Down-valuations hitting property transactions

BoE says down-valuations behind more property transactions collapsing - https://t.co/GeXe6NULTF

— Mortgage Solutions (@mortgagesols) September 21, 2017

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Mortgage valuation RICS registration

Landlords using a RICS surveyor for valuation purposes whether it be for their own purposes or through a mortgage company who require the valuation to protect their interest should be aware that from 30th April 2011 all surveyors acting in a valuation capacity should have registered under the RICS Valuation Registration Scheme.

Surveyors were criticised during the boom years for valuing up on many buy-to-let investments resulting in landlords owning off plan properties that were worth a lot less than they expected once the froth had been knocked off the over heating housing market.

Recently, surveyors have come under pressure for down valuing in an belated attempt to protect the exposure and interest of their mortgage company clients.

I'm not exactly sure why this new registration scheme will prevent these issues occuring again. 

Could it be a case of a professional body trying to shore up confidence in their members long after the horse has bolted!

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Landlord sues surveyor and wins

Surveying companies must be 'shaking in their boots' following on from the recent court case.
A landlord has won his case against a surveyor who had estimated the rental income on a new-build flat, paving the way for future challenges from other aggrieved investors.

The landlord Emmett Scullion bought an apartment in Cobham, Surrey following a valuation from local surveying firm Colleys, now part of Lloyds Bank.


The surveyor put a valuation of £352,950 on the property and estimated the flat could achieve a rental figure of £2,000 pcm.

The novice landlord purchased the flat based on these figures only to find that he could barely achieve a rental figure of £1000 pcm, half the amount indicated by the surveyor.
The landlord was then forced to sell the property at a loss. Following a long legal battle the has just been awarded £72,000 by the courts, who decided that Colleys owed him a duty of care.

Read more in the Guardian

With this legal precedent set, let the flood gates open.............

Read the judgement

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Buy-to-let over valuations

Many landlords suffering from negative equity in their buy-to-let investments may be able to do something about it if they are prepared to sue the surveyor that carried out the initial valuation.

Over valuation during the boom years was common practice by many RICS surveyors who saw the whole valuation process as purely turning up to a property and ticking a few boxes to than walk away with their survey fee.

A recent court case highlights that unwitting buy-to-let investors who may be suffering because of this practice do indeed have some kind of legal remedy which could result in a successful prosecution of the surveyor and the company for which they worked for.


Buy-to-let investor successfully sues surveyor

The recent case of Scullion vs Bank of Scotland where an investor successfully sued the lenders surveyor for negligence.

The court held in this case that the duty of care owed by a valuer to a commercial buy-to-let purchaser was no different from the duty owed to someone buying a home for themselves. The surveyor Mr Collins knew that the buy-to-let investor Mr Scullion would rely on his expertise and valuation, and would suffer loss if this was excessive.

The result was that the court found in favour of the buy-to-let investor and that the surveyor acting for the mortgage company still had a duty of care to the buy-to-let investor because the investor also relied on this valuation.

In this particular case the financial loss suffered by the landlord was attributed to the fall in house prices and as such could not be reclaimed. However, the landlord was able to claim back the difference in rent they achieved compared to that specified by the Colleys' surveyor at valuation.

This case raises some very interesting points for landlords who may have suffered from RICS over valuations at the height of the buy-to-let boom.

The basis on which a landlord may be able to seek compensation for an over valuation are set out in a precedent called "The Banque Bruxelles Principle" which has been established by the House of Lords. The basis of this principle is that a surveyor cannot be held liable for a fall in the market but can in fact only be held liable for the losses that can be attributed to the overvaluation. For more details.

Have you been stung by overvaluation? Share your experiences by posting a comment.

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Surveyors can't get it right

Following the fraudulent overvaluing of property by some surveyors during the boom time in property now we have the flip side as an issue.

With mortgage borrowers accusing surveyors of making low valuations that are jeopardising their chances of getting the mortgage they want.

As prices have bounced in many areas over the last 12 months overly cautious surveyors are reluctant to echo this bounce in their valuations.

Once bitten, twice shy I suppose.

Come on guys keep up.

Read article in Daily Mail

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RICS enhanced regulatory framework for valuation - add salt before swallowing

RICS have announced that they are looking to 'develop an enhanced regulatory framework for valuation that will raise professional standards and help secure the accurate valuations.'

What a joke.

RICS have been telling us for years that their valuations followed strict guidelines, with 'compliance with the Red Book (which is mandatory for all RICS members and regulated firms)'.

It seems that like the FSA they failed to regulate in the way that they were expected to, which has lead to a mass of false and inaccurate valuations particularly in the new build sector.

Well, here they go again. All mouth and no trousers if you ask me.

Read more on their new promises, but as with all these failed institutions, add a pinch of salt before swallowing.

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