Help Advice needed. Luxery apartment dropped 25K in price, in just over a year!

Phil1k

lynnexxxo wrote: »

Phil1k,
Maybe my maths is a bit rubbish but 60% of 125k is 75K - therefore only 11k less than you paid?
11k loss sounds a lot better than 25K loss .

I think the fact that it is a housing assosciation who own the other 40% i a good point- a lot of new builds are rented out (and some landlords may not be too picky about who the rent to) so at least with the HA your are likely t have reasonable neighbours. Also, there factoring fees are likely to be ok(ish).

And please ignore all nasty posts on your thread. I think if everyone only made comments that you would be willing to say face to face this forum would be a better place. Its fine to disagree wth someone or even tell them they have made a mistake, but the laughing gleeful posts leave a nasty taste. I'm sure Martin Lewis didn't start this website in order for a few to get their jollies laughing at the less fortunate.
Rant over

Its a £13,500 loss. Something that we just cant afford at the moment.

drrobert

I think there are several reasons for your girlfriend's problem:

1. New-build properties always tend to fall in value in the first few years as the 'buying new' premium is lost (and this is no longer compensated for by 20%/year house price rises)

2. 'Shared ownership' schemes seem to be poor value for money, as the properties are valued at a high level and the housing organisations don't usually accept a lower price. I looked at buying a shared ownership flat in London a few years ago, but found the overall prices high compared to what was available on the 'normal' market. I spoke to the housing organisation about accepting a lower offer, but they said they couldn't, so I didn't buy.

3. The resale market for shared ownership properties hasn't really been tested. They've only been around for a few years, so it's not yet clear how large the market will be when your girlfriend comes to sell

4. Because of the current 'credit crunch' and falling home prices, many valuers have been instructed by mortgage lenders to reduce their valuations by 10% or so. This is because mortgage lenders are worried about customers getting into negative equity.

I'm afraid that your girlfriend bought at a high price at a bad time. I agree that the whole 'shared ownership' concept is deeply flawed, and that it has lead to a lot of people buying poor and overpriced properties. I doubt there will be any legal come-back as the valuation of two years ago could have been quite reasonable in the 2005/2006 market.

If your girlfriend needs to sell, I think she should do so as soon as possible, because prices will only fall further from here. By all means investigate renting the property out, but she would have to change to a 'buy to let' mortgage (which may be more expensive), and the housing organisation would have to allow this. Moreover, she should carefully calculate whether she can rent the place out for more than her current mortgage repayments and housing organisation rental (allowing for repair costs, property management fees and void periods).

One (very speculative) ray of light: the Labour government was instrumental in setting up shared ownership schemes. As more and more people find themselves in similar circumstances to your girlfriend, the govt may feel obliged to help out if a successful media campaign is mounted.

Doozergirl

I don't doubt that people are prepared to pay your full asking price. 60% of something expensive is better than 100% of something you just can't afford. So in a weird way, what you are asking probably won't be a problem to acheive, but it is probably still the case that the entire apartment was only ever worth £125,000 - it doesn't matter what others paid; they were duped too. Suddenly when the incentives disappear on the full price properties, the owners, when they comes to sell are left with a harsh reality. Your gf's flat still comes with a lovely little incentive and I think people will still buy.

The larger the deposit, the less a lender cares, but your market is bound to be people with small or non-existant deposits. I don't know what to suggest except to say that I have no doubt that another offer will be along shortly. Maybe see what that valuations says before you give in

It's hard to advise.

lynnexxxo

I feel your pain phil - theres not many people who can afford to take at sort of a hit. Do you really have to move?

With any luck though you mightfind someone with a reasonable deposit thus if the property doesn't survey at the purchase price it doesn't matter as they don't need a high LTV ratio mortgage

Phil1k

drrobert, Doozergirl and Lynne thanks for your posts.

I've checked on upmystreet and it seems all the similar property's were valued the same, but its hard to gauge seeing the apartments layout, spec and positioning very greatly. Unfortunately the shared ownership org only had a few apartments within the block and decided to buy one of the more expensive ones with top spec. (Only the penthouse aparts are more expensive).

I've suggested that she try and sell with the Halifax seeing they originally valued the apartment at 147k. They might be more willing to find someone who will pay closer to the original price.

It also seems that the company that built the apartment complex are selling the last few remaining ones at a knocked down price just to get rid of them. This is completely devaluing the complex as a whole. I thought of getting in contact with the other people in the housing scheme to see if they know how much value their property has lost. If more people kick up a fuss then they might be inclined to do more to help. Its a long shot I know.

We have thought about renting it out but there is a clause that only allows her to rent out for a 6 month period. Again we are speaking to the housing company to see if this can be waived seeing the circumstances (but after previous dealings im not confident of this).

mpsavuk

Phil1k wrote: »

drrobert, Doozergirl and Lynne thanks for your posts.

I've checked on upmystreet and it seems all the similar property's were valued the same, but its hard to gauge seeing the apartments layout, spec and positioning very greatly. Unfortunately the shared ownership org only had a few apartments within the block and decided to buy one of the more expensive ones with top spec. (Only the penthouse aparts are more expensive).

I've suggested that she try and sell with the Halifax seeing they originally valued the apartment at 147k. They might be more willing to find someone who will pay closer to the original price.

It also seems that the company that built the apartment complex are selling the last few remaining ones at a knocked down price just to get rid of them. This is completely devaluing the complex as a whole. I thought of getting in contact with the other people in the housing scheme to see if they know how much value their property has lost. If more people kick up a fuss then they might be inclined to do more to help. Its a long shot I know.

We have thought about renting it out but there is a clause that only allows her to rent out for a 6 month period. Again we are speaking to the housing company to see if this can be waived seeing the circumstances (but after previous dealings im not confident of this).

Will putting it for sale with Halifax make any difference Phil?
After all it's a potential buyers lender who will appraise the value.It's likely going to come in at the same price anyway?

pinkshoes

How many flats are in the block, or within about 1km radius?

The price of newbuild flats in huge developments have been hit quite badly, as a couple of my friends have found out, although they've rented theirs out instead of selling.

Also, newbuild developments with more than 15 properties have 1/3 belonging to housing associations (some to be sold for % share, some rented out) which can often put off buyers. A friend of mine is selling his 1 bed flat in a similar development (he owns a % share), but has found it even more difficult than usual to sell as it's restricted to housing association buyers (i.e. key workers etc...). I think it's been 10 months since it went on the market, and although I'm sure he had a buyer, still no sign of completion!

dannyboycey

m00m00 wrote: »

my initial thoughts when seeing this ?

only 25k you are lucky


'luxury apartments' here are regularly losing 50% of their value or more.

157k one year, 65k the next.

My thoughts exactly. Cut your losses and run.

Phil1k

mpsavuk wrote: »

Will putting it for sale with Halifax make any difference Phil?
After all it's a potential buyers lender who will appraise the value.It's likely going to come in at the same price anyway?

Hi mpsav,

The thought process is that seeing Halifax did the original valuation if we find a buyer who is getting the mortgage through them they might be inclined to lend closer to the original price. Another long shot I know but she is desperate.

PasturesNew

There's nothing more I can add that the others haven't, so I will bullet point what I would have said:
1] It WAS new. Now it is 2nd hand.
2] It was bought pretty much at the peak (every area is slightly different, but most peaks were April 2006-June 2007 probably)
3] Prices have/are dropping across the country - and have been increasingly in the last 3 months. ESPECIALLY on new builds.
4] Interest rates have gone up since she bought, so it would cost more for a new buyer per £ to borrow
5] Mortgage arrangement fees have gone up since the Northern Rock fall out.
6] The %age lenders will lend has tightened.
7] SO lenders are not plentiful to start with, so buyers are likely to find it harder to borrow as they can't go to all lenders, but a limited number
8] Prices are predicted to fall by another 35% (see last sentence of Panorama programme as linked to further up this thread for the exact statement)
9] Buyers are increasingly more aware of the stamp duty threshold at £125k