Unfair house valuation - WWYD?

[Klaudiagal]

We have bought a 4 bed property less than 2 years ago in Teddington for 550k. It was in a very bad state, but since then we insulated the house from outside, insulated the attic, changed roof over extension, rewired, changed Lino flooring into oak wood and porcelain tiles, new bathrooms, new kitchen, replastered walls and ceilings and put a beautiful bifold doors to patio.. according to property price index, the value of property went up to 588k (did not take into account any work we did), but in the meantime we had 3 estate agent valuations between 680k to 735k (this one last week).
As we are planning to remortgage soon, we requested property valuation from our current mortgage providers, for which we were charged over £500, and we estimated the property value at 700k based on previous valuations. They sent a 20-sth year old girl who obviously was very inexperienced (she asked whether the house was built in 1998, when it is built in 70s and previous surveyor even gave us an exact year based on the specific way it was constructed). I can add that the house is in Teddington 5 minutes from Thames and bushy park, so definitely not an area that decreased in value recently. We got valuation updated today to 580k!! Less than what property price index would suggest!!! And after all the extensive renovations we did.
I called the bank and asked whether they can request a reasoning behind going that low, especially that the house next door is on the market for over 700k, but they refused to do anything or provide any details behind this valuation.
AIBU thinking that since I paid £500 for this valuation, I should have a document showing the reasoning behind it?
What do I do now? Can I put a complaint? I think it is just a blatant incompetence OR bank trying to get more expensive mortgage out of me. Anybody can advice ? Mumsnetters, please help, I am just gobsmacked!

I'd be annoyed if I'd been charged 500 pounds for something I wasn't then allowed to see or properly challenge! So I get that bit of it.

But....lender valuations are risk averse, and they are based on comparable properties in your area that have sold, not asking prices. While it's possible the valuer made a mistake, I think it's more likely that you won't get a substantial change in valuation until something very similar to yours sells for a higher price.

I had a similar issue when our ex-council flat, which we'd renovated throughout, didn't have any comparable sales nearby - like a lot of London the area is a big muddle of ex council flats next to high spec new build flats next to Victorian terraced houses, so while we were low rise, other flats were high rise, we had a big garden, other flats nearby didn't, we were solidly built with low service charge, newer builds were pretty flimsy and high monthly service charges, etc etc. We got offers we were happy with, but both our first and then our second buyers had to pull out as their mortgage lenders wouldn't value it at the price they were willing to pay. In the end we were able to wait for a buyer with a much higher deposit (think they had about 40%), which made the lender more reassured. It was a nightmare (really fun 18 months for us...) but it was valued by three different mortgage lenders and one independent and they all said the same thing, that they had to base on square footage and recent comparable sales and couldn't take into account renovation work on its own.

Good luck with the remortgage, hope it works out

@ClarasZoo

If it’s BTL (is it?) given how hard it is to remove tenants now they probably value them like old “sitting tenant” properties, 30-50% discount...

No it is not. I live here with my partner and child and it is not changing. It's the other house that people brought up as cheaper that had students in it.

OP I’m not sure if anyone else has said this so apologies if so. When we remortgaged with NatWest we were around 60% ltv. They said it was pointless revaluing as we were already on the lowest rate. Ie even if the property had increased by £50k it wouldn’t make a difference to the rate we’d get. Perhaps this is why they won’t send you the form?

@Bluntness100

I think the issue here is firstly it’s less than two years since you bought it. Secondly you habe spent 60k, and looking at recent sold prices (which is what you need to look at not prices property is marketed at, it would seem your property is valued correctly or at the low end of correct, but you paid far too much for it less than two years ago, if it was in that bad condition.

So for example in the condition you describe, if you’d paid 475 which was in line with other property sales at the time, then spent sixty k and it was valued at 580 you’d have made a profit and made your money back on the renovations. But because you paid so high it is not working out that way

You need to base it on what the recent sold prices are, not what someone is marketing their property for. Nothing has sold at that price in your area. The fact a neighbour is marketing at that, doesn’t mean that’s the properties value. It could be highly over priced.

However on saying that there is nothing coming up for having sold for 550 in the last five years so something is adrift here, or I’m missing it?

There is nothing that sold on my estate that is comparable as the other house was run down student house - hence the low price. And there is more to take into account t than just one other price - otherwise what would be the point of her actually setting her foot here??

All I would say is the fact that you have spent money on it doesnt necessarily translate to resale value. It depends on whether the money you spent was what buyers want etc.

@TatianaBis

You can query the valuation but I can tell you all mortgage valuations are coming in low at the moment. I’m currently buying an investment property in SW London, not far from Teddington but further in. And the valuation has come back very low. That’s actually in my interest as a buyer & I have used it to negotiate the price down. But there’s a reason mortgage rates are rising and valuations are low - economic downturn and price falls are expected due to Covid + Brexit.

So you might go through the whole process again with the same result.

Fine, but Natwest is blocking me from querying the valuation. They actually refused to submit the query form.

I’m still not really sure why you get a better mortgage offer if it’s worth more? It tends not to work like that. But as you’re not selling you’ll eventually get your money back so I’d not worry

The only reason I could understand is if you wished to remortgage and take money out, so needed it to be worth more. You don’t get better “deals” the more your house is worth.

However on saying that there is nothing coming up for having sold for 550 in the last five years so something is adrift here, or I’m missing it?

I linked one earlier @Bluntness100

We had similar in Ealing. It was ex-council and right next to the station. Spacious, bright, extremely convenient. Roughly £200,000 less than anything of a similar size. We were shocked, complained, but withdrew from the sale (we were buying) because we figured anyone we sold it to would have the same problem.
6 weeks later they phoned us back to say they’d made a mistake. We had a gift of about £500 from them.....but it didn’t change that we’d lost the property.

No advice- but our experience!

@Klaudiagal

Is this the same estate?

www.zoopla.co.uk/for-sale/details/58181763/?search_identifier=b379bbb6b0d497f7829c84ea2ba1ec71

@Blimeyoreilly2020

To be honest the fact that the surveyor didn’t recognise the house (& estate) as 70s is shocking but actually, more shocking, is that surveyors are meant to do pre-survey checks which should have easily highlighted the property’s era to them. Issue #2 is that the corporate survey companies expect their surveyors to do 6 in a day - it is not compatible with doing a good job!! You should definitely take this further with both Natwest, who are indeed violating your consumer rights, and also L&G who should be answerable for questions pertaining to their work. Finally why are you getting a VAL done before agreeing a mortgage? Always shop around first.

Thank you, exactly my point!

And to answer your question, I wanted to stay with the current mortgage provider (Natwest) and wanted to have fair valuation considering work that has been done as otherwise they would be using Property price index to evaluate my property which came up with higher price ironically:)

You don’t get better “deals” the more your house is worth.

Of course you do, if your house becomes worth more but the loan amount remains the same your LTV improves. Beyond a certain point it doesn't matter, but the rates that are available to you at 60% LTV are much better than those available at 90%.

@Bluntness100

I’m still not really sure why you get a better mortgage offer if it’s worth more? It tends not to work like that. But as you’re not selling you’ll eventually get your money back so I’d not worry

The only reason I could understand is if you wished to remortgage and take money out, so needed it to be worth more. You don’t get better “deals” the more your house is worth.

You do if it affects your LTV ratio

As OP said earlier, it'll unlock better deals

We went through exactly the same process as OP. The valuation added £50k to the original price. This meant we had £50k more equity. This meant we got down to the next band had 0.05 interest reduced just like that.

@bathmatty,,sorry, missed that,,

@Sleepdeprivedmama1

You can only go to the ombudsman when you disagree with the findings of an informal complaint. Put in a complaint over the phone or writing, they'll assign someone to investigate and then you'll probably get a "goodwill" partial refund.

If you disagree with their investigations, then they'll provide you next steps on how to contact the ombudsman.

Yup:) went thorough the info and already put formal complaint. 5 days to resolve. Thank you for pointing it out though:)

@Handsnotwands

OP I’m not sure if anyone else has said this so apologies if so. When we remortgaged with NatWest we were around 60% ltv. They said it was pointless revaluing as we were already on the lowest rate. Ie even if the property had increased by £50k it wouldn’t make a difference to the rate we’d get. Perhaps this is why they won’t send you the form?

The lowest valuation pushed us below 20%. The valuation of 640 (let alone 700) would give us over 30%, so in terms of rates difference it is massive at all account, and very beneficial to the bank... We did evaluate if it worth for us to have it valuaed higher, and yes, it was...

A mortgage valuation is always much lower than a sales valuation. It is usual, IME, to be charged for a mortgage valuation, but not for a valuation by an estate agent. The estate agent valuation is normally artificially high.

If the OP has a high LTV eg 90% she won't have access to the best rates.

@Bluntness100

I’m still not really sure why you get a better mortgage offer if it’s worth more? It tends not to work like that. But as you’re not selling you’ll eventually get your money back so I’d not worry

The only reason I could understand is if you wished to remortgage and take money out, so needed it to be worth more. You don’t get better “deals” the more your house is worth.

If the property is more expensive, they will give me better rate. With this price (580) change they will be taking £260 a month more in my monthly mortgage payment than if it it was valued as 700, or even 625...

I’m actually quite amazed at the number of people who aren’t aware that your mortgage interest rate will be better (/lower) the more equity in your property you own, obv totally understandable for those who’ve never had a mortgage though. Our best ever rate tracked 0.5% below base rate - was a true gift when rates plunged post 2008 crisis🤣....but when I complain these days my Mum reminds me that way back when they were paying 17%😱...

The valuation of 640

You're not likely to get a valuation of that full stop.

@TatianaBis

The valuation of 640

You're not likely to get a valuation of that full stop.

Said an experienced valuator;)

Do yourself a favour and read few comments here of people who actually do this job.

OP zoopla says prices in your specific area have dropped 15% in the last year.

www.zoopla.co.uk/house-prices/london/teddington/down-road/tw11-9ha/?pn=2

How much do you actually need the house to be valued at to get a better rate? Is it 625?

Sorry for missing earlier that you had spent 60K on it. I do think that for a house not in a massively poor state (which you said about your house as compared to the student let) then that is a lot for no structural work. This means you have gone higher spec and why not if it's what you want but I don't think that means you can expect to recuperate the cost if you sell (which is what the value is). I wonder if you've specked higher than the area usually commands? In which case it is value for you but not cash value. In a falling house market I think you might have to put up with a lower value than you want. Hugely frustrating if it makes £260 a month difference on your mortgage but hopefully in the future that will improve.

Sorry, misread it! It is around 15K average reduction, not 15%. Still making mortgage companies nervous though and if you think your house is work more than the average in your postcode than the k reduction will also be more.

OP, I sympathise. We had a similar problem a few years ago when remortgaging with Nationwide, a new lender to us.

We paid a product fee upfront of £200 for a seemingly competitive mortage deal. The valuer did a "drive-by" valuation and undervalued by a significant amount. By which I mean significantly less than we paid for the house several years previously. We live in a "tourist" town where the house prices have sky-rocketed since we moved here 20+ years ago, so we knew that market value and lender value would likely be very different but even so we were pretty shocked.

At the time, the most recent property sale in our road was five years previously. This was a house owned by a hoarder which was in a terrible state, unmodernised, much smaller than ours, garden a third the size. Our valuation from Nationwide was even less than the amount this house sold for.

Nationwide then declared that the low valuation meant we were no longer eligible for the great deal and had the choice to either lose our £200 and go elsewhere or choose their next-best deal which was rather less financially attractive. We had spent a lot of time sourcing the mortgage and waiting for them to faff about with the valuation and so decided to stick with Nationwide and take the next-best deal. Turned out this had no product fee attached to it but they still refused to refund our £200. So we had a more expensive mortgage and a £200 loss. Win-win for Nationwide!

They too refused to provide any detailed information about or reasoning for the low valuation. We pushed very hard for them to send a valuer in person, which they also refused to do. I even discovered, during one of many irate phone calls, that nobody even actually "drove-by". They just sat on their arse looking at Zoopla!

We were advised that this was not an uncommon practice and that we should pursue it with the ombudsman but, frankly, as full-time workers with young kids, we didn't have the time or the energy.