Delphi,
absolutely you should send in your valuation, it constantly surprises me how trusting people are with complete strangers when it comes to their finances. The person on the other end of the phone in the Council is a clerical worker and whilst they are only doing their job, they are not the person to take advice from when it comes to sorting out your financial commitments. Get the contact details of the manager and make sure all dealings are with him or her. You need to be persistant and be prepared to walk away if need be, personally I wouldn't touch affordable housing at the minute because of its valuation problems, this needs to be sorted out, the affordable housing applicant shouldn't be burdened with the council's debts, ie with apartments that have fallen in value.
As an alternative would you consider going directly to the developer and offering a percentage below the asking price? that way you would be free from the clawback etc. hth