into account any of the improvements I have done - did they do this for your valuation? My improvements were things like new roof, new boiler, new fence and wall, but don't know if these things count.
Just wondering what your experience has been?0 -
I had it valued just over a year ago. It was valued by Countrywide at the lower end of what we thought would be achievable. It was also valued quite a bit under what the estate agents valued it at but we thought they had overpriced it anyway. We have found out that the housing association have recently taken Countywide of their panel of surveyors. They didn't tell us the reason for this.
We haven't made any improvements that would count towards the valuation . We are now timing the completion of extension with the sale of the property.0 -
Their solicitor will probably spot the difference in circumstances when the valuation took place.Posts are not advice and must not be relied upon.0
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I had it valued just over a year ago. It was valued by Countrywide at the lower end of what we thought would be achievable. QUOTE]
Thanks Starsky. Sounds like your valuation was reasonable; I'm just a bit sceptical about whether the surveyor inflates the valuation in the interests of the equity loan lender.
Best of luck with your lease extension and sale.0
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