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Written by rosalind renshaw

Lenders and mortgage brokers are creaming off ‘secret profits’ from surveyors carrying out mortgage valuations, it has been claimed.

It is also alleged that with experienced, fully qualified surveyors reluctant to accept increasingly low fees, lenders are using those with less experience and fewer qualifications.

The claims come as concerns continue to grow over a shortage of surveyors, leading to hold-ups in house sales which agents are reporting are putting weeks on to normal transaction times.

The RICS has announced Dr Oonagh McDonald as chair of an independent commission looking into the issue.

The former MP will head the commission, which is calling for written evidence by September 30.

It has already received views made known on the RICS LinkedIn forum, where a number of surveyors have aired their anger and disquiet.

The most explosive claims come from Lesley J Long FRICS, who says that surveyors are having to accept progressively reduced fees, and that in practice, the lender or mortgage broker make ‘secret profits’.

This, he says, is because mortgage applicants hand over to the lender or mortgage a ‘substantial sum’ for admin and valuation costs.

Long says that “a large proportion of that total is retained by the lender/ intermediary, being in practice an addition to its profit but actually being a secret profit.

“The latter is generally deemed repugnant in law and often actually unlawful. This may indeed amount to a fraud.”

He goes on to say that the applicant is unaware of this, and assumes that the surveyor who is carrying out the work is on high earnings.

Long also alleges that in the face of growing resistance from fully qualified RICS members to accept low fees, lenders are accepting lower qualifications and are allowing an Assoc RICS to carry out mortgage and survey work.

“Lower skills and experience reduce standards and will lead to yet more insurance claims,” says Long in his submission.

“The RICS are aiding and abetting this process by allowing persons with minimal learning, limited professional knowledge, and with hardly any experience to attain an Assoc RICS suffix to his/her name.”

He concludes: “Those of us who have worked for many years to achieve their qualification and have then amassed years of experience look on in horror.

“Our voices as RICS members have been ignored for years and we become progressively disillusioned with our professional body.”

Comments

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    Firstly, I do agree that the lenders do cream off some of the profit.

    However, I do not agree that all AssocRICS are unexperienced or incompetent. I work as a sole practitioner and my assistant surveyor is AssocRICS qualified and has some 12 years experience of residential valuation. Surely people like him have better experience than a graduate, how has just passed the APC with only 2 years experience?

    • 23 September 2013 10:37 AM
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    Works well for me, out of area panel surveyors are easy to lead, far better than if they know what they are doing

    • 08 August 2013 13:57 PM
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    Too many in the food chain, taking their cut! The lender should contact the surveyor directly and cut out the middlemen. In-house valuers are too expensive to retain, so the work is farmed out. Surveyors have always called the selling agent for comps. What's wrong with that? Then there is always Land Registry or Rightmove et all. Agents like to moan at valuers picking their brain, but whinge further if the value is located from another source. Co-operation is key, to get the sale through.

    • 08 August 2013 07:43 AM
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    @ AC

    If they are only earning £26.5k, why are they all so bloody pompous and self important?


    Miserable buggers.

    • 07 August 2013 12:18 PM
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    What odd comments below.

    @MBN3 - really? with booking fees as high as they are (£5,500 for a decent rate out of Abbey - WTF?!!!)

    @RC - surveyors have ALWAYS phoned agents for comparables - I have spent 20 odd years providing them - always happily and honestly - this is NOT a problem and should be encouraged. The problem is dodgy agents lying to try and blow a sale and pick up the pieces afterwards.

    I am training to be a surveyor (after 20 years in the business) and my mentor was telling me how poor the situation has become.

    In pound notes, the average fee earned by the surveyor is the same as back in the mid 80's. With the effects of inflation and the additional costs of insurance, etc (much, much higher now) this makes the job of just doing Homebuyer & Valuation Surveys almost not worth the effort.

    The main cause of this is intermediary panel firms - sometimes there can be two companies between the surveyor and the building society.

    Worse still, the surveyor has to pay an annual subscription charge.

    Each one needs to get paid - that's why they are there - and it's not worth them doing it for less than £100.

    So, the building society charges the customer £600 and takes their admin fee cut, the panel companies take their admin fee cut and the surveyor has to pay out for all the insurance, petrol, his CPD (now there's another potential rip-off...?), etc.

    He or she will be lucky to see £150 profit out of it.

    Surveyors are professionally qualified - it takes nearly as long as becoming a doctor! They shouldn't earn an average wage (£26,500 - BBC website Nov 2012), but should earn a decent wage, let's say £50k a year.

    To earn that (after costs of course) they would need to be doing an absolute minimum of 7 homebuyers surveys a week.

    It is difficult to find out the number of resi surveyors out there but a recent RICS estimate puts it at 9,000.

    This requires 3 million surveys/ transactions per year.

    There were 932,000 completions in the UK in 2012.

    There were an average of 30,000 remortgages a month in 2012.

    The total of just under 1.3m surveys is way short of the mark.

    Even if you take into account aborted sales & remortgages it is still far too few.

    If you think that you as agents have had it rough, spare a thought for all those poor surveyors who trained hard for years for a job promised great prospects and has fallen apart around their ears.

    • 07 August 2013 11:19 AM
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    With chartered surveyors continually phoning up estate agents and asking them for free comparables and valuation advice, it is about time FNAEAs with the CPEA or Diploma were allowed to carry out these basic reports. All the training and studying to enable them to carry out these valuations is more than covered in the curriculum. It is only RICS restrictive practices which prevents this from happening. Over to the new chairwoman and chief executive to open the market up!

    • 07 August 2013 10:09 AM
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    Mortgage broker - agreed with what you say, but that is not what the story says.

    • 07 August 2013 09:05 AM
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    There is not a single lender on the high street that pays Mortgage brokers a secret commission on valuations, and that is absolute rubbish.

    The truth of the fact is that 2 RICS Surveyors can both come back with completely different valuations for the same property and that's the problem, so most of my clients often try with 2 lenders at the same time - and I have evidence of cases where there has been a difference in valuation prices of over 20%.

    • 07 August 2013 08:45 AM
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