Having dealt with numerous valuations regarding the above process it may be that the following content will help you decide how to proceed with your redemption through selling based on some of the experiences that we have encountered with the redemption process for our clients. The content is only our opinion and it is important that you read and understand the relevant information pack regarding your particular scheme.
It is not possible to redeem/pay back your equity loan without having an RICS Valuation carried out on your property. If you are selling your property then there is nothing worse than arriving at exchange of contracts and finding that you need to complete this redemption process. This, in our experience, has happened on a number of occasions as in many cases your legal advisers are unaware of the process involved.
Taking account of the timescales involved in arranging the valuation and the determination of the amount to be repaid and the physical timescale in actually making the repayment, then this timescale could significantly jeopardise your sale.
On this basis therefore, it would be prudent to ascertain what is required prior to commencing marketing your property. Once you are fully aware of the process required then you will need to arrange for the Valuation Report
Our experience suggests that if you instruct the valuation too soon, then it may expire before you agree a sale or complete on the sale of your property. It would perhaps be better to consider instructing the valuation and beginning the redemption process as and when you accept an offer on your property.
The process of the valuation and redemption will run alongside your agreed sale. With this in mind, the redemption valuation can take account of your agreed sale price and confirm that it reflects current market value (please note that the redemption figure is based upon the higher of the agreed sale price or the RICS Valuation).
Perhaps more significantly, this will follow the timescale required in the redemption process but will run in conjunction with the sale of your property. In many cases, an agreed sale can take between 6 to 12 weeks to complete, which could be equivalent to the timescale involved with the redemption process itself.
Another advantage of following this process would be that the valuation for settlement will be undertaken at a similar time to your purchasers valuation carried out by their Building Society or Bank. In many cases, the valuation provided for lending purposes can differ as the valuations required by lenders tend to be specific to their purpose. As such therefore the valuation criteria for the lenders surveyor may differ from the Help To Buy valuation criteria.
For example, if you have agreed a sale at £200,000 and your RICS Valuation for your Redemption through Selling agrees the valuation at £200,000. It would be unfortunate if your purchasers Surveyor down values your property to £185,000, as it is likely that you would have to renegotiate your sale price most probably after your Redemption Valuation has been submitted to the HCA. As noted in the paragraphs above, HCA will take the higher of the RICS Valuation or your agreed sale price for the redemption figure.
In summary therefore, you may find that the best way to proceed is to:
- Make sure you are aware of the valuation process, who it is that you will need to instruct and the timescales involved in the redemption process.
- Instruct your property for sale.
- Once you have an offer on your property and you consider that you may well be accepting an offer then:-
- Instruct your RICS surveyor to carry out the Valuation on your behalf based upon the criteria required by HCA for the Valuation Report itself. (Request a Valuation)
- Instruct a solicitor who has dealt with the Help To Buy Redemption process previously.
- Submit the Valuation Report which should be fully completed and signed accordingly, this needs to be sent to Target.HCA@targetgroup.com with the address provided in the subject heading.
- The Valuation Report needs to be submitted within 5 days of you receiving the Valuation Report.
- It is likely that you will receive a redemption figure via your Solicitor within 2-4 weeks of making the application.
- You will then have 4-6 weeks to settle the redemption before the Valuation expires.
- If you get to 10 weeks and the redemption has still not been settled, then make contact with your surveyor to prepare for a desktop valuation – which will extend the valuation for a further three months – or arrange for a new valuation to be carried out.
Please note that this is only an opinion based upon the experience we have with the valuation process with regard to selling property and the kind of difficulties experienced by home owners. Every circumstance differs and it may be more suitable for you to follow a different process, especially taking into account geographical locations and the time it takes properties to sell in different parts of the Country. It is important to make sure you are aware of the redemption process before you agree a sale.
RJHarmer Ltd is a RICS registered Surveyor