What next???

Tuareg

Desperately trying to get some advice for a friend whose predicament I feel partly responsible for. I’ve posted something similar else where but got no answer but desperate for advice to offer anyway here goes…

I and others persuaded a 30ish year old friend who was bad with money (he didn’t have debts just spent all his wages every month on rubbish) and renting to go for a 1 bed Shared ownership property. After 2 years of hard saving he’d got the deposit together and applied. Got offered a nice flat which he went for. Mortgage came through, affordability was o.k but has problem with the valuation.

The bank has valued the property at about 7% less than the Housing Association. HA refused to accept the down valuation and so appealed. Bank refused to up value. Another flat in the same property is back on the market after a ‘reservation fee’ was paid we assume because the buyer couldn’t get a mortgage at HA valuation.

The property is in London. BBC and RICS say that London house prices have been falling for 6 months and are predicted to continue to fall.

So Question…. has my mate lost his £1000+ in fee’s (reservation fee, valuation fee etc etc) or is there anything that can be done? Can the HA be forced to get a revaluation as its 3 months since the last one? Can the original valuation be challenged? Seems outrageous that they can re-advertise at the old price when they know that others have been unable to get a mortgage based on the valuation.

ANY advice greatly appreciated!

Pixie5740

Did your friend use a broker to find the mortgage or go directly to the lender himself? Another lender might value the property differently.

Tuareg

Thanks loads pixie5740..... he went to a broker that the Housing Association mentioned. There have already been multiple down valuations and failed appeals hence the frustration. Can HA be forced to get a more realistic valuation?

Elfbert

He can ask the broker to try another lender who don't use the same surveying company to value it. Or he can can see if he can raise his deposit by a gift from family. Or he can try and argue with the HA that no-one will be able to mortgage it at the value they set. Although I'm not sure that'll fly.

And RICS have said the market is dipping in London right now, but that over the next 5 yrs they predict it'll rise 30%. Plus it's not helpful to look at 'the market' you need the market for the type of property you're buying. Just because fewer people are spending 20 million on a penthouse doesn't mean the price of a 1 bed flat has dropped... it all depends on the individual property, really.

Tuareg

If multiple lenders are saying the HA valuation is too high its hard to justify raising £10k+ to pay the difference in a falling market.

Would the HA be required to let prospective buyers know that multiple lenders have refused to lend at the asking valuation OR can they just keep readvertising after each failed mortgage application and pocket the £500 reservation fee until the market catches up with their target price? Would seem somewhat unfair if that were the case.

In doing some research it appears the HA has to get a revaluation every 3 months is this binding? would the failed valuations need to be taken into account as there have been no comparable sales for nearly a year in the development.
thanks

Tuareg

O.k he's going to have to contact the Housing Association as theres been no contact for a couple of weeks.

Whats the best line to take? I'm minded to suggest he be a bit more forcefull i.e stop mucking people about but would that be counter productive?
Anyone else been in a similar position?
Thanks

princeofpounds

He doesn't need to be forceful. As pointed out, he has four options


1) Raise more money
2) Try a different lender who employs a different surveyor, will cost more fees
3) Ask the HA to drop the price
4) Give up


Personally I would try #3.


He just needs to ask the HA for a straight answer. Will they lower the price or not, because the surveyor down-valued the property. They can say yes or no. If no, then he should probably walk away.