New Build Undervalued

Vestraun

Agree with the others, I wouldn’t be paying a penny over the independent valuation unless this a forever or unique house. Assuming this is a fairly bog standard indentikit flat you don’t want to be stuck in negative equity and unable to move in 5 years time. 

davidmcn

Phil_D5000 said:

ooSTEVEoo said:

Run a mile!
Its clearly overvalued in the current market. I would not advise buying a new build leasehold property on HTB at any time, let alone now.
If you must go ahead ask for a big discount! New build apartments are notoriously overvalued, especially when HTB is involved. HTB is only helping the builders! 
Also do you fully understand leasehold? How long is the lease? What is the ground rent? What are the terms of the ground rent? Does the ground rent increase over time?? What other charges can the freeholder levy? Who will be the management company? Look for reviews on them. Be aware any quoted service charge will unlikely be realistic and will increase. Is the builder reputable? Has the building got a decent warranty? NHBC?
Sorry for being so gloomy but if property prices do fall then I can pretty much guarantee new leasehold flats bought on HTB will almost certainly be the first and hardest hit. Be very very careful. If you can look at small freehold houses. Or wait 6 months. 

I have been advised these are locked in for 10 years

Advised by someone independent from the developer?

eidand

just one warning from me, what anyone advises you, like whoever advised you of the 10 year lock in, be aware that unless it is in writing from someone who matters, that statement is as useful as a dead fish in a football game. I am sorry to say this, but the OP is coming up as a little naive.

New builds, developer's maintenance charges etc can be researched online easily these days and there are countless issues and horror stories. 

Sure, go ahead if you want, it's your money after all, but don't come here complaining  that you can't sell, when the time comes.

Phil_D5000

Thank you all for your input. Apologies for being “naive”, I have never purchased a property before have a developer that’s overvaluing a property and a mortgage advisor that won’t give me any advice. As for my solicitor, they also are not advising me anything, I ask them a question and they say “you have to make a decision on this” i cannot stress enough I haven’t a clue what to do next. From all the above it looks as though I walk away from this? Frustrating as I have been waiting for this to be built since Feb 2019, feel like a lot of times been wasted. Completion date will be January 2021. The development is for over 3000 properties. 

eidand

Phil_D5000 said:

Thank you all for your input. Apologies for being “naive”, I have never purchased a property before have a developer that’s overvaluing a property and a mortgage advisor that won’t give me any advice. As for my solicitor, they also are not advising me anything, I ask them a question and they say “you have to make a decision on this” i cannot stress enough I haven’t a clue what to do next. From all the above it looks as though I walk away from this? Frustrating as I have been waiting for this to be built since Feb 2019, feel like a lot of times been wasted. Completion date will be January 2021. The development is for over 3000 properties. 

I would say this, take a little break, say 2,3 weeks and research this very well.
There are facebook groups for a lot of these new estates, you can join one and start talking to people. Research very well what you are asked to sign, look at covenants, restrictions etc. Check the maintenance company, if it's the developer dealing with that, find out what it's called and research it online.
Get a solicitor that is not recommended by the builder.
Ask questions and make sure you understand everything. There are new build estates which are perfectly fine, but there are many that are not..Lack of knowledge on this subject can be very expensive, so address that first.
If 1 or 2 banks evaluate that new build less than what you are asked to pay then in your place I would offer only that number, regardless of the builder says. And finally, never ever trust one word from the builder, their sales team etc. Their interest is to sell you the property and they certainly do not have your best interests at heart..

trex227

I’ll give you an example so you can see why I’m always very dubious of new build flats. I used to live in a flat that the owner bought in 2007 for £140k (I live in the midlands so prices are much lower). It was a 2 bed really spacious flat. In 2012 I bought a 2 bed semi literally a couple of streets away for £120k. My house is now worth at least £160k, maybe as much as £180k based on other houses that have sold around here. There is a flat for sale in the same building as the flat I lived in for £136k.......

AnotherJoe

Phil_D5000 said:

ooSTEVEoo said:

Run a mile!
Its clearly overvalued in the current market. I would not advise buying a new build leasehold property on HTB at any time, let alone now.
If you must go ahead ask for a big discount! New build apartments are notoriously overvalued, especially when HTB is involved. HTB is only helping the builders! 
Also do you fully understand leasehold? How long is the lease? What is the ground rent? What are the terms of the ground rent? Does the ground rent increase over time?? What other charges can the freeholder levy? Who will be the management company? Look for reviews on them. Be aware any quoted service charge will unlikely be realistic and will increase. Is the builder reputable? Has the building got a decent warranty? NHBC?
Sorry for being so gloomy but if property prices do fall then I can pretty much guarantee new leasehold flats bought on HTB will almost certainly be the first and hardest hit. Be very very careful. If you can look at small freehold houses. Or wait 6 months. 

Hi Steve,
Thanks for the above. The leasehold on the property is 250 years. I have the charges, ground rent etc, all within budget and I have been advised these are locked in for 10 years? Don’t know if that is something that is common or not? The developer is one of the largest property builders in the U.K. and have said they are the management company post sale. I am hoping they will lower the property value, however I think this will be unlikely.

I don't,  if two different valuers have come up with such similar and lower prices, whose going to buy it ? 

And imagine when you come to sell and you take the hit not just on the usual drop in value from new to not new, but the £40-50k drop in value when other lenders also value it at the current price? You'd be straight into negative equity ina big way.
i would lower your offer to £325 and walk if they didn't go with that. And maybe it will take them several months to accept the new price, and possibly it will still be there by the time they accept reality. 

Vestraun

eidand said:

Phil_D5000 said:

Thank you all for your input. Apologies for being “naive”, I have never purchased a property before have a developer that’s overvaluing a property and a mortgage advisor that won’t give me any advice. As for my solicitor, they also are not advising me anything, I ask them a question and they say “you have to make a decision on this” i cannot stress enough I haven’t a clue what to do next. From all the above it looks as though I walk away from this? Frustrating as I have been waiting for this to be built since Feb 2019, feel like a lot of times been wasted. Completion date will be January 2021. The development is for over 3000 properties. 

I would say this, take a little break, say 2,3 weeks and research this very well.
There are facebook groups for a lot of these new estates, you can join one and start talking to people. Research very well what you are asked to sign, look at covenants, restrictions etc. Check the maintenance company, if it's the developer dealing with that, find out what it's called and research it online.
Get a solicitor that is not recommended by the builder.
Ask questions and make sure you understand everything. There are new build estates which are perfectly fine, but there are many that are not..Lack of knowledge on this subject can be very expensive, so address that first.
If 1 or 2 banks evaluate that new build less than what you are asked to pay then in your place I would offer only that number, regardless of the builder says. And finally, never ever trust one word from the builder, their sales team etc. Their interest is to sell you the property and they certainly do not have your best interests at heart..

Good advice here, don’t be pressured into anything, as you said there are 3000 flats in this development and although there may only be some in this phase being released and the developer will tell you you’re missing your chance, you won’t. 

Scotbot

AnotherJoe said:

Phil_D5000 said:

ooSTEVEoo said:

Run a mile!
Its clearly overvalued in the current market. I would not advise buying a new build leasehold property on HTB at any time, let alone now.
If you must go ahead ask for a big discount! New build apartments are notoriously overvalued, especially when HTB is involved. HTB is only helping the builders! 
Also do you fully understand leasehold? How long is the lease? What is the ground rent? What are the terms of the ground rent? Does the ground rent increase over time?? What other charges can the freeholder levy? Who will be the management company? Look for reviews on them. Be aware any quoted service charge will unlikely be realistic and will increase. Is the builder reputable? Has the building got a decent warranty? NHBC?
Sorry for being so gloomy but if property prices do fall then I can pretty much guarantee new leasehold flats bought on HTB will almost certainly be the first and hardest hit. Be very very careful. If you can look at small freehold houses. Or wait 6 months. 

Hi Steve,
Thanks for the above. The leasehold on the property is 250 years. I have the charges, ground rent etc, all within budget and I have been advised these are locked in for 10 years? Don’t know if that is something that is common or not? The developer is one of the largest property builders in the U.K. and have said they are the management company post sale. I am hoping they will lower the property value, however I think this will be unlikely.

i would lower your offer to £325 and walk if they didn't go with that. And maybe it will take them several months to accept the new price, and possibly it will still be there by the time they accept reality. 

Agreed, reduce your offer to 325k and if it is rejected leave it on the table. Time is on your side given the development is 6 months from completion. 

numbercruncher8

Wonder where this is? Sounds like it could be Barking Riverside, in which case the price sounds quite high.