Valuation Came Back as £0

toddler9

Hi All

Some advice please, we have recently had an offer accpted on a property, which is a 3 bed detatched in need of complete renovation

The price reflects the work which needs doing and we have the cash to do this on top of our mortgage

However our Natwest valuation came back today as £0.
On the report it says there are "specialist reports essential in order to provide a market value in present condition"

Details are explained as:

Instruct a qualified electrician to inspect the electrical installation and carry out recommended works in accordance with electrical and building regulations. Instruct a qualified heating engineer to inspect heating and plumbing systems and carry out recommended works

I am not sure what they want these reports to say? I know the electrics and central heating need to be replaced, and I said this in my initial application (we have cash to do this) but I cant replace them before I move in as I don't own the house? I have an electrician going tomorrow to the property, and I already have a quote from a heating engineer already. The bank are not being clear on what they want and they wont let me speak to the valuer!

Has anyone else been in this situation>?!

JoJo1978

A bank valuation of zero means that in its present state they are unwilling to lend any percentage of the asking price. So unless you can get the full funds elsewhere you cannot proceed with this purchase - yet.

They do seem open to revaluing the property when the works have been carried out, but in order to get to this stage you would need to negotiate with the current owner about how and when these works get done.

amateur_house

I had a £0 valuation about 3 weeks ago.

The surveyor said he couldn't value it until various surveys were done and estimates of the costs of work needed. I've just had those and sent them to the lender. On the last page of my valuation it said the house would be valued at the amount I had offered when the essential work had been carried out.

From what I understand if they are happy with the results of the reports they will keep a retention of the mortgage back until the work is completed. Or worst case scenario they won't lend at all. I am still waiting to hear their decision.

Do you have the email address of the valuer? I emailed for clarification of what was needed. The lender eventually sent me a copy of the valuation along with a letter telling me what was needed, but this arrived after the reports had been done.

davidmcn

Bit odd considering that the complete lack of central heating wouldn't make it unmortgageable - so why not just value on assumption it needs replaced anyway? Other essential plumbing / electrical works may be more of an issue if it makes house below tolerable standard.

liberty_lily

This has recently happened to us too

The house we're hoping to buy - 200 year old detached - has been valued at £0 and reports (structural/electrical) have been requested/remedial works carried out. We have a structural engineer and sparky lined up and money in place to pay for this, although like other posters I'm not sure how that works when a) someone is living there and b) we don't own the property.

We knew the house was a project and that we weren't buying the finished article. However, it certainly isn't uninhabitable or in an obviously dangerous state, just a bit dated, lol!

We've been told that the works must come to no more than 5% of the purchase price.......have never heard of this before and googling hasn't been of any help. Without wishing to hijack, has anyone come across this?

AdrianC

toddler9 wrote: »

However our Natwest valuation came back today as £0.
On the report it says there are "specialist reports essential in order to provide a market value in present condition"

Details are explained as:

Instruct a qualified electrician to inspect the electrical installation and carry out recommended works in accordance with electrical and building regulations. Instruct a qualified heating engineer to inspect heating and plumbing systems and carry out recommended works

I am not sure what they want these reports to say?

The valuation survey has not gone into detail on the electrics and heating/plumbing - they never do. It's just said "They need replacing". The lender want specialist reports to go into a lot more detail about what work's needed, and (right not) they want that work done before they're happy to lend.

Without that, they won't lend you a penny against that property - hence the £0 valuation.

I know the electrics and central heating need to be replaced, and I said this in my initial application (we have cash to do this) but I cant replace them before I move in as I don't own the house? I have an electrician going tomorrow to the property, and I already have a quote from a heating engineer already.

So the reports will be straightforward. Pass those to the bank, and see what they say about getting the work done. With specialist reports, and with assurances on a timescale for the work, they may well be more willing to lend without the work being done in advance. They may insist on a retention - so they'll lend you less to start with, until the work's done. This is, of course, a vicious circle - the money they're not lending means that you need the money you were planning on spending on the work in order to simply buy the place.

The bank are not being clear on what they want and they wont let me speak to the valuer!

They appear to be very clear on what they want. They want to lend against a property that's easily saleable if it's repossessed. They don't think this property is, without that work already having been done.

AdrianC

liberty_lily wrote: »

We've been told that the works must come to no more than 5% of the purchase price.......have never heard of this before and googling hasn't been of any help. Without wishing to hijack, has anyone come across this?

Again, it's simple - they don't want to lend on a property that has a massive bill looming, because it'll make it unsaleable if they repossess. This is the lender's only concern, at the end of the day.

Thrugelmir

toddler9 wrote: »

Instruct a qualified electrician to inspect the electrical installation and carry out recommended works in accordance with electrical and building regulations.Instruct a qualified heating engineer to inspect heating and plumbing systems and carry out recommended works.

I am not sure what they want these reports to say?

Not just a question of reports. The recommended works need to be carried out before they are willing to lend.

In essence the property is considered inhabitable.

LEJC

does the property have a kitchen and bathroom....?
even if only of sorts.....

this is usually what will define the place as habitable and without it,lenders are becoming wary of offering any mortgage....hence the EA details should usually reflect that it is of interest to cash buyers only.

I do find it unusual that it's vale is 0 simply because of heating and electrics....if that were the case,gosh I've devalued lots of properties over the years,and then clearly reinstated them.

AdrianC

Thrugelmir wrote: »

In essence the property is considered inhabitable.

You might like an "un" with that...

toddler9

LEJC wrote: »

does the property have a kitchen and bathroom....?
even if only of sorts.....

this is usually what will define the place as habitable and without it,lenders are becoming wary of offering any mortgage....hence the EA details should usually reflect that it is of interest to cash buyers only.

I do find it unusual that it's vale is 0 simply because of heating and electrics....if that were the case,gosh I've devalued lots of properties over the years,and then clearly reinstated them.

Thank you do the replies. Yes the house has a perfectly functioning kitchen and bathroom. All in all the house is in a good state- just an older lady lived there and now she is in a home. Most of what needs to be done is cosmetic and we have a large fund to do this which the bank can see in my account!

The plumber tells me the plumbing system is perfectly fine and needs no work, only the central heating needs to be replaced (which again we knew and we have the cash to do!) He is sending me the report and quote today

The electrics are currently running off a single fuse, which again I know needs to be replaced. I have an electrician coming today to do a full report.

I am happy for them to place a retention on the mortgage on the basis of the work being done within a certain time as we had planned to do both of those works as soon as we got the keys anyway.

My confusion is the house I currently live in (also mortgaged by Natwest) had no central heating when I moved in and also the electrics were running off a single fuse (all now replaced) but that was no issue!