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  • FIRST POST
    • danyalaziz
    • By danyalaziz 8th Jul 18, 12:25 AM
    • 33Posts
    • 5Thanks
    danyalaziz
    Down valued new build... blessing in disguise?
    • #1
    • 8th Jul 18, 12:25 AM
    Down valued new build... blessing in disguise? 8th Jul 18 at 12:25 AM
    Hi,

    We are purchasing a 2 bed flat under the shared ownership scheme. The full value of the property is £370,000. Our mortgage was approved, subject to valuation, and the report has come back saying the property is only worth £350,000. This is a massive 20k less than the HA want for it.

    Would it really be possible to negotiate down this much or is it unlikely? I reckon many people will be in the same boat as we have one of the cheaper 2 beds on a lower floor, they go up between 5-10k per floor.

    If not, would it be silly to find the difference (in our case £12,500) and be in negative equity?

    Everybody's views welcome.

    Thanks,
    Dan
Page 1
    • AnotherJoe
    • By AnotherJoe 8th Jul 18, 8:05 AM
    • 10,572 Posts
    • 12,088 Thanks
    AnotherJoe
    • #2
    • 8th Jul 18, 8:05 AM
    • #2
    • 8th Jul 18, 8:05 AM
    Why is the difference you need to make up £12,500 if the valuation difference is £20k?
    • BBH123
    • By BBH123 8th Jul 18, 8:51 AM
    • 745 Posts
    • 1,438 Thanks
    BBH123
    • #3
    • 8th Jul 18, 8:51 AM
    • #3
    • 8th Jul 18, 8:51 AM
    Why would you want to pay more than an independent valuer says it's worth.

    And if it's a Leasehold flat I'd walk away or at the very minimum do strenuous analysis of the lease because if you have any onerous ground rents / service charges / covenants you'll end up financially bankrupt and never able to sell the property. Always use an independent solicitor and not one recommended by the sellers

    You may have seen in the news the last couple of days the government are pulling out of help to buy leasehold new builds , likely houses, probably flats because of the Leasehold scandal, I would imagine a HA can be equally astute and there are some horror stories around .

    Do your research and have your eyes wide open .
    Last edited by BBH123; 08-07-2018 at 8:53 AM.
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    • HampshireH
    • By HampshireH 8th Jul 18, 9:03 AM
    • 909 Posts
    • 1,004 Thanks
    HampshireH
    • #4
    • 8th Jul 18, 9:03 AM
    • #4
    • 8th Jul 18, 9:03 AM

    ANOTHERJOE

    Why is the difference you need to make up £12,500 if the valuation difference is £20k
    The additional amount the share they are buying would cost?
    • danyalaziz
    • By danyalaziz 8th Jul 18, 10:53 AM
    • 33 Posts
    • 5 Thanks
    danyalaziz
    • #5
    • 8th Jul 18, 10:53 AM
    • #5
    • 8th Jul 18, 10:53 AM
    Hi,

    You are right. It would be unwise to pay over the valuation even if it is perfect for our needs.

    It is a leasehold flat, with a lease of 125 years as per government guidelines for shared ownership. Ground rent is 0 until staircased to 100%, I haven't read the draft lease yet so I don't know how it's calculated thereafter.

    Is there anything in particular we should look out for in the contract/lease? Buying a house in the local area is out of budget therefore a leasehold flat is our only option.

    Thanks
    • AnotherJoe
    • By AnotherJoe 8th Jul 18, 11:38 AM
    • 10,572 Posts
    • 12,088 Thanks
    AnotherJoe
    • #6
    • 8th Jul 18, 11:38 AM
    • #6
    • 8th Jul 18, 11:38 AM
    The additional amount the share they are buying would cost?
    Originally posted by HampshireH
    I doubt the shared ownership scheme would be interested in taking a share of the overvaluation portion though. So OP is likely to have to stump up the whole £20k.
    Definitely need to check that anyway.
    • danyalaziz
    • By danyalaziz 8th Jul 18, 1:17 PM
    • 33 Posts
    • 5 Thanks
    danyalaziz
    • #7
    • 8th Jul 18, 1:17 PM
    • #7
    • 8th Jul 18, 1:17 PM
    Barclays will lend me enough so itís just a 12,500 shortfall. I imagine itís all to do with the share required.
    • jonnygee2
    • By jonnygee2 8th Jul 18, 5:26 PM
    • 308 Posts
    • 307 Thanks
    jonnygee2
    • #8
    • 8th Jul 18, 5:26 PM
    • #8
    • 8th Jul 18, 5:26 PM
    Someone's valuation is wrong. Going off what you know of other properties in the area, what do you think? OR do you have a link?
    • danyalaziz
    • By danyalaziz 8th Jul 18, 9:00 PM
    • 33 Posts
    • 5 Thanks
    danyalaziz
    • #9
    • 8th Jul 18, 9:00 PM
    • #9
    • 8th Jul 18, 9:00 PM
    I either think the HA's valuation is wrong because maybe the market isn't where they predicted it would be atm, or the surveyor has somehow not been told by the HA when he went to visit that it includes a 20k parking space. I don't know yet.

    Attached is a link for the same development but 385k cause it's on a higher floor (without parking) - https://m.primelocation.com/new-homes/details/47765325?search_identifier=f7c847b595cd8e29661aac2 a4b734836

    This development is right next to ours, and prices seem even higher - https://m.primelocation.com/new-homes/details/47790039?search_identifier=f7c847b595cd8e29661aac2 a4b734836

    Thanks
    Last edited by danyalaziz; 08-07-2018 at 11:22 PM.
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