Surveyors are facing a rise in the number of court actions brought by lenders over valuations they made before the housing market crashed in 2008. Countrywide alone is expecting to pay up to nearly £12m in claims.
The increase in cases has led to a near doubling of their insurance premiums.
Research carried out by The Daily Telegraph revealed that Countrywide, the UK’s largest estate agency chain, faced 35 writs in the High Court last year from mortgage lenders including Barclays and Bank of Scotland. The paper says a further 12 writs have been filed this year, with five in March alone.
The issue at the heart of these claims, says the Telegraph, is the valuations surveyors put their names to in the lead up to the housing crash.
“While prices were rising, no one contested the valuations. When prices started to come down, lenders looked to see if they could pin the liability on surveyors.
“For that reason a lot of the claims date back to valuations undertaken prior to 2008. With these types of claims normally subject to a six-year limitation period, the clock is counting down.”
Gary Head, underwriting director at insurer Hiscox, told the paper: “There are potentially a lot more claims against these companies to come through the pipeline as more properties are repossessed and financial institutions realise their losses.”
In a statement, Countrywide said: “Over the last couple of years, the recession and the fall in house prices has led to a rise in claims throughout the industry.
“It is not uncommon for any professional business to place reserves for any potential future claims and Countrywide’s position as the largest in the industry reflects the size of the reserves.”
In its accounts, Countrywide made a charge of £11.9m in 2010 against an “abnormal increase in the number of indemnity claims”.
Other surveyors such as Savills and Knight Frank are also reported to be facing claims.
The Telegraph quoted “one leading surveyor who asked not to be named” as saying: “Lenders are feeling their way through the market, testing out where the weak spots are. The issue for surveyors is that when a bank wins one of these cases they tend to pursue a whole raft of other ones against the same surveyor in the expectation they will continue to win.”