Re-Evaluation - 30% Below Initial Valuation

hereforhelp

I'm new to this site with my current predicament pushing me here, so I'm curious to understand what type of responses I will get from the following (live) scenario:

- I had a mortgage offer accepted in October 2017 for a new build flat with a 10% deposit - I'm told there are a finite number of lenders that will provide a 90% mortgage on a new build flat
- the developer set the anticipated completion date for 30th June 2018
- in April 2018 a new contract was issued with an anticipated completion date set for 31st December 2018
- after a face to face meeting with developer in July 2018, where the developer advised me that we would be completing at the end of August 2018, having given me assurances that any additional costs I incurred from the 1st September 2018 would be met by the developer, we exchanged contracts...
- October 2018 rolled around and my mortgage offer expired... great!
- My broker advised me that I would have to submit a new application given the time that had elapsed on the previous application
- The new application was submitted with fresh payslips, bank statements etc.
- The lender approved my application with affordability not being an issue
- The lender has subsequently valued the property at 30% less than what it was valued at, by the same lender, a year before
- The lender is unwilling to provide a copy of the valuation report which will make it very difficult for me to go back to the developer (I do not imagine for a second that the developer will drop the price by 30%)
- I am going to instruct my broker to seek a mortgage application with another lender, although I am mindful of the chances of this lender instructing the same valuation body and the limited number of lenders willing to lend in my circumstances (90% mortgage on a new-build)
- I am hugely concerned about my ability to recover my deposit (just shy of £30k) having exchanged
- My next steps are to seek legal advice, independent of my instructed solicitor, for misrepresentation against the developer based on the strength of his comments in July inducing me to exchange at that point

It goes without saying that this has been an exhaustive process so far which now has the propensity to be compounded further. I appreciate there are a number of variables within my circumstances and I'm not really sure what I hope to gain from this thread, but on a scale of 1-10 with 1 being 'not chance at all' and 10 being 'absolutely no problem at all' - how do you rate my chances of recovering my deposit and pulling out successfully?

A

davidmcn

Very little. Why didn't you get these promises translated into something in the contract? Did you discuss them with your solicitor?

Crashy_Time

https://www.gov.uk/government/news/uk-house-price-index-for-july-2018


"*Figures for the two most recent months are not being published because there are not enough new build transactions to give a meaningful result"


Good chance that the developer will have to drop (some) of the price?

hereforhelp

Appreciate the response.

Yes, details were shared with the solicitor but nothing was amended in the contract as this was an agreement made in good faith... on my part anyway.

Crashy_Time

What does your contract say about return of deposit?

davidmcn

hereforhelp wrote: »

Appreciate the response.

Yes, details were shared with the solicitor but nothing was amended in the contract as this was an agreement made in good faith... on my part anyway.

Presumably before exchange your solicitor advised you what the contract meant, that if the construction dragged on you wouldn't have the right to pull out, that if you defaulted you'd lose your deposit and potentially could be pursued for any additional loss the developer incurs, and that the contract would trump any side discussions you and the developer might have had?

hereforhelp

The contract is unambiguous in terms of the rights of termination. For me, the point of the matter, is the disparity in the the initial valuation and the subsequent valuation. I've spoken with 3 independent advisors this afternoon and each of them are concerned about the size of the swing and the lender's refusal to issue the valuation report.

jonnygee2

- after a face to face meeting with developer in July 2018, where the developer advised me that we would be completing at the end of August 2018, having given me assurances that any additional costs I incurred from the 1st September 2018 would be met by the developer, we exchanged contracts...

Did your solicitor advise against this? I think you should be concentrating on the advice your received as you should never have exchanged contracts with a mortgage that was about to expire on an uncompleted property, on the basis of an unwritten promise.

A claim against the developer is going to be difficult unless you have evidence.

For me, the point of the matter, is the disparity in the the initial valuation and the subsequent valuation.

I don't think this makes much difference - the bank has every right to refuse your mortgage application.

hereforhelp

Just to be clear, the mortgage application hasn't been rejected. The valuation of the property has been adjudged to be £50k lower that the asking price.

Interestingly, having met with the developer and my solicitor today, of the 20 other parties that have exchanged, not a single buyer has had an evaluation come back at the £240k valuation I've received. All are at the asking price of the seller.

hazyjo

hereforhelp wrote: »

Just to be clear, the mortgage application hasn't been rejected. The valuation of the property has been adjudged to be £50k lower that the asking price.

As good as! You won't be able to borrow that extra money, so unless you can be gifted it or win it, you are going to be in for one hefty bill for pulling out.


I suppose you need to establish who is at fault - you or your solicitor. Stab in the dark says you, but I really can't comprehend how your solicitor would let you exchange on a new build knowing it was so far off with such a tiny deposit. They must have warned you, surely. They only do what you instruct them to so if you assure them you're okay to exchange, they will exchange.

jonnygee2

Just to be clear, the mortgage application hasn't been rejected. The valuation of the property has been adjudged to be £50k lower that the asking price.

Hence they will not lend you the money you have asked for? I'm not sure you get it, the bank aren't going to lend you the asking price. That's basically a rejection and that's their decision to make. They have no obligation to order multiple valuations or challenge the valuer they instructed. They make their own decision as to what risk they are willing to take with their money.

Valuers make certain assumptions when valuing, as defined by whoever instructed the valuer. It may be that the banks valuer was working on slightly different assumptions or constraints. It doesn't really matter anyway, it's the banks prerogative to decide this.

The mess up here was exchanging when a mortgage offer was about to run out. Your solicitor should have advised you against this, or at least advised you of the risks.

Interestingly, having met with the developer and my solicitor today, of the 20 other parties that have exchanged, not a single buyer has had an evaluation come back at the £240k valuation I've received. All are at the asking price of the seller.

Okay, well you might be able to find a mortgage with another bank then :-)