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Down-Valuing Surveyors Reappear In The Market

Date Added 24/03/2014

The RICS says surveyors are becoming increasingly cautious as house prices rise, basing valuations on comparables that have not ‘caught up` with today`s market.

`If property prices rise quickly, comparable evidence never catches up` says Peter Bolton King, RICS` residential director. The result is that lenders are willing to offer mortgages on less than the asking or agreed sale price of a property, leaving would-be buyers with a shortfall which they have to either make up themselves, or otherwise forcing them to walk away from the purchase.

Back in 2011 the NAEA - which then had Peter Bolton King as its chief executive - said sales and remortgage deals were collapsing because some lenders and surveyors were ‘deliberately undervaluing homes`, in some cases by as much as 10 per cent. At that time the RICS denied that surveyors were being over-cautious.

Research by the Daily Telegraph in 2011 showed that surveyors were facing large numbers of legal actions by lenders over valuations made before the downturn in 2008; earlier this month EAT reported that in 2012 LSL Property Services had to set aside £17.9m to deal with over-valuation claims relating to what it called a period of `high-risk lending` between 2004 and 2008.

Now with values rising sharply in some areas - but with the fear of a bubble and consequent price falls - it appears that surveyors are being cautious to avoid a repeat of the legal action of past years.
Tyrer & Hart Property Specialists

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