Mortgage lenders say house buying at risk from surveyor ‘down valuing’ | House prices

Mortgage experts claim the rise in property valuations is “disrupting deals and lives”, with some homes losing value by 10 per cent or more by surveyors.

Some believe that uncertainty about the contents of the budget could lead to surveyors taking a cautious stance and valuing properties at less than the agreed price.

Ayla Mortgages broker Jonathan Alvarez Herrera had seen a “definite increase” in bearish valuations in the mortgage market in recent months. When asked about the scale of the discounts, he said it depends on location, “but on average I would say it is around 10%.”

He added: “I’ve seen the south-east and London particularly affected, but that’s just because properties are at a higher value.”

Official Land registry data announced on Wednesday It showed that house price inflation in the UK remained at 2.6% until the end of September. But this figure masked regional differences: prices in London fell 1.8% during the year. Meanwhile, property website Rightmove said this week that budget speculation was “increasing uncertainty across much of the market”.

Undervaluation occurs when a surveyor, usually acting on behalf of a mortgage lender, carries out a valuation of a property and concludes that the market value is less than the agreed selling price, sometimes much less. This could have huge consequences for everyone involved. The buyer can renegotiate the price with the seller, but if that doesn’t work, he or she may choose to switch to a different mortgage lender to get another appraisal.

If this is not successful, the buyer may have to borrow more money to cover the shortfall, pay a larger deposit or abandon the purchase.

Alvarez Herrera said had recently seen a property drop in value from £3.1 million to £3 million. Although proportionately this was not a huge discount, the customer did not want to put down an extra £100,000 deposit and was unable to renegotiate the price, so the purchase fell through.

Patricia McGirr, of Repossession Rescue, which focuses on people in financial difficulty, said downward valuations were “destroying deals and lives. Even the same surveyors are dropping values ​​within months, especially in London”.

He said: “Whether it’s lender warning, local sentiment or pre-budget jitters, valuations have become a postcode lottery.” It “causes chaos and stress” for vendors, developers, and others.

Two cases have recently fallen in value, one in London by 17%.

Most downvaluations are “moderate – typically 2% to 5% below the agreed purchase price,” said The Mortgage Vine broker Vijay Rabadiya, adding: “Newly built apartments, unique or rural properties and homes in slower southern markets tend to attract the most scrutiny.” [by surveyors].”

Other brokers reported valuations 5% to 15% below last comparable sales prices.

The Royal Institute of Chartered Surveyors (Rics) says on its website “In reality, there is no such thing as ‘undervaluation’. What is being described here is the difference between value (to the individual buyer/seller) and market value.”

He adds: “It is important to recognize that the ‘client’ is in most cases, for example, a bank or construction company. [the lender]Not the person taking out the mortgage.