Newspaper article The Evening Standard (London, England)

We're Puzzled by PS110k Valuations Gap

Newspaper article The Evening Standard (London, England)

We're Puzzled by PS110k Valuations Gap

Article excerpt

Byline: Fiona McNulty OUR LAWYER ANSWERS YOUR QUESTIONS

Q MY BOYFRIEND and I are trying to buy a share of a freehold flat and our offer of the asking price, PS390,000 has been accepted. Our home buyer survey has valued the flat at the price we offered but now the lender's "reinstatement valuation" is PS280,000. Why is there such a difference between the figures? Our mortgage has been approved -- but should we be concerned?

A THERE are two valuations for a property: the market value -- which is the figure it should sell for on the open market --and a reinstatement value, which should cover the cost of demolishing a damaged property and rebuilding it using the same materials.

It is extremely important for the reinstatement value to be accurate because buildings insurance cover should always equal at least the reinstatement value of the property.

If a property is underinsured and there is a claim, it is likely that any settlement figure will be reduced accordingly. Clearly the surveyor who carried out your home buyer survey considers the price you are paying to be accurate.

Your lender's valuer considers the reinstatement value to be PS280,000 and so you should ensure that the level of cover under your landlord's buildings insurance is sufficient to cover your flat and the various other flats in the building.

If you think that the lender's valuation is incorrect then ask the surveyor who carried out your home buyer survey to confirm the reinstatement value of PS280,000.

Q I AM living in a one-bedroom flat that I bought in December 2011. Next year I want to buy a bigger place -- either a two-bedroom flat or a house -- and I would then rent out my current flat. What sort of stamp duty will I have to pay? Since I will be letting my current flat, will that turn it into a buy-to-let property? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.