‘Builders push people into shared ownership’
Every time the couple get a down valuation, they have to pay a surveyor on their side another £275 to re-value it – as valuations, in this instance, go out of date after just three months.
It is starting to feel like moving could be an impossibility, as the family continues to incur costs to sell it.
Ms Theron just had a third down valuation from a different lender which uses the same surveyor as Nationwide. They also decided the flat was worth just £225,000.
She said: “I’m at a loss. I don’t know what else to do. This whole process is just awful.
“The boys love football and basketball. Four people in a two-bed isn’t practical. We’re living on top of each other. It’s affecting the functionality of our family.”
Steve Duck, director at London-based Reside Mortgages, said he has seen a rise in down valuations. This month, three of his clients have been confronted with them – one of which saw a £900,000 property drop by £40,000.
Mr Duck said: “We mainly deal with people inside London and property appreciates a lot faster here. But outside London, it’s even more important to have a plan if you opt for shared ownership.”
Promoted as a way for struggling first-time buyers to get their foot on the housing ladder, shared ownership allows people to buy a share of a property rather than the whole thing. As they continue to live there, they can increase this share – a process known as “staircasing”.
But Mr Duck said: “You can only staircase a limited number of times before you have to buy 100pc. And not all lenders will allow you to staircase above 75p. After that, they expect you to buy all of it. There’s all these catches that buyers need to be aware of.
“If the value falls, then staircasing becomes cheaper. But it can be a gamble, especially if it’s a newbuild. We’ve seen some builders push people into shared ownership. You need a plan in place – are you going to get a pay rise? Could you use some inheritance to buy a greater share?”
