Retention

f6100153x

Hey, FTB in the process of buying our first house.

In my previous post I asked about what happens with a surveyor undervaluing the house we're buying. We've had an offer accepted of £155k and the surveyor said due to some work that needs doing it's they value it at £150k. So natwest have said they will offer us the £155k with a retention of £5k until we've carried out the work. That makes sense to me.

However, we've spoke with the vendors and they've knocked the price down to what the surveyor valued it. So I thought I'd go to Natwest and say we're only paying £150k now so we won't need the retention, but Natwest have now said they will lend us £150k with a £5k retention.

Is this standard practice?

I'd have thought if there surveyor valued it a £150k and they're lending us £150k then all should be fine in their eyes?

Should we look at other lenders? We have the £5k so we could pay it but it wouldn't leave us with much at all to cover the work

Thanks in advance

kingstreet

Yes. This is normal.

A price reduction is not the best way for a resources-limited FTB to deal with such a situation.

What will happen now is you will see £5,000 of the mortgage funds held back, so you will need to increase your deposit by £5,000 to bridge completion.

Then you get the work done and following a reinspection the surveyor releases the retention and the funds are released.

I would have suggested first obtaining the required reports and estimates required by the surveyor to see if the works will actually cost £5k. Much of the time, work won't cost as much, if anything. Submitting the reports to the surveyor would then have seen the retention reduced or lifted altogether.

f6100153x

Thanks,

Yeah we've had 2 quotes and just waiting on a damp survey to be carried out. 2/3 things that need doing only come to £800 so unless the damp situation will cost over £4000 it should come out less.

Luckily my Dad said he could lend us the £5k retention so we still have our cash free to do the work. Will the mortgage company mind it being loaned from a parent?

kingstreet

Make sure you get an independent timber & damp surveyor to report and pay for it!

"Free reports" by damp contractors more often than not result in a quote for a new DPC - surprise, surprise.

An independent surveyor might charge you £200, but save you £2,000 by establishing the cause is leaky rainwater goods, soil bridging the damp course, leaky chimney flashing etc.

http://www.independentdampsurveyors.co.uk/

Your parents lending you the money until the retention is lifted shouldn't be an issue and probably won't even be asked.

f6100153x

Yeah we're paying for an independent damp surveyor to come out on Tuesday. Thanks for the advice