Posted on 16 September 2013 by
Another one of my colleagues has recently dealt with a far more unpleasant situation regarding a valuation going wrong. He was helping out a lady to buy a new buy to let flat in Stratford, East London. This client lives in the area and already holds a flat that she lets out nearby. She knew the market and wanted to build her portfolio in an area of London that is rapidly growing. Anyone who went to the Olympics, or who has subsequently gone to the re-opened Olympic Park, or even Westfield can see things are changing.
My colleague’s client intended to buy the two bed 1930s flat for £223,000. A down valuation of maybe £10-15,000 was expected as the client was buying at the top of the market for the area and the property type. However when the report came in, again looked at by a surveyor from outside London, both my colleague and his client were rather shocked to read the following wording in the report;
The property is situated within an historically poor class location, with the immediate surrounding area comprising a large amount of local authority properties.
The valuer might have well said on their form that the flat is in some sort of underclass ghetto, filled with undesirables with dubious character. As such the surveyor then declined to put a value on the property, stating
The property is not considered suitable security for the mortgage.
So, living in a historically poor class location precludes a client from getting a mortgage now? I could not decide what was more offensive; the wording, the suggestion that an area of local authority housing dragged down the locale or the fact that poor people lived nearby it was not suitable for a mortgage. And, by association as the client lived in the area, she too dwelt in a Dickensian slum nightmare.
I can just imagine the rather shocked valuer running back to his Lexus from the inner city hell that is Stratford, his soft leather loafers picking up the detritus of urban poverty, before locking himself and driving as quickly as he can down the M11 until he reaches somewhere nice and middle class where he can finally let his guard down. Maybe Saffron Walden (no offence Saffron Walden).
Honestly, this comes from a different era, not a multicultural inclusive and diverse London, but a 1950s class obsessed provincial town. Perhaps Mr Chumley-Warner has a new job as a Home Counties property valuer.
Anyhow, my colleague and the agent questioned the valuation and the wording and it was confirmed by the valuation firm that is was unacceptable, and that phrase had been deemed inappropriate for a good few years. Another surveyor went out to the flat, and an estimate of £223,000 was returned and the offer duly produced.
Many surveyors do a good job, providing well thought out and researched valuations on properties that are fair to all sides. But for the ones that do not make sure that your professional advisers are doing everything they can to challenge and overturn inaccuracies. The cases above are extremes, but there are issues with valuations all the time and you need to make sure that you have someone fighting your corner for you. If it does not look right it needs to be investigated and questioned until a satisfactory conclusion is reached, especially if the valuer is not from the local area and lacks that vital neighbourhood knowledge. Whether you are buying to live or to let you need to know that you are getting the best deal you can, on both the mortgage and the property value.
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