Shared ownership staircasing - disputing a valuation

Lulu1979

jonas123 wrote: »

Slightly worrying that someone wanting to sell their share had a much lower valuation than someone wanting to staircase! Hopefully the surveyors aren't instructed to value to property differently in each situation (a bit of my paranoia shining through)

Hi Jonas and Adrifor,

I have just been Googling to find people in the same situation and have just joined this forum after discovering this thread.

I don't think you guys are being paranoid at all, in fact, part of the reason I decided to do a bit of research is because I too have my suspicions about the huge valuation discrepancies. I wholeheartedly believe, surveyors are being instructed to value properties differently for sellers/buyers.

Take my case for example. My partner owns 25% of the property we currently live at, in the Hampstead area of London. The property was valued at £250K when he bought his share several years ago.

We love living in the area and have decided to buy the rest of the shares. Because the area is extremely sought after, we have long suspected the value had dramatically increased, this was quickly confirmed when we realised one of our neighbours was selling up and their flat was now valued at £370K. (It’s exactly the same layout as ours)

Using this value as our marker, we decided to act quickly, informed the Housing Association and got a valuation done, using one from the list of survoyers they insisted we have to use. To our shock horror, we were told our flat is now worth £480K. That’s £110K more than anticipated and £110K more than the flat upstairs. How can that be?

I was lucky enough to have a direct comparable, so I took this up with the H.A immediately but to my disappointment, they claimed they had no power over the valuation or the survyor.

After yo-yoing between the two parties for over a week, I decided to take matters into my own hand. I demanded the details of the survoyer who valued the upstairs flat from the H.A. They were extremely hesitant, but I persisted and almost a week later they gave it to me.

To cut a long story short, the second valuer came a few days ago. One of the first questions he asked me was, are you selling or buying? My replied was, “I’ve not decided yet, it depends on the value of the property”. He raised an eyebrow and tried to press me for clarification but I skirted around the question each time.

I’m still waiting on the valuation report but verbally he did say, the value will be very similar to the flat upstairs, roughly £370K. So it’s looking good but we need it in writing. Was hoping to get an answer today but roll on Monday.

Fingers crossed! I will keep you posted.

00ec25

Lulu1979 wrote: »

To cut a long story short, the second valuer came a few days ago. One of the first questions he asked me was, are you selling or buying? My replied was, “I’ve not decided yet, it depends on the value of the property”. He raised an eyebrow and tried to press me for clarification but I skirted around the question each time

it is perfectly reasonable that there will be a difference in values depending on whether you are selling or buying

if selling then your prospective purchaser is buying 25% of a property which leaves him exposed to rental costs on the other 75% and he has no control over those rental cost increases and when he in turn sells up he has to get agreement from the HA on what they want for their share

where you are only buying a part share of a property that share is NEVER going to be 25% of the full market value of a 100% stake in it.

just take a minute out to think, if you sell something which you own 100% your purchaser knows exactly what it will cost, if you sell only a part ownership the other person has to fund the purchase and pay (increasing) rent meaning that the value of the share is less than the value of the whole

Lulu1979

00ec25 wrote: »

just take a minute out to think, if you sell something which you own 100% your purchaser knows exactly what it will cost, if you sell only a part ownership the other person has to fund the purchase and pay (increasing) rent meaning that the value of the share is less than the value of the whole

So they are inflating property values in order to recoup on the rent profit they would lose from 100% staircasing?

If this is the case, and it may well be. Why don't they just state that outright? What's stopping them from declaring this and being transparent about the whole thing?

Instead, they were surprised and acted very sheepish when I confronted them about the difference in valuation. Why is that?

Cheers

neilio

Hi everyone. I’m so glad I’ve found this discussion thread.

I bought a 35% share of a shared ownership 1-bed flat in Bermondsey 3 ½ years ago when the flat was worth £260,000. Since my initial mortgage term is up I’m looking to staircase to 100%.

A month ago, I contacted the HA (Hyde) to ask for directions how to staircase. They told me I have to commission my own RICS chartered surveyor to value the property. The process is that I get the survey done, send the valuation report to the HA, then they send me the form of instruction. The HA suggested a list of surveyors. I ended up choosing Countrywide because they were the cheapest and could do the survey quicker than the others.

The HA had already set an expectation that 1-bed flats in my area were currently selling for between £400,000 and £450,000 which shocked me, especially as I was aware of a flat in my building, same spec and layout, which had been on the market before Christmas at £350,000.

Countrywide carried out the survey, but they refused to speak to me directly about anything. They said they would only speak to the HA because it is on their behalf, not mine. I challenged this every time and told them I am the client, I commissioned it, but they wouldn’t listen and said they sent all correspondence, including the valuation report, to the HA direct. I asked the HA about this and they said it was incorrect what Countrywide was saying and they should send me the valuation, but the reason they don’t is because the HA used to appoint Countrywide themselves but don’t any longer because apparently people were complaining that valuations were too high and accusing Countrywide of being in league with the HA at price fixing at abnormally high values. I didn’t know whether to believe that or not and didn’t know this until now. I requested that the HA instruct Countrywide to send me the valuation, but they said there is an open dialogue and Countrywide is aware. I doubted all of it!

The valuation came back at £405,000. I wasn’t surprised given what the HA had already said. The three comparables used we two recently sold flats in an adjacent building which was completed last year (both for £395,000) and a new flat sold in an under construction building not occupied yet (for £420,000). But overall, still shocked. I should mention that the building/flat I am in is five years old. The HA sent the form of instruction.

I approached a mortgage lender. Their own surveyor visited my flat this week, and I gave them the Countrywide valuation for information, but their valuation came in at £385,000. £20,000 less! I was shocked at the disparity. I initially called the HA to ask what I can do about this. They said it sounds very unrealistic for it to be so low and if I wanted to challenge the original valuation then I have to provide the new survey’s comparables. I called the lender’s surveyor (White Horse) who is unable to provide me with the valuation report because it was the lender, not me, who commissioned them.

I became angry and my partner and I mulled over what this might mean for us. We realised that maybe £405,000 is ridiculously too much for that flat. We never dreamed it would be worth as much as that. I called White Horse back and asked them if they could provide me with the valuation report and comparables if I commissioned the survey myself from the surveyor. They said this could be done. The White Horse surveyor was very nice and explained that he did include a flat sold in my building more recently that the Countrywide survey had failed to include, the flat that sold for £340,000 (originally listed at £350,000 – see third paragraph, above) in March this year.

The penny dropped that I think Countrywide did a poor job. I searched online and found that £340,000 sale, in my building, same flat essentially, and on Land Registry. Why did Countrywide not include this?

I am going to commission White Horse next week to send me the valuation so I can prove to the HA what I think it is really worth (couldn’t do it last week as all this happened late Friday). Has anyone experienced anything similar, and how did you resolve? I am crossing my fingers that because I commissioned the Countrywide survey, not the HA, that I am in a strong position to retract that survey and submit a new one. If they tell me that they will only accept the first one, I will remind them that I was Countrywide’s client, as the HA had explicitly told me repeatedly, and that they’d be none the wiser if I’d gone to White Horse in the first place. In any case, should White Horse provide more appropriate comparables – and it sounds like they have done – then I have provided the evidence that the HA requested.

I also wonder that when the HA told me that 1-beds were going for £400,000 to £450,000 that she was talking about the new builds, not the older flats which is what I am living in. I think it’s setting an unfair expectation for the HA to be telling people those figures, especially if they aren’t an accurate reflection.

I’ll let you all know how I get on. Would be interested in anyone else’s thoughts on this matter.

kingstreet

neilio wrote: »

I searched online and found that £340,000 sale, in my building, same flat essentially, and on Land Registry. Why did Countrywide not include this?

As there's a lag between the sale being completed and the data hitting the Land Registry figures, is it possible at the time of compiling their comparables, the sale was not yet visible to Countrywide, but had appeared when the later surveyor did theirs?

neilio

kingstreet wrote: »

As there's a lag between the sale being completed and the data hitting the Land Registry figures, is it possible at the time of compiling their comparables, the sale was not yet visible to Countrywide, but had appeared when the later surveyor did theirs?

I hadn't thought of that. However, according the the Land Registry, data is published every month and covers information for the preceding month*. The sale of the similar property completed on 11 March, which means it would've been published at latest on 30 April. The Countrywide survey was undertaken on 07 May.

Either it was published and Countrywide missed it. Or, I've been unfortunate with the cut off dates. Let's say, for argument's sake, it was published the day after my survey on 08 May, that means the sale must've completed before 08 April, which it did, so that doesn't make sense. A quick search of nearby addresses tells me that sales as late as 25 April are on there today, so the sale must have been there and Countrywide missed it.

* the forum won't let me post a hyperlink annoyingly. I found this under the Land Registry public data FAQs.

EDIT: I've just emailed this piece of research to the HA today to back up my evidence further, should the need arise.

kingstreet

Yes, the update is done each month, but typically, it takes about two months from completion for a property to appear on the Land Registry data.

This may be because solicitors don't provide the data the minute the sale is completed.

There is a Land Reg representative who posts on here who may be able to shed more light on this.