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Massive down-valuation on a new build

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  • System
    System Posts: 178,094 Community Admin
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    I have had the same issue when buying our shared ownership property which was down valued by 20k. After a month, the HA decided to lower the price following a revised survey.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Klr005 wrote: »
    Seems a lot of people don't understand shared ownership or how it works.

    The price is non negotiable. Its set at a value and you pay a share on that meaning the other purchasers in the block had valuations come back to match the price.

    Whatever you think of Housing Associations and price inflations, others have bought their share and so OPs valuation must be different and under valued compared to the others of the same price.

    Good luck with a different valuation.


    According to that reasoning, house prices can never fall and lenders can never change their mind about the value of a propert even if circumstances change, such as the economy, the amount they are allowed to lend as a multiple, the interest rate tests they must apply or local factors such as say a new incinerator opening next door or the local school gettingmarked down by Ofsted (all these have an effect on supply and demand),


    So, since house prices can obviously fall, that reasoning is wholly incorrect.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    AnotherJoe wrote: »
    According to that reasoning, house prices can never fall and lenders can never change their mind about the value of a propert even if circumstances change, such as the economy, the amount they are allowed to lend as a multiple, the interest rate tests they must apply or local factors such as say a new incinerator opening next door or the local school gettingmarked down by Ofsted (all these have an effect on supply and demand),


    So, since house prices can obviously fall, that reasoning is wholly incorrect.


    Many people still probably believe they can`t fall.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    brit1234 wrote: »
    Don't forget all the other shared owenship extra costs and restrictions. I would look and understand the small print before going forward. Personally I have always thought shared ownership a scam to inflate prices and labled wrongly as affordable homes.


    As for your valuation, you do know London house prices are still falling and awash with unsold flats. You wait 3 months and I am sure the valuer will value it even lower.


    Must be a high end area for that price.


    Yep, it is all about helping banks and developers, nothing to do with helping ordinary people. Many people are now awake to the fact that property is well overpriced though, that is a step in the right direction IMO.
  • kinger101
    kinger101 Posts: 6,284 Forumite
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    Crashy_Time wrote: »
    Many people still probably believe they can`t fall.

    Some believe they can't rise as well.
    "Real knowledge is to know the extent of one's ignorance" - Confucius
  • nkomp18
    nkomp18 Posts: 193 Forumite
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    edited 11 September 2018 at 9:22AM
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    My experience with a new-built in London was pretty similar. Exchanged 3 years ago for £500k
    Just before completion the mortgage evaluator came up with a £465k figure.
    I showed this to the developer and they came back with their own evaluation with comparables estimating it at £510k.

    Not sure how it works with shared ownership but the issue with new-builts that are soon to complete is that a lot of investors are trying to sell them off as contract re-assignments for cash buyers. Because they exchanged 5 years ago at a pre-sale price, they still make profit on a £460k contract re-assignment.

    My developer said as soon as the notice to complete is served, it becomes a normal apartment that regular people can get a mortgage for, and the price shoots up at market price again.

    Not sure how it works with shared ownership, but you could show the evaluation report to the developer and ask them to prove it is worth what you are paying for and you can take that new report to your bank for reconsideration. Often the developer or the bank might agree to a second (free) evaluation if you escalate this enough.

    I do hope it works out for you because I can understand how stressful this can be. No one likes to lose their life savings because some mortgage evaluator did their job by googling stuff on rightmove.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    kinger101 wrote: »
    Some believe they can't rise as well.


    Are you hoping they will go up some more?
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    With headlines like this there should be more down-valuations to come?


    https://www.telegraph.co.uk/news/2018/09/13/bank-england-head-accused-spreading-gloom-no-deal-brexit-house/


    Of course MC tried the same line BEFORE the Brexit vote, and look where that ended up, it is almost like a large section the public want house prices to crash now.
  • PersianCatLady
    PersianCatLady Posts: 622 Forumite
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    Atreyu107 wrote: »
    Hi all,

    I'm going through the process of buying my first home through shared ownership. It's a new-build flat being sold by a housing association, and my purchase share is 25% on a total value of £550,000. .

    Everything thing was going smoothly up until yesterday. My mortgage advisor has found a great mortgage, my credit and ID checks were all accepted by the mortgage company and everything was looking good.

    Then the bank sent round the surveyor...

    The valuation report back today values the property at £475,000, a full £75,000 below the asking price.

    My mortgage advisor is in discussion with the Housing Association to understand what's gone wrong, but I'm trying to get my head around how the two figures can be so different.

    The block I'm buying in is all shared ownership, so I know for a fact that there are no cash buyers stumping up the difference. It's also not like I'm the first buyer in the block... In fact, out of the 20 flats available, the flat I'm purchasing is one of the last three to complete.

    Other than getting another valuation done with another lender (and therefore a worse mortgage deal) is there any recourse for me challenging this valuation with the surveyor?

    This is now the second time a Chartered Surveyor has royally done me over on a house purchase, and the lack of accountability is astonishing.

    Thanks all,
    A

    Or could it be that the sweet talking developer has had you over and you have paid well over the odds?
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    Shared ownership in the current economic/political climate is a terrible terrible idea IMO.
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