Matrimonial home valuations in lockdown: can they be trusted?
For many of our clients, the family home represents a significant asset in the matrimonial pot. In the event of a divorce, agreeing what should happen to the family home, be it a sale, with a possible unequal division of the proceeds, or a transfer into one party’s sole name, can hold the key to reaching a negotiated financial settlement.
The starting point is to agree the value of the property, often with the assistance of estate agents or a chartered surveyor. Where one party wishes to retain the family home, or the settlement provides for a sale of the home with an unequal division of the proceeds, the accuracy of the valuation, and whether it is agreed by both parties, is of utmost importance.
In the light of the Coronavirus pandemic, there will likely be increased scope to challenge valuations, particularly those obtained before the housing market was temporarily suspended on 23 March. This has the potential to derail or draw out financial negotiations, in what is a fast changing situation, but with little end in sight.
There is still much uncertainty around the effect of COVID-19 on the housing market; whilst Savills predict a fall in prices of 5-10 per cent this year, there are reports of a surge in demand for properties in rural areas, particularly those that offer larger gardens. Anecdotally, we have heard of Coronavirus being used to try and renegotiate discounts of up to 20 per cent on agreed sales prices.
In this climate, it can be difficult to advise our clients on whether to rely on a property valuation in the context of a financial negotiation. Some clients may wish to put negotiations on hold to see what the future brings, particularly as Savills are expecting house prices to rise in 2021/2022. But for those of whom this is not an option, or where there is a pressing need to find a resolution, it may be necessary to adopt a more strategic approach. For such clients, my Private Property colleagues and I have put together the following tips
- Request an updated valuation. When entering into negotiations, an up-to-date valuation (even with caveats and projections) will be more persuasive than an outdated valuation.
- Consider instructing a chartered surveyor. Most surveyors should be able to provide a comprehensive report explaining how the final valuation has been reached. Given the uncertain market conditions, a detailed examination (and possible challenge) of the report by the other side is to be expected, and a surveyor will be best placed to assist with answering any questions which may arise.
- Test the property on the market. This is the only way to really know how your property might perform on the open market. Offers received from prospective buyers may provide a starting point for agreeing a valuation.
- Consider equal sharing of assets where the value is not agreed. Splitting the risk evenly may encourage resolution, as neither party will be worse off as a result of the valuation.
Where sale proceeds from the matrimonial home will be used to purchase a new property, clients may also wish to consider their ability to obtain a mortgage in the current market since some banks have changed their lending criteria, and the level of deposit they are able to offer, particularly if other investments such as stocks, shares or interest on savings are performing poorly.
Ultimately, it is still too early to predict the long-term effects of COVID-19 on the housing market. For clients who are not able to wait and see what the future holds, which is often the case in the context of a divorce, it is particularly important to take advice on how to value the matrimonial home in the current climate.
IBA Annual Conference
The IBA heads to Miami for its 2022 Annual Conference bringing together thousands hundreds of lawyers from around the world.
Joint Venture Opportunities
Join our panel where we will discuss various topics including Joint Venture structuring and Partner procurement.
Mind your business: Safeguarding your business against loss of mental capacity
Practical considerations to safeguard your business against loss of mental capacity.
Jack Carter writes for eprivateclient on the registration requirements for trust structures holding UK real estate
Trust structures holding UK real estate: Reporting requirements under the Register of Overseas Entities
FT Wealth quotes Sarah Anticoni on forum shopping
"Being the first to file for divorce is not a foolproof way of securing an English hearing"
What can UK investors interested in Life Sciences learn from their more experienced, including US, counterparts?
The recent tie-up between Canary Wharf and Kadans demonstrates the enthusiasm to access the lucrative UK life sciences market.
Helen Coward writes for Tax Journal on the main purpose test for SDLT group relief
Mainly ignored? The main purpose test for SDLT group relief
The Ayes have it - Collateral Warranties can be a ‘Construction Contract’
The Court of Appeal handed down its judgment in the case of Abbey Healthcare (Mill Hill) Limited v Simply Construct (UK) LLP
A guide to protecting non-matrimonial assets in divorce
Learn what you need to know about non-marital assets and how to protect them in a divorce.
Charles Russell Speechlys advising Battery Ventures on the sale of SPT Labtech for £650 million.
Battery Ventures has raised over $9 billion to invest in software and services, enterprise infrastructure, and much more around the world.
Alexia Egger Castillo
Wealth Structuring Developments In Switzerland
Careful considerations need to be given when setting up wealth and estate structures and vesting funds in them.
New Legislation on Reciprocal Recognition and Enforcement of Judgements in Matrimonial and Family cases by the Courts Hong Kong and the Mainland
The implementation of the Ordinance offers better safeguards to the interests of parties to cross-border marriages.
Windrush Day 2022 – supporting access to justice
Charles Russell Speechlys is proud to continue supporting survivors of the Windrush scandal in their fight for justice.
The Leasehold Reform (Ground Rent) Act 2022: Landlords and developers beware serious sanctions for non-compliance
The Leasehold Reform (Ground Rent) Act 2022 received Royal Assent on 8 February 2022 and will come into force on 30 June 2022.
EG quotes Emma Preece on the Picturehouse and BNY Mellon rent arrears cases
“The case is being closely watched by landlords and tenants alike as the impact of the pandemic lives on in the commercial property sector”
Charles Russell Speechlys has advised long-standing client Stonegate on a series A investment into Peckwater Brands
Stonegate is one of the largest pub companies in the UK with a rich portfolio that covers over 4,500 sites.
Pro bono support for major office premises move for charity in Stoke-on-Trent
Emmaus entities provide safe homes, community support and meaningful work to formerly homeless people across the UK.