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!

@Africa2go you have made the mistake of presuming the properties are on "council estates". They aren't.

@allaboutthecrisps

The question is where did you get the info that the prices went down by 17k?

Zoopla. It said that average prices went down by average of 15K in your postcode but your house is above average value in that postcode hence my estimate of 17K.

Well, if you treat those website as such a valid indicator, Rightmove estimated value of my property at 621kz Go figure.

Well, if you treat those website as such a valid indicator, Rightmove estimated value of my property at 621kz

They seem to be a reasonable estimate of general price increase or decrease in the specific areas even if their actual prices are sometimes a little off. Do you think prices are not falling in your area?

Zoopla gives a range though? It doesn’t just give one figure.

YANBU. I wanted to remortgage recently and paid hundreds for a valuation and why, I have no idea, as they didn’t even see the house so I can only assume someone hopped online and got a valuation within seconds which don’t take into account any improvements we’ve actually done in the house. Infuriating OP and yes I would push further if I were you.

You aren’t the only one I’ve heard of who’s having a problem with Natwest re: undervaluations. They seem to be wanting to put all mortgages in higher LTV categories to make more money. Try HSBC - I don’t recommend them usually but during the pandemic their size has ensured they have remained fairer than others and their valuers seem to understand larger properties.

This is why the new mortgage gte is coming out. People have unrealistic ideas about how much their house is worth and the bank is slapping that right down on valuation and won’t lend.

You cannot rely on Zoopla for estimated values, it’s done on algorithms.

Absolutely. Banks don’t want to lend higher LTV as it’s risky. Especially now when mortgage affordability is so tight. House prices are xxxx salary when banks will only lend, for the most part 4.49x salary. There are ceiling caps. Particularly now there are issues with banks lending on people who’ve been on furlough, taken seiss etc. Banks can see a correction coming which is why they don’t want to lend at 95%. To say they are trying to force people into higher ltv is daft. They don’t want the risk. The FTB market is drying up and the next rung of medium size houses has too. Partly because of all the above and partly because the new HTB schemes rules out 2nd movers and enforced a regional price cap.

Banks don’t care what you spent on it, they care how much it’s actually worth in sold prices. So if you don’t pay, how much will they get back. Some places are running hot. A lot of places are seeing house prices fall. EA and sellers haven’t cottoned on to this yet. The banks have and it is that which is stopping houses moving. People then find themselves needing a high LTV and banks won’t lend on it for those moving on. Or in the case of FTB they can’t get another 10% quickly enough.

There is a reason the new 5% mortgage gte is coming. In our area houses are staying around for months and not selling. This that do sell often come back on the market with a slapped down value because banks won’t lend what the EA and seller said they should get.

Itisasecret has it, there are many places that are definitely in a bubble (which will always crash). I am Devonian, don't currently live there but family do. Currently crackers, 24 hours online to sell and people are buying getting in bidding wars without actually seeing the property . It is beautiful but infrastructure is not that great (good luck multi household zoom meetings and training it to London twice a week) and local stable well paid work is very hard to come by. A hard winter and some job losses/ actually we want you back in the office more could well have a big impact on people's ability to live the Devon idyll and a likely correction in prices...

Yes it really has. Mortgage affordability rules are tight. They are also reaching the cap in a lot of places on salary multiples. Some places are running hot (like I referred to in my post). A lot aren’t. Which is why banks are refusing to lend and it’s why the new mortgage GTE is coming out. The government are taking the risk of negative equity and the banks will not in the current market.

Which is why chains, etc in a lot of areas are collapsing. The banks will not lend and for the most part, they are the ones who dictate the housing market for the majority of people. Unless you’re a cash buyer of course or have a significant salary where it’s really not relevant.

I live in the SW and houses are not selling and coming back on the market for significantly less than they went on for. (Not Devon but rural).

@GrumpyHoonMain

You aren’t the only one I’ve heard of who’s having a problem with Natwest re: undervaluations. They seem to be wanting to put all mortgages in higher LTV categories to make more money. Try HSBC - I don’t recommend them usually but during the pandemic their size has ensured they have remained fairer than others and their valuers seem to understand larger properties.

Yes, that literally seems to be it sadly...

@allaboutthecrisps

Well, if you treat those website as such a valid indicator, Rightmove estimated value of my property at 621kz

They seem to be a reasonable estimate of general price increase or decrease in the specific areas even if their actual prices are sometimes a little off. Do you think prices are not falling in your area?

According to property index price which is government measure to not only the area but the price of property - no, they are not. And it is the official measure that gives you a view on specific property, not Zoopla general area estimate, which includes a lot of multi million houses in the are, and I bet they are falling..

@Itisasecret

Yes it really has. Mortgage affordability rules are tight. They are also reaching the cap in a lot of places on salary multiples. Some places are running hot (like I referred to in my post). A lot aren’t. Which is why banks are refusing to lend and it’s why the new mortgage GTE is coming out. The government are taking the risk of negative equity and the banks will not in the current market.

Which is why chains, etc in a lot of areas are collapsing. The banks will not lend and for the most part, they are the ones who dictate the housing market for the majority of people. Unless you’re a cash buyer of course or have a significant salary where it’s really not relevant.

I live in the SW and houses are not selling and coming back on the market for significantly less than they went on for. (Not Devon but rural).

Affordability here is not the issue as I am borrowing the same amount of money regardless of valuation.

So, as much as what you are saying is correct, it has no relevance here

[quote RedMarauder]@Africa2go you have made the mistake of presuming the properties are on "council estates". They aren't.[/quote]
The OP says "The property is part of ex council estate"

Affordability here is not the issue as I am borrowing the same amount of money regardless of valuation.

So, as much as what you are saying is correct, it has no relevance here

But won't a better LTV give you a better rate? I think the banks are tightening everything up, after all they look after themselves first.

• Affordability here is not the issue as I am borrowing the same amount of money regardless of valuation.

So, as much as what you are saying is correct, it has no relevance here*

Of course it does, the bank doesn’t care about you as an individual. It cared about its risks as a whole.

If the market isn’t supporting the house price that sellers and EAs think it should. Banks will not agree to a mortgage at the wanted value, if they think the property is overvalued, no matter if you can afford it or not. It’s a risk to them. Which is why the gte is coming out.

Exactly because house prices in many areas are OTT, banks won’t lend on them at the desired price, they won’t lend high LTV either so the Government are taking the high ltv risk to try and get transactions going again. Despite what people read in the news and bar the odd exception, house prices aren’t rising. Banks command the market and they’ve got no confidence which is why they aren’t lending. There is a big disparity in what people think they should be getting and what the bank is willing to lend.

It’s not about what you can afford, the bank doesn’t think your house is worth that much, so they won’t value it at that. It’s completely relevant and happening up and down the country which is why the Government have stepped in to keep transactions moving.

the Government are taking the high ltv risk to try and get transactions going again.

As soon as I read about this I was like the market is so fecked, this is just another prop. I think we are in for yrs of stagnation in many areas as people can get on but they can't move up.

Which is what is happening now. It’s why people can’t move, houses aren’t selling or the chain is collapsing and there are going on for much less. The banks call the shots and people haven’t caught onto the fact yet, the banks are slapping down sellers and EA and are not budging if they think you’re over valuing.

This is pushing people to need higher LTV, hence the govt intervention.

It impacts everyone with a mortgage, as op is finding out.

How did you get on with getting a copy of the report OP?

@Klaudiagal I was told 3 things that seem to apply here too.

1 Banks will always undervalue estate agents, sometimes by up to 30% esp in hot markets where there is more risk. Certainly the situation now.
2 All the unseen repairs you will lose money on them. I've heard seasoned estate agents say you may get 50% of what you put in, if you are lucky. It's why flippers can't just do those types of repairs and earn money.
3 there is a far smaller ceiling for ex local authority houses. So for example say you did 150k of upgrades and could get that back on a Victorian house, you may only get 30k back on that in an ex local authority home. They increase at a much more conservative rate than other homes.

This may explain why. Though I agree with you, the evaluation does seem low even considering the above. I'd have thought at least 600-650.

Also you are right @Klaudiagal they should absolutely provide a report. I hope you can get your money back.

All the unseen repairs you will lose money on them. I've heard seasoned estate agents say you may get 50% of what you put in, if you are lucky. It's why flippers can't just do those types of repairs and earn money

I think people pay far too much for places that need any work. I have come across people who don’t value their time when doing a place up and/or have no idea the cost of plasterers or central heating.
Yes you can make money from doing up places to flip. You just have to be realistic on your purchase price.

@TeddingtonSchools

How did you get on with getting a copy of the report OP?

So, few developments here.

1. got the report finally, they were blatantly refusing to provide any other info, and only when I mentioned that I know there is a valuation report and I paid for it, only then, after 2 calls I got it
2. from the report I got phone number to valuators office. When I mentioned the valuation price and explained why I think it is too low, there was a long silence, and she said they would definitely look into it as it seems low. They advised Natwest should give me 'post Valuation query' (pvq) form so I can start that process. Natwest is refusing to do so. So effectively I am unable to query valuation despite the fact I paid for it.
3. So I complained. And it was rejected. So now the case is with Financial ombudsman since Friday. I also complained about the fact they refused to disclose valuation info twice.
4. In the meantime, the valuators have been very helpful and advised me to put a complaint against them so they can use it to assess the valuation.

The fun continues...

@Eloisedublin123

A valuation needs to contain the rationale behind his the valuer arrived at the value (I’m a valuer!) Does your valuation contain no comparables and/ or rationale?

Thank you- knowing what you said, after they refused to give me any information on the reasoning behind the valuation saying 'there is no info we can provide you and nothing we can do' - I mentioned that I am aware of existence of valuation report on the back of any valuation and why are they refusing me to see it if I paid for it- at this point they sent it to me straight away...mind you, there was literally nothing in it that would give any meaningful explanation to it...