Thoughts on £0 valuation please?

Nmq880405

Hello, new here and just looking for thoughts on current situation please, especially from anyone who might’ve been in a similar situation.

Recently had an offer accepted on a house. The house is priced roughly the same as comparable properties that have sold nearby over the last 6 months, in fact most of these have gone for 15-20k more than this despite being the same in terms of quality etc. This particular house is very well looked after, modern kitchen and bathroom, converted cellar. Properties go quickly in this area, it’s a residential area, good schools nearby, very good transport links to city centre.

The only problem with this house is that it is a terraced, and the house next door (end of terrace) is a convenience store, A1 license. It is a tiny convenience store, doesn’t really get much foot fall and isn’t really busy traffic wise as the road is permitted parking and there are double yellows outside the shop itself, meaning its only really used by locals who walk there – I’ve lived in the area for years so know it well from that respect. It opens 9am – 8pm.

I went through a broker for the mortgage, and found Leeds BS to be offering the best rate, got AIP without issue. The broker also contacted Leeds prior to full application to explore the potential problem of the shop. Obviously Leeds couldn’t guarantee, but indicated that there would be a good chance this would be fine, subject to valuer’s comments. I fully appreciate why lenders have these policies in place, and also appreciate that a consideration for them would be future saleability/ whether the use of the property may change etc and of course took this into my own consideration.

Went ahead and had the valuation earlier this week, which has come back as zero. I fully understood there was a chance this would happen, but there seems to be some holes in the story.

I had paid to upgrade to homebuyer’s survey so both were being done at the same time by Countrywide. The surveyor contacted me in the morning as they do to see if there was anything particular I was concerned about, which there wasn’t. The subject of the shop came up and he advised me that “late shops can sometimes be an issue” – he also said that he would do his checks and then cross check against the lender’s criteria to ensure they deemed the property suitable. We discussed the fact that Leeds had confirmed A1 may be acceptable subject to his comments.

I have had sight of the valuation report that was sent to Leeds.

Just to note, Leeds lending criteria states “Properties which are above, adjacent or near to commercial premises may be acceptable subject to the following: the proximity of the commercial use must not effect the quiet enjoyment of the property. Consideration would be given to the location of the property – the property must be located in a desirable area with good demand, readily saleable and readily marketable.”

In my opinion for the reasons I mentioned above, the shop being next door doesn’t interrupt the quiet enjoyment, obviously this is subjective and he may feel that it simply being there does. Regarding the location, as above it is a popular area with high demand.

Reasons for zero valuations on the report were simply as  below with no more detail:

-Proximity to commercial premises  
-Air traffic noise

I have a few questions that I’d be interested for people’s thoughts on…

1.      I am struggling to understand how “proximity to commercial premises” helps Leeds form a decision – they as a lender say they may accept these properties, but this information gives no further context. I could understand this is Leeds’ criteria stated they were fully unacceptable, but as it caveats this, I would have expected there to be some more information explaining how the property interrupts the quiet enjoyment, and if it is an area that does not have good demand. Am I missing something?

2.      Regarding air traffic… that would rule out the whole town. The house isn’t particularly close to the airport but as most places are here, its probably vaguely near to the flight path but not under it (my parent’s house is under it, planes come over every 5 mins, there is a difference). Could perhaps understand if it was very close to the airport/ planes were flying low, but this just seems crazy. Plenty of houses in the area are mortgaged… would this really be an issue without the shop or does this just sound like something that’s been thrown in for good measure?

3.      I also noticed on the valuation report there are two questions – one being whether the property is suitable security which they have marked as no, but another one which says “is the property readily saleable at or about the valuation figure?” and they have answered this as ‘yes’.
This seems contradictory but wondering if anyone can offer any insight… at present the application has gone to a senior underwriter to see if it will be overturned – would this perhaps tick the box of it what was highlighted in their lending criteria, ie indicating that it is next to a commercial property but is readily saleable and they believe the purchase price is more or less accurate?
Or, is he suggesting it is readily saleable at £0… which makes no sense either.

4.      Finally, I’m not sure how surveyors work, but it seems odd to me that this particular surveyor knew about the shop before arriving at the property, saw the shop when he arrived and carried on with the survey despite knowing he was going to do this. Would this be common practice, or would you expect they’d contact me back to advise it’s likely going to be a zero valuation before going ahead with homebuyers? (I haven’t had this back yet).

 

Thanks in advance! 

 

 

 

[Deleted User]

Some lenders might lend on it and some won't. Good idea to use a broker. 

I have had a £0 valuation but did not purchase the property as it did not have a kitchen, likely a cash buyer ended up buying at a reduced price. 

ACG

1. They can accept close to commercial. But the surveyor does not like the commercial property it is close to for whatever reason. A lender being able to do something does not mean they will always do it, it is impossible to account for surveyors and underwriters discretion. 

2. Without seeing the property and speaking to the surveyor its impossible to know. I live not a million miles away from an airport. About 40 days a year (depending on the wind direction), planes take off and turn over our house, I hate those 40 days and never even realised it would happen until after we moved here. If I had, im not sure if I would have moved here (I might have, im just not 100% sure). 

3. The surveyor sees it as worth the asking price, but does not see it as acceptable for Leeds. The same surveyor might go out and say it is acceptable for another lender. 

4. I would have suggested going for the basic valuation and then doing a homebuyers report once you had the offer personally. I know you discussed the property over the phone but without knowing what was discussed and what the surveyor did before going its impossible to say. 

I have put in appeals and never had one overturned. You are asking the surveyor to admit they are wrong. I think you would be best to just knock this on the head and find another lender or property personally. 

Nmq880405

3. The surveyor sees it as worth the asking price, but does not see it as acceptable for Leeds. The same surveyor might go out and say it is acceptable for another lender. 

Thank you, this is the bit in struggling with as alot of lenders have more or less the same wording as Leeds in their criteria so don’t understand how it would be acceptable for one and not another , unless surveyors have more detail on criteria than we get to see?

I haven’t appealed it, Leeds have advised they don’t have an appeals process but have advised themselves they’ve sent it to the senior underwriter to review so not sure what the difference is.. 

Hoenir

Nmq880405 said:

I haven’t appealed it, Leeds have advised they don’t have an appeals process but have advised themselves they’ve sent it to the senior underwriter to review so not sure what the difference is.. 

Decision is entirely the lenders. It's their money that will be used to purchase the property. 

user1977

I suppose there's a difference between merely being "close" to commercial property, and it literally being through the party wall from you. They probably don't want to be too prescriptive in their criteria (commercial premises across the road might be even worse if it's e.g. a nightclub).

Mishomeister

As there is now a full survey report, when the broker will be looking who to place this mortgage with they can send the report for the new prospective lender's underwriters to fully review so you would then only go with the lender that would confirm they are happty with all the issues identified.

ACG

Mishomeister said:

As there is now a full survey report, when the broker will be looking who to place this mortgage with they can send the report for the new prospective lender's underwriters to fully review so you would then only go with the lender that would confirm they are happty with all the issues identified.

Underwriters wont really use that.
They will still rely on the surveyor who acts for them. 

Mishomeister

ACG said:

Mishomeister said:

As there is now a full survey report, when the broker will be looking who to place this mortgage with they can send the report for the new prospective lender's underwriters to fully review so you would then only go with the lender that would confirm they are happty with all the issues identified.

Underwriters wont really use that.
They will still rely on the surveyor who acts for them. 

You could still however get a very, very good indication if you get an underwriter to look at the survey if they believe this is the one for them.

Nmq880405

Thanks all, I pulled out in the end after getting pre-valuation checks from two other lenders... all came back re the shop but added other things... for example one had an issue with a sub-station down the other end of the road, and another an issue with a doctor's surgery on another street... too much like hard work! 

ACG

Nmq880405 said:

Thanks all, I pulled out in the end after getting pre-valuation checks from two other lenders... all came back re the shop but added other things... for example one had an issue with a sub-station down the other end of the road, and another an issue with a doctor's surgery on another street... too much like hard work! 

I think you have probably dodged a bullet there. Its not so much the buying it now, its trying to sell it down the line. I think the power station down the road and the Drs surgery seem a bit OTT, but the shop is always going to be a problem.