Help to buy: "Surveyors undervaluing properties"

Graham_Devon

Bit of a weird one this, and, in some way, alarming.

I decided to buy a one-bedroom flat in Grafton Quarter, a new development in Croydon. The asking price was £327,500. I secured funding from the help-to-buy scheme and paid the £500 reservation fee back in December.

Shortly before we were due to exchange in April, the selling agent, Savills, said that since too many lenders were undervaluing the properties, the developer had decided to sell in blocks to investors. I was told I would be refunded the reservation fee and my £1,318 legal expenses, but more than three weeks later the money has yet to materialise.

Couple of points here:
1. In some ways, a lucky escape for the HTB buyer, even though it did cost them.

2. Who are these investors that are willing to buy properties above valuation?

3. How are they getting around the rules on HTB properties / planning regs.

https://www.theguardian.com/money/2018/may/31/help-to-buy-inflated-prices-developers-investors

westernpromise

Surveyors always and without exception undervalue properties, in my experience.

If you're buying with a mortgage, and you default, the lender can use the surveyor's valuation to sell it quickly below its real value. They get their money and you get cleaned out, but they can cite the survey as proof they didn't do this. If you're buying without a mortgage and you find problems with it the surveyor will just say Well I did tell you not to pay that much for it.

If you turn it on its head, what's ever in it for a surveyor to overvalue a property?

PasturesNew

Two HTB new builds were sold to an investor in a near-by development of nine houses near me last year. Seven to owner occupiers, two "mysteriously" to a new BTL LL (newly registered company, just before purchase).

HTB has only helped builders to secure the profits they wished to acquire... by keeping prices high as the buyers are thinking of today and being able to buy one ... not thinking of what happens in 5 years when they get charged for the loan. Also, they'll get "taken by surprise" when they sell and "suddenly realise" that it's not all their house/money, but only 80% of it or so as they never owned it 100%.... as few will have remortgaged the whole place, but just let the loan roll on for a variety of reasons.

Graham_Devon

westernpromise wrote: »

Surveyors always and without exception undervalue properties, in my experience.

If you're buying with a mortgage, and you default, the lender can use the surveyor's valuation to sell it quickly below its real value. They get their money and you get cleaned out, but they can cite the survey as proof they didn't do this. If you're buying without a mortgage and you find problems with it the surveyor will just say Well I did tell you not to pay that much for it.

If you turn it on its head, what's ever in it for a surveyor to overvalue a property?

:undecided

What's the "real value" if all those who are accredited to state the value are "wrong"?

Thrugelmir

Easy to overpay when you are using someone elses money, and are repaying it over 25-40 years. When it's your own money people are far more careful.

MPD

I think the stock phrase used by surveyors for about the correct price or better is something like

The purchase price represents fair value for money

HPC_Ghuol_Hunter

Graham, the !!!8216;real value!!!8217; is the amount of cold hard moolah that someone is prepared to stump up. Remember prices are set at the margins, and that other HPC goon guff that you lap up?

the_flying_pig

>1 bed in Croydon
>£330k
>...

jackiechain

heyasdfghjkl;asdfghjkl