Selling Up Shared Equity Home - Valuation Q

Mouton

Hi all, I've had a quick search through previous posts, but was unable to find a thread that relates precisely to my situation, so I'll put my Q here...

Nearly 5 years ago, I bought my house under the old gov-sponsored Homebuy Direct scheme (the predecessor to Newbuy, I think). I own 70% of my house through an ordinary mortgage, and the government own the other 30%, which is loaned as an 'equity loan' (i.e. rent-free & interest free for 5 yrs). This means I'll pay back 30% of the value of the house when I come to sell. It's not a Housing Association home or in an HA development... it's a newbuild that was bought with this scheme, so it means that I will sell it privately just like an ordinary house.

I've been tracking sale prices of my neighbours' homes, which are identical models to mine, and so far everything looks fine. The whole house should sell for ~30-40k more than its original price if the market holds.

Buuut, looking through the terms of selling, I noticed the following:

"The HBD assistance you received is an equity loan and,
in accordance with the terms of HBD, the repayment amount is calculated as a proportion of either the current market value or the sale price of your property (whichever is higher). For
example, if you received 30% of the initial purchase price through HBD, the amount you will have to pay back will be 30% of either the current market value or the sale price of your
property (whichever is higher)."

In order to calculate the market value, I must employ a RICS surveyor (not from my mortgage lender), who will send a report to the HBD people. Let's say the surveyor puts a value of £210k on my house, but it then sells for £220k. From their terms, it sounds like I'd be paying 30% of £220k, which is fine. But if the surveyor overvalues my house - say £235k, and I can only sell it for £220k... presumably I'm going to be paying 30% of £235k when I've only got £220k coming in.

Would it therefore serve me to get a LOW valuation e.g. by leaving the garden untamed? Would an estate agent see this valuation and base their guide price on it? What could be the potential pitfalls of getting a low valuation?

Any experience from elsewhere??

Thanks in advance!

carefullycautious

:rotfl::rotfl::rotfl:


Quote


Would it therefore serve me to get a LOW valuation e.g. by leaving the garden untamed?






Ill give you 10 out of 10 for trying

Mouton

I was thinking of leaving underwear hanging on all the door handles too.

volvoman1

im in a very similar situation, just wondering how you got on, my HBD 5yrs is up soon as was thinking of moving...

martin.cat

Would your potential buyers valuation be suffient given its not your mortgage lender?

I get the impression that the higher is placed there to avoid someone selling cheaply to dodge paying equity.

Have you spoke to a solicitor yet? I would find it hard to believe that paying market value portion of equity when it's gained value isn't enough

dgtazzman

Glad you brought up this subject. In the process of selling a HTB house and I thought the equity repayment would be solely based on the sale price (in fact, found several places in the official help to buy site that suggest this, but don't make it overly clear). After some digging, it seems you need to get a valuation from an independant RICS surveyor that meets certain criteria (which include viewing the inside of the house) and that this valuation be backed up with at least 3 recent comparables. The valuation can be at most 3 months old at time of completion.

Good way of keeping surveyors employed, one of these surveys is 330 pounds for a house in my price bracket, not that that's an issue, what is an issue is that I'm going abroad for work and won't be back till 2 or 3 weeks before exchange/completion and the time scale I've seen suggest the process from valuation to settlement figure for the loan takes up to 2 weeks. My ex-wife now lives halfway across the country and I have no family nearby to let a surveyor in when I'm gone, gonna have to hope the EA can help out, me thinks.

volvoman1

dgtazzman, how did you get on with the sale of your property?
I've made the decision to sell today, as im coming to the end of my 5yr HTB so just reading up how it all works, not been in this position before.