Professor Property Advice

My old school friend and I have decided to take up a Shared Ownership offer in the Royal Artillery area of Woolwich, London. This was done through Moat Home Ownership. They had a brand new apartment on sale for £285,000 and we bought into 55% of it (August 04) and got the necessary mortgage from a lender. All well and good we thought. Last month we had it valued by an independent (and Moat approved) value who has told us that the property is now worth £205,000. A drop of £80,000 in just 18 months! Firstly, how can this be possible? Have you ever heard of such a case? We obviously went into this trusting a government approved scheme. Don't forget it's designed for first-time buyers as a way to get on the ladder (not to trap them for life). We are now in a situation where we can't afford to sell our share (it would cost us £32,000 for our share) and it seems that (after meeting with a mortgage adviser yesterday) that we can't buy out the remaining 45% at the new £205,000 rate. They said that a lender would not lend us the money for this as we were already owing on the property. Is this right? Have Moat done something illegal here? Could you advise on the route to take here as we're completely stuck and it just doesn't seem right? Has the property been knowingly overpriced and if so is there any steps I could take? I can provide much more info if required. Any facts or figures you like. Please get back to me as I really don't know where to turn at the moment. Thank you for your time.

I would get another valuation. It may be that the original valuation that you had done was wrong. If this is the case and it can be proved then there may be an argument to follow in your favour. If, however the original valuation was carried out on someone else’s behalf it may be more difficult. It seems very dramatic. Please keep us posted. People have been in this situation in the past, but if you can just live with it, you may find that in time the value will increase again and your ‘negative equity’ will go away. After all, you still have a share of a property, and your mortgage has not been affected by the recent news –the only thing that has changed is the fact that you’ve had it valued.

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