The importance of an accurate Help to Buy Valuation when staircasing
Home owners with a Help to Buy: Equity Loan with Target HCA will often consider repayment of their loan after five years, this being the point at which interest becomes payable on the loan at 1.75%. With house prices in much of the south east having experienced little gain in the last 12 months, or in some cases negative movement, home owners with a Help to Buy: Equity Loan may wish to take advantage of this and repay their loan in full or in part (sometimes known as ‘staircasing’). Staircasing payments must be a minimum of 10% of the property’s prevailing market value. For the same reason, those owners with Help to Buy: Shared Ownership with Orbit may be considering purchasing the remaining shares in their home.
What is staircasing?
For either Help to Buy scheme, one of the first steps in the process of staircasing is to obtain a market valuation for your property. Orbit and Target HCA Help to Buy schemes require that the valuation report is prepared by a RICS Registered Valuer.
The amount to be paid when staircasing is calculated from the market value determined by your appointed RICS Registered Valuer. Therefore the importance of this figure cannot be understated. Taking a typical example property worth £400,000, if the determined market value was overvalued by just 5% this would result in £4,000 being overpaid on a 20% loan or purchase of 20% additional shares. This error would not be corrected at the time of eventual sale. The home owner must therefore place a lot of trust in their Surveyor’s ability to arrive at an accurate value. At the same time, the instructed Surveyor takes on a considerable responsibility knowing that that their valuation figure will directly determine the amount of a loan to be repaid or the cost of additional shares in a property. In this period of market uncertainty it is particularly crucial that a RICS Registered Valuer, with knowledge of the local market, undertakes a comprehensive review of comparable market evidence.
We have carried out hundreds of RICS valuationsfor properties all over the High Weald. By appointing Lawrence & Taylor – Chartered Surveyors you will ensure that your valuation is carried out by an experienced local Surveyor with due care and skill.