Staircasing for £nil valuation - cladding hangover - advice please

housebuyer143

user1977 said:

howardmeer said:

user1977 said:

howardmeer said:

k12479 said:

howardmeer said:

Surveyor confirm compliance with Red Book and RICS advice at time of valuation, i.e. a legitimate valuation and not just "I don't know, so will just put £0"; it was fully reasoned.

Have any cladding-affected property transactions occurred for £0? I doubt they have, however, I imagine many cladding-affected properties will have changed hands to cash buyers for real, albeit discounted, values. I think the claim that your valuation is legitimate would be hard to defend.

As far as I can see (Rightmove, Zoopla, Land Reg data) nothing has sold in my block since mid-2019 (so before the non-compliant cladding was discovered). I'm pretty sure even cash sales would show up somewhere on these sites, so if I am right, this supports my assertion that in fact properties are worth nil in current state because nothing has sold.

The RICS guidance will probably have something to say on this, but I doubt that logic works - a slow (or non) moving market doesn't mean the properties are valueless. Everybody could simply be biding their time (and a large proportion I expect are mortgaged, so can't be sold for any less than the current mortgage balance).

So if you think about it, who would buy a flat (even at a discount) which had a totally unknown and unlimited future liability? 

Lots of people do - you see e.g. landlords buying cheap properties (with common charges, structural problems or redevelopment schemes etc hanging over them) and pocketing whatever rent they can get in the meantime, and taking a gamble on what happens in the future.

Unless you think there's actually some certainty that the leaseholders' liability will be greater than the value of the flat? (in which case surely the true value is negative, rather than zero!)

As others have suggested, I would view the "zero" valuation as meaning "we can't provide a valuation because of the amount of uncertainty involved", not "we're certifying that the value of this property is precisely nil".

I had a property with knotweed and the surveyor valued it at £0. This was due to the uncertainty around what management plan was in place etc. 
The house was never worth £0 and a cash buyer would have happily bought it. As it happened we provided info on the treatment plan and the property was valued.
As others have said £0 is more likely to be a no valuation rather than its actually worth £0. 

GDB2222

howardmeer said:

GDB2222 said:

howardmeer said:

k12479 said:

howardmeer said:

Surveyor confirm compliance with Red Book and RICS advice at time of valuation, i.e. a legitimate valuation and not just "I don't know, so will just put £0"; it was fully reasoned.

Have any cladding-affected property transactions occurred for £0? I doubt they have, however, I imagine many cladding-affected properties will have changed hands to cash buyers for real, albeit discounted, values. I think the claim that your valuation is legitimate would be hard to defend.

As far as I can see (Rightmove, Zoopla, Land Reg data) nothing has sold in my block since mid-2019 (so before the non-compliant cladding was discovered). I'm pretty sure even cash sales would show up somewhere on these sites, so if I am right, this supports my assertion that in fact properties are worth nil in current state because nothing has sold.

That’s a terrible argument. Nothing has sold because most owners are mortgaged up to the eyeballs and are not able to take even a 10% or 20% drop in value without going bankrupt.

And, of course, I would have bought your flat for more than £nil, as I would have bought through a limited liability company.  

What you have is a purely legal argument, based on a ‘surprising' valuation,  and you need to pay a lawyer to read the documents and advise you. 

Thanks GDB2222 - never considered the limited liability a purchase through a Ltd would offer a Buyer. Very good shout!

The issues around no sales and the reasons why are all fair - but that is why the Lease insists on the instruction of an independent RICS surveyor to carry out a valuation; it's their job to give a valuation taking all these things into account. That is what the SO did and £nil was the valuation given.

Have had a lawyer read the terms of the Lease, the HA official Guidance on Staircasing and the written instructions from the HA when starting the process - the reply is that the argument is sound. However, without a similar case or example, it is new territory and so the lawyer could not give a clear view on the likelihood if success.

What SO is trying now, is explore what other people's experience has been with "valuation disputes" before proceeding....

There are threads on this forum about stair casing valuation disputes, and Google will find you reams of links. However, I don’t think that you will find other cases similar to yours. 

Have you asked your valuer whether he is prepared to justify a £nil value in the witness box, and precisely what he meant by his report?  If he says that he just meant that the valuation was too uncertain to give a figure, you probably won’t have a viable case. 

Apart from that, you are in the hands of the lawyers. Are you prepared to gamble say £100k in costs on winning this case? Can you afford to lose that sum?  Litigation is a gamble, and you are right to be circumspect 

GDB2222

Oh, and if you do go to court, could you please let us know. 

silvercar

I don't know whether the help to buy equity loans come under the same rules as staircasing, but for a long while those with HTB were unable to redeem their equity loans as the company owning the loans was allowed to refuse to sell at undervalue caused by cladding issues. Harder for those people as their interest rates on that part of the loan start to increase after 5 years.

This poster seems to think that restriction has gone:
https://forums.moneysavingexpert.com/discussion/6376231/help-to-buy-equity-loan-redemption-valuation-disputes-cladding-and-non-cladding-disputes-target#latest

howardmeer

silvercar said:

I don't know whether the help to buy equity loans come under the same rules as staircasing, but for a long while those with HTB were unable to redeem their equity loans as the company owning the loans was allowed to refuse to sell at undervalue caused by cladding issues. Harder for those people as their interest rates on that part of the loan start to increase after 5 years.

This poster seems to think that restriction has gone:
https://forums.moneysavingexpert.com/discussion/6376231/help-to-buy-equity-loan-redemption-valuation-disputes-cladding-and-non-cladding-disputes-target#latest

Thanks Silvercar - very useful comparative advice - but the link you are referring to is another thread by me!

silvercar

howardmeer said:

silvercar said:

I don't know whether the help to buy equity loans come under the same rules as staircasing, but for a long while those with HTB were unable to redeem their equity loans as the company owning the loans was allowed to refuse to sell at undervalue caused by cladding issues. Harder for those people as their interest rates on that part of the loan start to increase after 5 years.

This poster seems to think that restriction has gone:
https://forums.moneysavingexpert.com/discussion/6376231/help-to-buy-equity-loan-redemption-valuation-disputes-cladding-and-non-cladding-disputes-target#latest

Thanks Silvercar - very useful comparative advice - but the link you are referring to is another thread by me!

Oops!

Here's a published article confirming that redemptions can take place, at least for HTB equity loans:

https://www.insidehousing.co.uk/news/news/help-to-buy-leaseholders-can-now-sell-homes-at-cladding-affected-value-says-homes-england-72058