Frequently Asked Questions
Yes, you will need to instruct a solicitor. Any redemption figures will be sent directly to your solicitor and copied to yourselves. When considering a solicitor, it is important to confirm that the solicitor has dealt with the Redemption process before, especially in relation to selling property.
Yes, we are fully aware of the valuation criteria. This is listed within the Help 2 Buy section of our website. We are one of the panel surveyors recommended by myfirsthome.org.uk to undertake the valuation work on your behalf. Please be aware that you can instruct your own surveyors but the criteria is stringent and failure to meet this criteria will result in the valuation you provide being rejected. If you are to instruct your own surveyor, it is important that you confirm the criteria to them directly.
Please see our comments on the procedures recommended for redeeming your equity loan while selling your property. Both the redemption process and the selling of your property can be considered at the same time. It would be prudent to be prepared to instruct the valuation for your redemption as soon as a price has been agreed for the sale of your property.
The valuation is valid for 12 weeks. This is from the date that the surveyor arrives at your property and carries out the valuation. If you need to extend the valuation time, then prior to the 12 weeks’ expiry, and we would recommend at approximately 10 weeks, you consider re-instructing the surveyor, to carry out a desktop valuation which will keep the valuation live for a further 12 weeks. This is, however, on the assumption that the values have not changed since the original valuation was carried out. You do need to be aware that in certain locations within the UK, the valuations change on a monthly basis, and therefore you may well need to reconsider having a valuation carried out in full.
The valuation needs to be submitted along with the relevant form located at the end of the customer information pack.
Yes. It is important that both processes are run concurrently, as any subsequent re-mortgage on your property will need to take account of the respective loan-to-value and your affordability. The loan-to-value issue and the redemption figures can only really be considered once you have had your valuation undertaken and you are aware of the valuation figure that will be considered by the HCA. Please see further details with our Redemption through Re-mortgage (link) on the Help 2 Buy page (link).
The process in total was estimated to be 12 weeks under the original scheme but this has now altered with Target. Some of the redemptions can be as quick as two weeks but Target will not provide a redemption figure until such time as the administration fee is paid – trying to contact Target can be where the time is lost. Once the figure is received from Target, then the redemption process could take up to 4 weeks to complete.
New-build premium is a premium associated with the purchase of a new property. Once a new property has been acquired and lived in, it becomes effectively second hand and is therefore comparable with every other property which is currently lived in. It is similar to buying a new car, whereby once you drive the car out of the showroom, it subsequently devalues, and this follows the same pattern with new-build initially. However, unlike a new car, where the value continues to depreciate, your now lived-in property will benefit from the growth in the housing market and will subsequently most likely recover any loss in its new-build premium. This is, however, very relevant to location, house type and condition. New-build premiums in certain locations may well be overcome by the length of reservation period. For example, if you reserve a property 6 months prior to moving in then the likelihood is, in a very strong market, from the time you reserve the property to the time you move in, the value is likely to have increased and this will have offset any new-build premium lost. In those areas which struggle with their saleability, then at times it takes a long time for this new-build premium recovery.
New-build premium is accepted as a valuation consideration by both the Royal Institution of Chartered Surveyors and the Council of Mortgage Lenders, although there is no defined calculation to offset the loss of a new-build premium against the initial valuation or purchase price. It depends very particularly on the location of the property, the strength of the market geographically and the particular property in question. An important consideration when it comes to the valuation of a new-build premium is the length of time since the original purchase of the plot. We tend to find that in a steady market, the longer the timescale between the redemption and the initial purchase price, then the more likely the new-build premium will have recovered and the growth of the housing market will have offset any new-build premium loss.
House Price Index is an index used by a number of lenders to calculate the growth in the value of your property since you initially acquired or purchased. The reason the lenders feel comfortable in considering a House Price Index as a form of valuation is because your property is new and modern and unlikely to suffer any issue of defect or damage. Lenders will use their own information regarding house price growth for your region to calculate an estimation of the value. For example, if you purchased a property at £200,000 and the lender/building society believe that there has been a 5% growth in your regional market within a 12-month period, then their estimation of your value would be £210,000.
In many cases the lender’s valuation will be a market value but the majority of lenders have their own internal manuals which instruct the surveyor to carry out a valuation in a certain way. The lender may instruct the surveyor to look for differing issues, either environmentally or locational, or indeed factors within the market which they deem may affect value. Issues with leases, length of lease, local authority housing estates, privately-rented apartments etc., all have an influence on the way a lender’s surveyor may approach a valuation. When considering a re-mortgage, particularly with a new lender, then the lender’s valuation will be critical to your loan-to-value, which is why it would be prudent to run the redemption process alongside the re-mortgage process.
The valuation will take anywhere from 15-30 minutes depending upon the size of the property. It is important to note that it is a valuation only and not a survey. In order to speed up the process for your redemption, it is likely that we would request information regarding your original plot detail, purchase price, purchase date, developer, etc., and also any detail regarding any subsequent sale. The majority of the work carried out for the valuation report itself is done with the comparable analysis and providing the information required by the HCA team. This tends to be done away from the property itself.
Zoopla, like lenders’ HPI projections, works on a geographical and regional house price inflation figure. This fundamentally means that the way Zoopla considers your value is the way it will consider a value for properties that may be as far as 50 miles or so away and located in far better, or far worse, locations. It works on a generalisation and a regional calculation that house prices have progressed year-on-year by a certain percentage. An RICS surveyor’s valuation will take account of more immediate comparable evidence. With HOPS, one of the requirements is to consider values within a 12-month period and located within a 5-mile radius. In our opinion, even 5 miles from a property can significantly distort a value. We would suggest that if you were to go 5 miles in every direction from your own property, you would find properties and locations which would be significantly better or significantly worse. Our intention is to look at comparable evidence that lies within a ¼-mile radius and if possible, most directly located on your development itself and within a similar or same house-type. This dictates a very specific value for your property and your location as a whole. This is why there is usually a fundamental difference between a Zoopla estimate and an actual valuation for market value.
The issue with valuation is that it can only ever be subjective and although comparable evidence can be used to make the value as objective as possible, it is still up to the individual RICS surveyor to consider specific comparables and to apply his knowledge and experience to determine whether the type of property being considered offers a fair reflection of value for its accommodation and also more specifically, within its location. This is fundamentally why two values will very rarely be the same. For example, you have five prospective purchasers look at your property, two of which will dismiss it due to either location, style, design, decor, kitchen, bathroom, lack of en-suite, south-facing garden, north-facing garden – numerous issues. Two prospective purchasers may consider it to be of interest and one purchaser may believe it’s the house of their dreams. All five prospective parties have a different consideration for value. The old adage of ‘a house is worth what somebody is prepared to pay for it’ doesn’t really work if you consider that two of the prospective purchasers may have considered a value to be zero, two may have considered the value to be reasonable and one may well have overpaid considerably more than market value. For all five, there is a different ‘prepared to pay’ value. With this in mind, it would tend to confirm the original statement that valuation is very subjective. There is no correct valuation but an RICS surveyor will draw upon experience, comparable evidence and marketing knowledge, to determine a fair and reasonable market value. Unfortunately, RICS surveyors will draw upon differing experiences, which is why at times values can differ quite significantly. A surveyor’s role is to try and interpret a value – and not set it.
The HCA will take the higher of the valuations for your redemption figure. If you have sold at a higher figure than the current market value provided by your RICS surveyor then it will be the higher sale price agreed that will be considered for the redemption. If the RICS value is higher than the sale price, then the RICS value will be considered for the redemption value.
The valuation report is a PDF which is pre-signed and emailed directly to you. We do not normally provide a hard copy but this can be provided if requested.
Once the valuation has been arranged, then prior to releasing the report, you will receive an email confirming the appropriate terms of engagement and confirmation of the appointment time, along with the appropriate methods for payment. Details of payment can also be found on our website.
The intention is to provide the report to you within 3 days of the initial valuation taking place. In the majority of cases the valuation report is provided sooner but as the valuation criteria is very specific regarding the comparable evidence, this part of the report has to be accurate and if there is a delay, it is usually because there is a difficulty in obtaining the relevant comparable evidence, or indeed, physically speaking to those people who can provide it.
The validity of the valuation lasts for 12 weeks from the date of the initial inspection. If it is likely that the valuation date will expire after 12 weeks, then it would be our recommendation that you make contact with either ourselves or the previous surveyor to instruct them to reassess the value and confirm whether a desktop valuation is acceptable, but to do this at approximately 10 weeks i.e. 2 weeks before the valuation is due to expire. This can be done by emailing ourselves requesting a desktop valuation. The cost of this valuation report is £50 including VAT.
RJHarmer Ltd is a RICS registered Surveyor