Second Opinion (valuation) on shared ownership new build

Nailer99

Hi everyone,

I am considering buying a shared ownership property in London. I know all the arguments for and against, so no need of a repeat here.

One of my main concerns however, is the potential drop in value, if the house prices do crash or "correct". This would be made worse if the flat were overvalued in the first place - it is a new build after all.

I have suspicions that the asking price is quite good, but I am not an expert. So, here is the question I wanted to ask the forum:

How can I get a free or reasonably cheap independent second opinion valuation of the property, so I can work out if I'm getting a good deal?


Thanks!

Dan

tr3mor

Just have a look at similar properties in the area that are a few years old.

zzzLazyDaisy

The problem is, if you can't afford to buy on the open market, a comparison with other places in the area is meaningless. The fact is that there is often a premium on new build, so it does take a while for the re-sale price to cath up, which may not be a big problem in a rapidly rising market. Also, there does seem to be a premium on shared ownership property, so you could get caught both ways. I am assuming the shared ownership is with a housing association? They are unlikely to drop the price even if you do get a lower valuation, simply because there is always someone else stood behind you ready to buy.

But if you are not planning on moving again any time soon, it may still be a good choice. My sister has just purchased a shared ownership property. The mortgage, rent, and maintenance charges all add up to significantly less than she was paying in rent - and as she says, she knows she is secure and isn't constantly worrying about what will happen at the end of the current 6 month tenancy. So if it is an investment you are after, it might not be a great move, but if you are looking for a home you can call your own and the open market is beyond your reach, then it could well be better than renting.

Nailer99

Thanks Daisy and tremor,

That sounds like good advice. This will probably work out similarly priced to renting (and with much better decorative order), although this does depend on the mortgage deal I manage to get, so I am seriously considering it.

My main worry is that the drop in house prices might leave me out of pocket, but since the share I would be buying is actually rather small I wouldn't be risking so much.

I don't think a comparison with open market prices is meaningless, as when I come to sell, the property will be valued by a independent valuer according to market prices.

Any tips for good web-sites to look up recent sale prices?

zzzLazyDaisy

Hi, sorry I didn't mean a comparison would be 'meaningless' but that it wouldn't get you very far if you try to negotiate a lower price.

As far as re-sale is concerned, you need to check with the HA - they will probably have a clause in the contract to say that any re-sale must be through the HA, and the buyer must comply meet the criteria for shared ownership. Which may not be a bad thing, because it means that your house will be attractive to people in your current position who can't afford to buy on the open market. Also, provided there isn't a lot of shared-ownership new builds going on, it may also help to protect the price

tr3mor

It strikes me that shared ownership schemes offer all the disadvantages of buying and renting, yet none of the advantages.

Your house is not free to do with what you want yet you're not able to just up sticks in six months time to move area.

dmg24

As far as re-sale is concerned, you need to check with the HA - they will probably have a clause in the contract to say that any re-sale must be through the HA, and the buyer must comply meet the criteria for shared ownership.

Not necessarily, many HA's allow a sale on the open market. As you said, the OP needs to check with the HA that is relevant to their situation.

Nailer99

dmg24 wrote: »

Not necessarily, many HA's allow a sale on the open market. As you said, the OP needs to check with the HA that is relevant to their situation.

That is indeed the case. They put it on sale for another shared ownership arrangement first, but if noone is interested then you can sell on the open market.

However, the key point is that the valuation is done by an independent third party, who values it based on its market value.

Nailer99

tr3mor wrote: »

It strikes me that shared ownership schemes offer all the disadvantages of buying and renting, yet none of the advantages.

Your house is not free to do with what you want yet you're not able to just up sticks in six months time to move area.

As I said in my original post, I'm not going to get into a discussion of the pros and cons of SO as this has been done to death in these forums.

However, it is not as simple as you suggest: I have looked at the pros and cons in great detail. For me and with this particular flat it is a good deal (provided the housing market doesn't completely crash, but then in that case out-right buying would be even worse!). This may not be the case for everyone and for every S.O. development but there is some good advice on these forums if you do a search.

dmg24

danb77 wrote: »

As I said in my original post, I'm not going to get into a discussion of the pros and cons of SO as this has been done to death in these forums.

However, it is not as simple as you suggest: I have looked at the pros and cons in great detail. For me and with this particular flat it is a good deal (provided the housing market doesn't completely crash, but then in that case out-right buying would be even worse!). This may not be the case for everyone and for every S.O. development but there is some good advice on these forums if you do a search.

You have clearly done your research.

My first property was a SO house, and was definitely the right move for me, hopefully it will be for you too. Best of luck! x