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TODAY'S OTHER NEWS

Down-valuation shock - half of buyers hit by lenders’ bad news

A mortgage service claims 46 per cent of buyers have had their prospective property down-valued by lenders - often forcing them out of the market.

Bankrate UK, a mortgage comparison service, questioned buyers from across the UK attempting to purchase a property in the past six months.

Forty six per cent revealed they had their prospective property down valued by their chosen mortgage lender. Of those, 50 per cent of the buyers were aged 18 to 34, and 37 per cent were 45 or over.

Homes valued between £400,000 and £500,000 were subject to the most down-valuations. 

Overall 44 per cent of affected homes were down-valued £5,000 to £10,000, while just under a quarter were down-valued £10,000 to £20,000.  

However, some buyers found their potential properties had been down-valued as much as £240,000.

Cottages were the property type down-valued most often - 66 per cent - followed by 48 per cent of semi-detached properties.

Buyers looking to purchase properties in Wales had the highest chance of down-valuations (63 per cent) followed by London (59 per cent) and then Yorkshire (58 per cent) and the North West (56 per cent).

Precisely a third of first time buyers were told by lenders that their chosen property was £20,000 to £30,000 less than the agreed sale price. 

The survey was of 1,000 buyers in the UK carried out between October 2 and October 7, and follows a survey by the Bank of England last week which warned that mortgage lending may become stricter in the coming months as lenders are wary of wider economic problems caused by the pandemic.

Bankrate UK’s full report is here.

Poll: Have you come across down-valuations threatening chains?

PLACE YOUR VOTE BELOW

  • Samantha Sullivan

    In Wales you have ESurv who carry out most valuations and you guarantee a down value from particular surveyors in our area. I find it is particularly the Nationwide and HSBC mortgages

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    • 19 October 2020 07:59 AM

    If valuers downvalue then the property market will seize up and lenders won't have any new business.
    If negative IR come in lenders who downvalue will be stuck with cash costing them a fortune.

    Far better to lend it out.

  • Roger  Mellie

    Remember now that surveyors are personally accountable and liable for their valuations so if they overvalue, they could be on the hook if a property goes repo. Then there are the mortgage lenders that specifically instruct surveyors to down value to ensure there is value on the Title again if a property goes repo. Buyers will just need to stump up more cash if they want to buy I guess.

  • Samantha Sullivan

    Roger, totally understand that and can see other agents way over valuing around me to win business, they alwayd have but more so now. I had one down valued 15k even though there were 33 comparables at the price I agreed, there is no justification in the cases I've had so far, just the same valuer doing the same on all...

  • Peter Hendry

    The antidote to the so-called down valuation is to change the way houses are bought and sold such that the price paid is ‘market justified‘. This is the key to practically eliminating down valuations in all market conditions. The method to do this has been crafted by housing market observations over the decades and may now be found on searching for The House Price Virtuoso Solution. Change should be valued as being essential for progress to keep happening.

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    • 19 October 2020 11:08 AM

    All very well downvaluing but the market will freeze up.
    Large deposits don't grow on trees!!

    Unless a commensurate price reduction occurs to match a downvalue then nothing will sell.

    Peter Hendry

    Well, everything sells at the market price of course.
    Nothing will freeze up so there’s nothing to be frightened of. ;)

     
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    • 19 October 2020 12:26 PM

    @peterhendry

    No property doesn't sell in such circumstances.
    Simply vendors withdraw their properties from the market.


    Only the three D imperatives will cause sales.

    Those vendors without such imperatives simply won't bother selling.

    Downvaluing destroys much of the property market putting it in a sort of stasis.

  • Peter Hendry

    I wish I could agree with you but I simply cannot for very significant reasons.
    One thing you should learn to accept is: ‘Everything is subject to change!‘

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    • 19 October 2020 13:36 PM

    I accept that I was due to sell and now won't due to potential downvaluing.

    Instead I will continue with my current occupants.
    I want to desperately get out of the LL game but not at the cost of downvaluing.

    So I will be stuck making excellent profits until I can sell for the correct retail price.

    I will NOT sell for less!
    There will be NO change for me

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    Valuers have often down valued in times of price rises or times of adversity. They can be a more cautious breed. Its what us Estate Agents are here for, to deal with these issues. Sellers who want to sell or move will sometimes agree a compromise or will not. In the short term they may end up getting less. Also depends on how motivated the buyer is, can they find the difference. A reasonable Vendor unlike Paul Barrett ha ha, will often adjust the price to enable his transaction to take place. It all depends on the motivation of the buyer/seller circumstances of moving etc etc.

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    • 19 October 2020 15:38 PM

    Exactly if there is no real motivation to sell then a vendors like me can wait for the best retail price and that means more than now.

    I'm in no chain nor will I ever be so can afford to sell at top retail price.

     
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    Paul, i don't think the price will ever be good enough for you to sell. Best to keep renting it out.

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    • 19 October 2020 16:25 PM

    Oh! I know what price I am prepared to sell out at.
    Letting is just too risky now which is the only reason I want out.
    Just not prepared to get out at a loss.

    So am forced to continue risking letting.

    Am making excellent profits but I still want out.
    As many LL are finding out a profitable property can instantly turn into a bankrupting millstone courtesy of the dysfunctional eviction and civil recovery processes.

    A profitable LL is a fag paper from a bankrupt one because of these problems.

    I certainly don't wish my personal financial security to be based on feckless tenants and a dysfunctional eviction process which very unfortunately it currently is.
    Tenants as opposed to lodgers are a very risky business

     
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    Nobody seems to have mentioned that the Stamp Duty holiday will end in the Spring of next year, which might well put a check on market values, so valuers are just being cautious. If they are slap-happy with values now, then they might be criticized again! They just can't win. Also I detect a bit of angst in that agents commission is being potentially lost which is what this is really about.

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    • 19 October 2020 19:20 PM

    Spot on.

    You can't really blame the valuers
    They have to consider their indemnity insurance premiums.

    Yep a bummer for EA losing those commissions!

    But I reckon Sunak will extend the SDLT holiday.

    The property market has been one piece of good economic news.

    Sunak won't wish to destroy that activity.

    He'll extend like he has with furlough.
    But the poor chap is damned if he does and damned if he doesn't.

    But without support the UK faces calamity.

    A few billion here and there in what are emergency circumstances will be accepted by the vast majority of the population as necessary.

    We are in wartime mode here.

    It took over 60 years to pay off WW2 debt.
    It will take at least 100 years to pay off CV19 debt and QE

     
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