Tag Archives: property

What does a Valuer do?

Ruaraidh Adams CairnsProperty expert Ruaraidh Adams-Cairns explains the process of completing an independent property valuation during divorce

I understand, from working with clients during family breakdown for 20 years, that the process of divorce can be confusing and overwhelming. I believe that information can help: the more clients know about how things work, the easier it is to understand or at least not worry about one part of the system. I am often asked about how I go about valuing a property, or properties, and I hope this short blog can give a flavor of how I work in the collaborative process and outside it.

The first stage is go to the property and inspect it. In doing so, I will measure up and photograph it, checking its physical condition and how it presents to me as a valuer, and to a potential purchaser. This is all about getting to know the property physically, getting a sense of it and understanding its situation and context. Once back in the office, I’ll check the Land Registry to find out how it is owned and when it was last sold, or go through the deeds if it’s not registered, and check its full history. This means also looking at whether there have been any planning applications and what they have been for. After that, I’ll look around for similar properties in the market, and compare them to see what light they shed on the valuation and talk to agents in the area. The last stage in the process is to put all of these things together into a report, which I submit to the instructing solicitors.

There are inherent difficulties with property valuations. My opinion is just an opinion – one that is formed through settled process, experience and the cultivation of expertise, but an opinion nonetheless, and necessarily subjective. Different people, whether valuers or prospective buyers, may take a different view. The other major difficulty is that the property market is constantly shifting and evolving. It never stays still. A valuation is indisputably a snapshot taken at a certain time that needs to be reconsidered frequently if it is to remain up to date.

Considering these problems with the valuation exercise, clients often consider the short cut of obtaining marketing appraisals from estate agents. There’s no doubt that this is cheaper – even free – however, it is not without significant risk. Estate agents usually pitch their appraisals above market value, and sadly it is not unknown for client to seek to mislead or influence local estate agents in order to acquire a valuation at a level that suits them. Indeed, when working as a single joint expert where I am presenting an independent report to both sides, problems often occur when estate agents have given unrealistic expectations to one of the clients. My role is to give a realistic value, without any influence from either side.

In the collaborative setting when I am asked to prepare a valuation report for clients, we have the opportunity to discuss these problems and the issues with estate agents’ views in a meeting, so that everyone is directly involved and can ask questions until they have sufficient understanding. I am also able to give an insight into the robustness of the valuation, which can vary from property to property and from time to time. We have the opportunity to investigate any “special value” which a property may have to both clients or either of them, which might affect the way a settlement is structured. These discussions inevitably help the collaborative lawyers and their clients better understand their property needs going forward, and contribute to a lasting and practical resolution of financial matters.

Property valuation is not an exact science, but experienced valuers can contribute significantly to a discussion on resources and future needs. It is most productive to do this in the context of collaborative practice, and I commend this approach to those considering how to resolve matters arising on relationship breakdown.

Radams-cairns@savills.com

 

Financing property purchases

DSC_7820X-PETER ZTPeter Tsouroulla explains the ins and outs of mortgages when your family circumstances are changing.

Now the dust has settled from the general election, the Bank of England has started warning of interest rate rises soon to come. Although it seems inevitable that rates will start to go up, in my opinion this is likely to happen in closer to twelve months from now than six. This is the busiest period in the London housing market I’ve seen for some time: as if the election delayed the usual springtime property market and pushed it all towards the autumn instead. I’m dealing with lots of people buying property, and even more remortgaging to take advantage of some attractive offers from lenders while interest rates remain at this historic low. As it’s a speciality of mine, I’m also seeing lots of clients going through divorce and looking into their options for financing the plans they need to make for separate future lives.

For those currently looking to raise mortgages to assist with the purchase of property on divorce, there are some good mortgage products around. There are some good fixed rate offers that offer certainty and predictability of expense, although for these you trade flexibility. As ever, a good mortgage depends on your particular circumstances and for such a significant purchase it really is worth taking individual advice about what might work best for you. However, there are some general principles that might help while you’re trying to get a preliminary picture of your options.

For those who are employed, it’s seldom difficult to find a good mortgage deal at the moment. Even if your personal circumstances are changing, your payslips can evidence affordability and confirm your regular income, which is just what the lenders want to see. At the moment it’s possible to find lenders who will lend up to 4 or 5 times your annual salary, and interest rates are attractive – of course, it’s important always to bear in mind that they will not remain this low forever, and plan accordingly.

If you’re self-employed, you may well find that there is a conflict between evidencing the affordability of a mortgage to a lender, and ensuring you keep enough money in your business to guard against future uncertainty. It is an unfortunate fact that mortgage lending has become more restricted for the self-employed, but a good broker should be able to introduce you to the right lenders and help you prepare the evidence that you’ll need. If you’re self-employed it is by no means as difficult to get a mortgage as some sectors of the media would have you believe, as long as you can clearly evidence your good financial position to the right lender.

For those relying on maintenance payments to fund a mortgage, prospects improve when you know where to look, and a good broker will again be able to help you find a lender with an appropriate product for you. Most will require there to be a court order in place before they lend, and some require evidence that maintenance has been paid for a certain number of months, but it really depends on your individual circumstances. It is often possible to get a loan for half the value of a property based on a decent level of maintenance, sometimes slightly more.

People often ask me what difference age makes to your ability to get a mortgage. This can indeed be a factor in affordability, as due to restrictions from the regulator most lenders are unwilling to go beyond the age of 65, or at a push, 70, in a mortgage term, and a shorter term means higher payments for the same loan. This is another case where a broker may be able to introduce you to a lender who is sympathetic to your particular circumstances and can offer something a little different from the standard products you might find on the high street.

I’ve worked with clients in changing circumstances for many years, and the best outcomes have tended to come where people engage in the collaborative law process in order to get a 360 degree view of the available options. Where mortgage lending is concerned, there’s a lot to be said for putting your cards on the table and discussing your resources together with your legal advisers, so that the best possible solution can be found for everyone involved.

peter.tsouroulla@johncharcol.co.uk

Dealing fairly with the property aspects of divorce

Ruaraidh Adams CairnsRuaraidh Adams-Cairns explains the differences between how he works in the collaborative process, as a mediator and as a court-appointed expert.

I am regularly called on in the conventional court process for sorting out the division of property on divorce to prepare valuation evidence as a ‘single joint expert’. This means that I am appointed and instructed jointly by both sides (via their solicitors) to write a report on the couple’s property, or properties, and value it/them so that the court and everyone involved knows what’s there to be divided up. Often, one or other side in the dispute will disagree with what I say, leading to correspondence and questions, and eventually perhaps to my being cross-examined in court about my methods and conclusions. All this is part of the job that I have been doing for many years now, and which I enjoy.

The collaborative process is different as I can come into the meetings that the divorcing couple are having with their collaborative solicitors and hear their views about the relevant property before I value it. I can therefore ensure at the outset that I address any particular considerations and concerns that either person has. They also have the opportunity to ask me their questions in person, as do their lawyers, and discuss my conclusions and their ramifications. Because the property owners are much more engaged and in control in the collaborative process, the chance of misunderstanding or a failure on my part to get to grips with psychologically important points is much lower. It can also really reduce costs where property makes up a big part of an asset base.

The collaborative process is particularly interesting to me in the light of my property mediation practice. There are huge similarities between the way collaborative solicitors work to arrange outcomes for their clients that are fair and tolerable, and the way that I work in mediation where I aim to use my surveying and sales background to facilitate deal-making.

In my experience, the collaborative process is preferable for couples where property is an important component because negotiation and deal-making is a sensible approach in the property sector. A process that keeps the important people highly involved, reduces scope for protracted misunderstanding and encourages open dialogue, even where emotions are running high, is likely to result in more positive long-term outcomes for the whole family. Although I enjoy my court work as an outsider, I see the havoc that going through the system can wreak on the people involved and would certainly encourage people to consider collaborative law as an alternative wherever possible.