Valuing a property

JA Morgan / Valuing a property

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Before approving your mortgage application, the lender will want to check the property's value. To do this, the lender will usually arrange for a qualified valuer to inspect it. You normally have to pay for the valuation, even if you do not go on to buy the property. However, some lenders do not charge for valuations, so check.

The valuation is carried out purely to help the lender decide whether it is willing to lend, and if so how much, on the property you want to buy. The valuer makes a written report to the lender. The lender does not have to tell you the contents of the report, but some lenders will give you a copy or at least tell you about any serious problems which may have been spotted during the valuation.

The valuation is not an extensive survey and will not necessarily identify all the repairs or maintenance that might be needed. For a full picture, you should consider having a complete building survey or a mid-range "home-buyer's report" carried out. This can usually be done at the same time as the valuation.

The value of a property will be affected by a mix of many different factors. These will include its size, location, type, state of repair, local environment, assessment of how easily it would be to re-sell in the future, and prevailing market conditions. Valuation can never be exact, but most properties are valued at something around the price for which they change hands. However, sometimes you may find that the valuation identifies significant problems, or that the property is formally valued at a significantly lower price than the offer price. In these circumstances you may be able to re-negotiate the price with the seller. In the most serious cases, you may even decide to withdraw your offer, or the lender may decide that it is not prepared to lend.

If the property lacks basic amenities such as running hot and cold water, an inside toilet or a bath/shower, a condition of the mortgage would be that you install these within a certain timescale.

Problems may possibly arise with the following properties:

• Properties which are not expected to last for at least 60 years from the time the mortgage is provided;
• Leasehold properties (usually flats) with leases for less than 60 years*;
• Converted flats which are not structurally sound or where the lease does not contain adequate conditions for the shared areas (for example, stairways and hallways) of the building; or
• Freehold flats (because of legal difficulties in keeping the building in a good repair).
* In some parts of Central London, such as Mayfair and the West End it is common for properties to come with leases of less than 60 years. Although this will reduce the number of lenders willing to lend on such prperties it does not mean purchase via a mortgage is impossible.

 

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