What is a zero valuation?.

It doesn’t matter if you’re a first time buyer, moving home or adding to your portfolio, waiting for your lender to confirm the value of the property you want to buy can be a tense time. It can be especially stressful if you’re on a tight budget, adding to your home buying challenges.

Getting a down value (where the surveyor decides that the property’s market value is lower than the price you’ve agreed to pay) could leave you in a situation where your lender can’t give you the full amount you need to purchase. But, what if your lender comes back with a zero valuation?

Here’s our guide to what a zero valuation is, what might cause it, and why it doesn’t mean you need to give up on buying your next home.

What is a zero valuation?

Definition:

Zero valuation (/ˈzɪə.rəʊ/ /ˌvæl.juˈeɪ.ʃən/) – After a valuation survey has been conducted, the lender has decided that they cannot lend on the specific property in its current condition. It is also referred to as a ‘Nil’ valuation.

Why have I received a zero valuation?

There are two main reasons a zero valuation could be given:

1. The property falls outside of the criteria that the lender is prepared to finance on – For example, some lenders will not lend on properties made of non-standard materials or built using non-standard construction techniques. Buyers looking to purchase grade listed properties may also fall foul to the lender’s criteria.

2. The surveyor has spotted a major issue, or they require more information before they can make a full valuation – With an aging housing stock, it’s become more likely that your zero valuation is due to an issue that the surveyor has spotted during their inspection. Properties with structural issues or lacking basic facilities such as a working bathroom will often be classed as ‘unmortgageable’, even if you’re plan is to fully renovate it.

While it might be a shock, there are some quick zero valuation solutions. You may need to re-visit the lending criteria to see if there's any wriggle room, or source the extra information that the surveyor needs to make a full valuation.

Examples of ‘zero valuation’ properties

Is the property really worth nothing?

Of course not – the lender is only basing a ‘zero valuation’ on its own criteria for what it’s prepared to lend. They aren’t valuing it on what someone might be willing to pay for it, or what it could be worth in the future once any issues have been put right.

The real question is, can you see the value and can you afford to correct any issues? While a zero valuation isn’t the end of your property dream, it might be a good point to reassess what you want to achieve and what you can realistically afford to do. Or, a good time to change lenders.

Is there anything I can do about a zero valuation?

Your valuation report should outline the reasons for a zero valuation, so you can begin to look at resolving any issues. If there are problems with the property's structure, for instance, it may be that you need to negotiate with the seller to ensure they’re put right before the sale can progress.

Other common issues from a surveyor’s point of view include electrics, the roof, and asbestos; so you might need to call in some expert tradespeople to create a clearer picture of what work needs to be done and how much it might cost.

While getting a mortgage is the buyer’s concern, being limited to 'cash only' buyers may motivate the seller to get any problems fixed; even if you walk away and they put it back on the open market, future buyers are likely to encounter the same issues.

Will all lenders come back with the same answer?

No. As zero valuations are often based on the lender’s own criteria, you may find different lenders have different views on the value of your property.

At Together, we look at the bigger picture before making a common-sense decision. We know that not all homes are ‘standard’ so we take everything into account and never make a decision based on tickboxes alone. Speaking to a real person with years of experience of lending on non-standard properties is more likely to get you the result you need to move forward with your purchase.

Ready to get started?

Looking to finance a zero valuation property? Get in touch with our team of friendly experts to see what Together can do for you.