Under valued help to buy mortgage valuation, what to do?

Firsttimebuyer5

Hi

I have been going down the process of buying a new build flat in London using the HTB route and have run into a problem with a down valuation of the property, and looking for some advice.

What has happened so far.

1. Reserved a flat being quoted at 575K by the developer. Paid £500 reservation fee
2. Instructed solicitors & mortgage broker.
3. Asked to sign a help to buy contract at 40% of the £575K asking price.
4. two high street lenders have valued it at £525K (almost 10% less than what the developer has valued it at)
5. Friend buying a similar flat in the same development at 585K has had a different high street lender value the property at the asking price (which is higher than mine!)

From what I understand about HTB, I won't be able to proceed with the purchase as the valuation would need to match what I'm paying. I have approached the developers via email, and they have indicated that they will not be able to lower the price as they have said that other properties have been valued okay.

Are the developers able to walk away from this purchase now? Considering that it is a HTB, if they were to sell this to someone else under this scheme, they would need to get a valuation of £575k from another valuer, and considering that 2 have already come back much lower, what would the chances of that be? If I walk away, will I lose my reservation fee?

Crashy_Time

You will lose a lot more than the RF if you don`t walk away.

brit1234

Re "Under valued help to buy mortgage valuation"

You do know that the London housing market is on its knees and prices have been falling for ages? Don't belive me then look at the London price figures or the lastest RICS report London estate agent comments. You can look at the coments going back for the 18 months. Or follow Henry Prior on Twitter to actually find out whats happening with the London housing market:

https://twitter.com/HenryPryor

Do your research on what's happening to the London Housing market and then decide if the housing developer is using Help to Buy to over value the flat you are buying.

Do your research first before ranting about the flat being undervalued.

cjmillsnun

Firsttimebuyer5 wrote: »

Hi

I have been going down the process of buying a new build flat in London using the HTB route and have run into a problem with a down valuation of the property, and looking for some advice.

What has happened so far.

1. Reserved a flat being quoted at 575K by the developer. Paid £500 reservation fee
2. Instructed solicitors & mortgage broker.
3. Asked to sign a help to buy contract at 40% of the £575K asking price.
4. two high street lenders have valued it at £525K (almost 10% less than what the developer has valued it at)
5. Friend buying a similar flat in the same development at 585K has had a different high street lender value the property at the asking price (which is higher than mine!)

From what I understand about HTB, I won't be able to proceed with the purchase as the valuation would need to match what I'm paying. I have approached the developers via email, and they have indicated that they will not be able to lower the price as they have said that other properties have been valued okay.

Are the developers able to walk away from this purchase now? Considering that it is a HTB, if they were to sell this to someone else under this scheme, they would need to get a valuation of £575k from another valuer, and considering that 2 have already come back much lower, what would the chances of that be? If I walk away, will I lose my reservation fee?

What extras are they throwing in? It's a common ploy to do that and lenders are wise to it.

brit1234

Firsttimebuyer5 wrote: »

Hi

I have been going down the process of buying a new build flat in London using the HTB route and have run into a problem with a down valuation of the property, and looking for some advice.

Firsttime buyer 5 my best advice is to listen to this 5 minute you tube clip from a housing market expert on the London market at the moment and across the country.

It will give you a basic heads up of the current state. Knowledge is power and it will give you basic grounds so you can haggle the price down with the developer to the lower valuation. This after all is Money Saving expert and we want you to save money rather than lose it.

https://www.youtube.com/watch?v=14FeitWqDcE

Cakeguts

Seems expensive for a flat. Where is it?

Marvel1

Cakeguts wrote: »

Seems expensive for a flat. Where is it?

Doesn't surprise me if in London.

Firsttimebuyer5

Thanks for the advice and links!

I have done my research and although there are not loads of comparables in the area, my initial thoughts were that £575k for the area was okay, and the developer has since put up prices for identical flats on the same floor for £600k (unfortunately sounds expensive, but yes it is London!). However, I just wanted to understand whether the developer has any obligation to now review the prices following the bank's valuations, as the apartments were marketed as HTB. Do I have any other ammunition that I can use to negotiate with the developer, besides the nervousness in the London property market?

Cakeguts

cjdavies wrote: »

Doesn't surprise me if in London.

I knew it was in London I just wondered where in London.

brit1234

Firsttimebuyer5 wrote: »

Do I have any other ammunition that I can use to negotiate with the developer, besides the nervousness in the London property market?

Land Registry prices, actual prices properties sold for.

Ignore Rightmove, Nationwide, Halifax, Hometrack just stick with land registry prices.

csgohan4

overpriced, when you move in in, it will drop it's value even more