Shared Ownership re-valuation?

amanda_lea

Hello

We're first-time buyers and have been accepted for a shared ownership property in London. After getting the good news we have been under a lot of pressure from the Housing Association to appoint a solicitor and get a mortgage in a very quick timescale - this we have duly done and I can understand that they want to push things along as quickly as possible.

However... after speaking with the seller we now understand that he hasn't found a property yet and that we could be in for a bit of a waiting game. This in itself isn't too much of a problem, but the Housing Association has just advised us that the seller's valuation expires at the end of May and if we haven't exchanged contracts by then, the property will need to be re-valued. Given the area it's not unlikely that the prices will have shot-up and we will have to fork-out more than we ever expected!!

One part of my brain understands why the valuation needs to be up to date, however it just doesn't seem reasonable as:
- we registered interest and agreed to go ahead based on the original valuation
- their offer to us was based on a financial assessment of us - at the original price
- we have obtained a mortgage offer based on that valuation (will we then have to re-apply for the whole mortgage?!)
- we are 'ready to go' and should it get to the point where the property is re-valued it would be entirely due to the seller not finding anywhere

It's also worth noting that the whole process has gone through really quickly so far - I'm not sure if it's a 6 or 3 month validity for the valuation, but in either case it's relatively recent.

After much web-research I can't seem to find any posts of this happening and wondered if anyone could let me know if they can do this or if there's anything we can do to push-back against it?

Thank you for any help - we're crossing everything we have that we won't have to cross this bridge - but if we do would like to be prepared!

Thanks in advance
Amanda

cattie

If I were you I'd be telling the vendor that unless they find somewhere pretty fast or agree to go into rented accommodation you'll have to look for another property to buy seeing as waiting for them to find somewhere is going to cost you a few thousand £ more.

Housing associations have their own rules regarding valuations & offer periods, so it probably varies from HA to HA.

kingstreet

It's worth bearing in mind, the rent on the HA share will also increase if the property value increases.

Typically, it's 2.75% of the share value.

You should have been advised to do nothing until your vendor finds a property. If they do not do so and decide not to move, your expense up to that point will have been wasted.

Did you seek advice from a whole market mortgage broker or the solicitor representing you?

tinkerbell1985

The shared ownership lease will usually specify a period for which the valuation is deemed valid. Most are 3 months. The housing association I work for ask for the valuation to still be in date at the point the sale is agreed (not at point of exchange) deliberately to avoid these issues.

You've mentioned a vendor, so as this is a resale and not a new build shared ownership, you'll probably find the rent amount will stay the same regardless of the value if the property, as resale shared ownerships are just an assignment of the lease on it's current terms.

It's worth asking if the vendor will go into rented, but I'd suggest this will be unlikely, especially as prices are rising, they won't want to be priced out themselves. But it's worth asking. Also, do you know if there were others interested in buying as well as yourselves?

Do you know if the vendor is looking for another shared ownership or on the open market? It can be tricky to move from one shared ownership to another, so it could take a while if that's the case?

da_rule

What would be your thoughts on the OP exchanging contracts but then setting the completion date for a few months time? They will have satisfied the Housing Association in that they will have exchanged. They could always then complete earlier if the vendor manages to find a property.

Jenniefour

da_rule wrote: »

What would be your thoughts on the OP exchanging contracts but then setting the completion date for a few months time? They will have satisfied the Housing Association in that they will have exchanged. They could always then complete earlier if the vendor manages to find a property.

Interesting. I've heard of this being done in the past and have a friend who did it years ago - a sort of 'long stop' completion. Do people do this now? If it's possible then the downside is that the vendor - assuming they want to buy again, could be tied to a price that works against them in their next purchase. Could be worth a try, though.

da_rule

Jenniefour wrote: »

Interesting. I've heard of this being done in the past and have a friend who did it years ago - a sort of 'long stop' completion. Do people do this now? If it's possible then the downside is that the vendor - assuming they want to buy again, could be tied to a price that works against them in their next purchase. Could be worth a try, though.

The question for the seller would be do they want to risk losing the sale.

Long stop competitions are still carried out, and the completion date can be amended. The only thing will be that under the CML Handbook come mortgage lenders put limits on how long the period between exchange and the release of the mortgage advance can be, and then further rules on how long after the advance is paid completion must take place.

amanda_lea

Thank you all for your replies - and so sorry I haven't got back until now - Plusnet managed to cancel the internet a month earlier than we thoughs so have been down and out for the past few days!!:mad:

The good news is that he has apparently just put in an offer on a place... thinks its a repossession so there's no chain, however the advert is still on the website so hoping that no-one makes a higher offer. I'm assuming that with a re-possession, the bank would like to get things sorted as quickly as possible, rather than hanging around for slightly higher offers? I'm not sure what the difference is in this scenario? (maybe I'm being hopeful!)

kingstreet: yes we had a whole of mortgage advisor and have recently asked our solicitor about the situation - both have said that this is quite normal - personally I can't see the logic - but maybe I'm biased here!? My main bugbear has been with the HA - as from day one we were really pushed to move asap - emails includings the phrase "you need to apply for a mortgage immediately". They mightn't have said it in so many words but from the outset implied that the seller was in a position to move.

tinkerbell1985 / cattie: The seller lives with his elderly mother so I imagine rented accommodation and two moves isn't on their agenda! However I'm pretty certain that he's looking on the open market - so that's a positive.

There were about 5 other people who were also interested and on the selection list 'behind us' - we have now received the formal mortgage offer :j so hoping that puts us in good stead.

da_rule/Jennifour: Thank you, I didn't know that longstop completions were possible. To be honest, it isn't ideal as we have to move out of our current place at the beginning of April - we're staying with relatives but there's a long commute and there's only so long that us and the cat can stay welcome with relatives!! Nevertheless - an option to look into - we know that the seller is moving because of jobs, so he does need the sale...