Housebuilders say disputes over pre-recession valuations are slowing recovery
The price of new homes is being driven down by a record number of legal threats to surveyors over house valuations given before the credit crunch, housebuilders have claimed.
They say the issue is still affecting the sector’s recovery, two years after mortgage lenders started instructing surveyors to be more conservative in their valuations, particularly of new housing.
Government figures show that although house prices overall have risen 8.2% in the past year, new build prices have fallen 3.9% in the past 12 months.
In the past year, 25 surveyors have been taken to court over valuations by mortgage lenders, including Barclays, compared with just one in the previous five years. Thousands of others have been threatened with legal action by no-win no-fee lawyers, which have hugely driven up the cost of professional indemnity insurance and threatened to drive a number out of business.
Roger Humber, strategic policy adviser for the House Builders Association, said: “Virtually every valuer is being sued by one of the major lenders. With all the pressure they have no other choice than to take a very cautious view. Small builders are having to fight every down-valuation like hell.”
David Dalby, director of the property professional group at the RICS, said: “Some surveyors are inundated with potential claims, and insurers are looking very hard at whether they can insure them.”
The problem is compounded by the fact that a number of lenders, including top three lender Nationwide, are instructing surveyors to value new-build property at resale price, thereby losing the traditional premium for new construction.