Confused about retentions? Help please!?

Stripeytiger2018 · 5 March 2018 at 8:53PM

Hi guys

FTB here and a little confused as to how retention works. A buildings surveyor said today in his experience the lender we have gone with would put a retention on for works. He's recommended that work will cost up to 3k. Haven't worked out who's paying or reducing sale price or anything like that yet as waiting for report to go to lender.
The banks surveyor refused to value so had a buildings surveyor have a look and he's given us this 3k figure.

My question is ... is a retention an under valuation ? For example if the house was valued on the open market at 220k would a mortgage with a 3 k retention be 3k less?

Would the banks surveyor value the house 3k less after seeing 3k of works is recommended?

It's a 1st time buyers scheme and we need the mortgage offer to match the open market valuation (minus deposit)

Sorry If that makes no sense I'm really confused !

Have sent some emails asking this question but it's driving me mad tonight.

Stripeytiger2018 · 5 March 2018 at 9:33PM

Any help really appreciated thank you

amnblog · 5 March 2018 at 10:26PM

If we assume that the property valuation is OK but a £3,000 retention is put in place.

The lender will lend you as requested but will hold £3,000 back until the works set out in the retention clause are completed after purchase.

This can be a problem as you need to find the £3,000 from somewhere else to complete on the purchase.

Clearly, the cost of the repairs were unexpected to you, and you may look to renegotiate the price. However, dropping the price by £3,000 will not remove your need to find extra cash to complete the purchase.

Speak to your Mortgage Broker for more guidance.

Thrugelmir · 5 March 2018 at 10:54PM

Stripeytiger2018 wrote: »

The banks surveyor refused to value

On what grounds? Be surprising if it was for a £3k retention for remedial works.

Stripeytiger2018 · 5 March 2018 at 11:04PM

Thank you. The banks surveyor said that because there is step cracking above the kitchen window she was unable to value it. She wants a detailed report from buildings surveyor or structural engineer detailing the cause along with costs to put it right for it's future stability. The buildings surveyor today said it's not structural he has recommended we have a lintel put in two windows and we have the brickwork repointed.

So it is possible for the banks surveyor to value the house as the same as the open market valuation but put a retention on.

Had a chat with solicitors today she said wait for our report. Will have it in a few days

Stripeytiger2018 · 5 March 2018 at 11:08PM

We are hoping once the banks surveyor has the report she will be able to provide a valuation. I hope she doesn't under value as the buyer has had two done and we have had two all of which are 220k we also had a homebuyers survey which highlighted a few things.
There is work to be done but we are happy with the price of the property and can budget accordingly.

wantonnoodle · 6 March 2018 at 10:54AM

Hi,

I just wanted to share our story, which is similar, just to give you some idea of how you could progress. We bought our house last year (completed Feb 2017). We had a similar situation in that at first, the lender valued the house in line with our offer, but put a 100% retention on it subject to a structural survey (query subsidence) and cavity wall tie inspection.

We arranged these with a couple of well respected local businesses for a total cost of just under £500. These identified a need for the cavity wall ties to be replaced, along with the replacement of 3 lintels. The reports were dispatched to the lender, who then reduced the retention to £5000, subject to works being completed. Total cost of the works from the people who produced the reports was just over £3000, so they were withholding more than the work cost.

Our mortgage broker negotiated on our behalf with the vendor, via the estate agent to get us the best deal, and it was finally agreed that the vendor would get the work completed at his expense, to a standard deemed acceptable by the lender with insurance backed guarantees transferable to us at completion, as long as we agreed to proceed at our original agreed price (our alternative was to try and drop the price to a point to make it affordable to find the extra cash). As the vendor was a joiner, he clearly had contacts in the relevant trades and had the work done the week before Christmas.

We hadn't completed any legal work up to this point (the offer was accepted in late October) as our solicitor had only received our vendor's contract pack 3 weeks after the offer was accepted and by that time, we had already had the valuation back and didn't want to spend on searches etc until we knew that the surveys were sound. We kicked off the legals the first week in January and completed the 24th February. We could have completed a couple of weeks earlier had our solicitors been more on the ball, but in the end it worked out well.

Whatever you decide to do, have confidence in your decision. Good luck in the negotiations.

Confused about retentions? Help please!?

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