Repaying H2B Equity Loan HELP!!

Daisy1307

Hi there,

In Feb 2018 I bought a new build flat in Croydon, using the Help to Buy Equity Loan (40%). Now, just over a year later I am trying to sell. I know this doesn't sound sensible, but to cut a long story short I don't have any other option. You can't rent your property with the Loan in place...

I have hit a real problem and I would appreciate any help or advice anyone can offer. Basically, Target HCA (who administer the repayment of the loan on the sale of the flat) take 40% back. They require a valuation, and they take 40% of the higher value - either the sale price or the valuation.

I bought for £280k, but there is little to no chance in the current market I'll sell for anything more than £265k (probably more like £250k). An identical flat in my block, but with a £25k parking space, sold for £250k last week. There are currently several very similar/identical properties on the market all for £230-£260k. So I'm set to lose money anyway.

BUT I've just had a revaluation done. The first was £280k and the new one is for £275k. Bearing in mind my flat will probably sell for about £260k, I have to give the Government back 40% of £275k. That equates to £10k-£6k that I will lose from my deposit, without taking into account the loss from selling for less than I bought. The valuation is based on sale prices from June, September and November 2018 - even in January these sale prices would have been more relevant but now they seem laughable (and yet also make me want to cry!!)

What can I do in this situation? Do I need to wait a few months for the lower-priced sales to show up on Rightmove, then get a new valuation? Do I stand any chance of winning an argument with Target?? Please help!!

kingstreet

Do you have a buyer?

If not, wait for the agreed sale, then ask your surveyor to refresh the valuation and tell them the agreed price. You've jumped the gun by the sounds of things as Target set a time limit on the valuation which is three months, IIRC. Indeed, as stated in the redemption guide;-

Please note: The RICS valuation will only be valid for 3 months. If your loan redemption is not completed within 3 months of this date, you will need to provide Target with a Desktop Valuation, re-confirming your property value. You must complete your transaction within a maximum of 6 months of the original valuation.

Surveyors use comparables usually up to four months old so you will also have a better chance of a lower figure as time passes.

As you have stated the rules say higher of sale price or valuation to prevent people selling for undervalue and stitching up HMG so no, you aren't going to get Target to do you a favour.