Valuation came back as £0

SC1991

So the lender carried out a valuation on a home I put an offer on. It came back as £0 and the reason was because the valuer said it was leasehold and only 9 years left on the lease. However the Estate Agent listed it as Freehold and the seller said they bought the freehold when they originally purchased the house and have the document stating that. Are lender valuations often wrong? I'm assuming they did a desktop valuation. Where would they usually check the tenure as I looked on the land registry.gov site and it had listings for both freehold and leasehold so I'm guessing whoever carried out the conveyancing work when the seller originally purchased the freehold didn't update the details properly? Anyone had a similar situation happen?

user1977

Not seen it specifically with surveyors trying to interpret the lease documents and getting it wrong, but we've seen other examples posted here of laypeople looking at e.g. a registered leasehold title and ignoring the fact that the owner also has the freehold.

I wouldn't normally expect surveyors to try going to into that sort of detail, I thought they usually just put in some assumptions for what the lease terms are and leave it to the solicitors to check and come back to them if anything needs recalculating.

ArbitraryRandom

I agree it's probably a simple mistake. Could also possibly be the title wasn't updated correctly? 

One to refer to your solicitor, then forward their confirmation of the freehold to the surveyor to get an amend report. 

propertyrental

who are the registered owners of the leasehold a freehold titles? Same person? same name as your seller?

eddddy

Is the property a house - as opposed to a flat or maisonette?

Assuming it's a house, it sounds like you need to establish what titles exist on the property, who owns them, and what they are planning to sell to you.

At a guess, it sounds like there are 2 titles:

• A freehold
• A lease with 9 years remaining

Hopefully, both those titles are owned by the seller, and they intend to transfer both titles to you. But in order to make the house mortgageable - your solicitors will need to do some extra work:


I think that your mortgage lenders will require your solicitors to do one of the following...

• Extinguish the lease, leaving you with a freehold house. (Because a house with a 9 year lease won't be mortgageable.)

Or

• Extend the lease (to say 100 years, or 999 years) so that you can get a mortgage on the leasehold. (But it would probably be more sensible to extinguish the lease.)

If that's the case, it's bad that the seller and/or the estate agent didn't tell you about the situation. The extra legal work might add an extra £1k to £2k to your legal fees.

Plus it's not the kind of work a conveyancing solicitor would normally do - you might need a specialist solicitor.


(Unless that extra work is done, the mortgage valuation will be £0)