How Are Shared Ownership Properties Valued?
Typically, shared ownership properties are valued by surveyors registered with RICS – the Royal Institution of Chartered Surveyors. The surveyor will usually visit the property to make the valuation, inspecting it both inside and out. He or she may also take into account the sale price of three comparable properties in the area. This will determine the open market valuation of the property.
Valuations When Staircasing a New Shared Ownership Property
If you already own a shared ownership new home but want to increase your share, you will have to get a valuation. Some shared ownership providers require you to use a surveyor they have pre-approved. Others, however, let you choose a surveyor independently, provided they are RICS registered.
You have to pay the full fee for the valuation. You should remember too that this valuation will not be used by your mortgage provider – it is just so your shared ownership provider can determine the value of the property. This means you may need to pay for another valuation so you can get the increased mortgage to pay for the additional share in the property.
If you don’t agree with the valuation, then you will initially have to discuss your concerns with the surveyor. You will need to provide evidence why you think the valuation is wrong, usually in the form of examples of sale prices of comparable properties in your area.
Your shared ownership provider also has an appeals process, but the decision of the appeals process is final and can result in the valuation of the property going either up or down.
The valuation report you get from the surveyor will usually include an open market valuation (the price the surveyor expects the property would sell for on the open market), and a valuation that excludes any significant improvements you have made to the property. You should remember that most shared ownership providers require you to inform them about planned improvements before you carry out the work.
So long as the provider approved the improvement work, the cost of the additional share of your property is based on the valuation excluding significant improvements.
Valuations When Selling Your Share
The process of getting a valuation if you wish to sell your share of a shared ownership new property is similar to the process of getting a valuation to staircase. That said, here are the main differences and some additional things you need to know:
• The first thing you should do if you want to sell your share of the property is to inform your provider and get a valuation.
• Your provider will use the open market calculation to work out your share and its share of the property.
• The valuation is normally valid for three months.
• Getting a valuation does not mean you must sell your home. When your provider receives the valuation, however, it will calculate the shares and will then send you a contract. If you wish to proceed with selling your share, you will have to sign the contract.
• You will normally have to give the shared ownership provider the opportunity to sell your share of the property before you sell it on the open market. This sometimes applies even if you own 100 percent of the property.
• The shared ownership provider retains its share of the property based on the valuation, even if you agree a sale price that is below this.
Getting a valuation can take time so you should speak to your provider as soon as possible if you are thinking of staircasing or selling your share.