A sharp increase in property down valuations, particularly affecting London and the south-east, is disrupting home purchases and causing significant financial strain for buyers, mortgage brokers report.
Deals and Lives Turned Upside Down
Mortgage experts claim that a rise in surveyors valuing properties below the agreed sale price is turning deals and lives upside down. Some brokers suggest uncertainty surrounding the government's budget may be fuelling this cautious approach from valuers.
Jonathan Alvarez Herrera, a broker at Ayla Mortgages, confirmed a definite uptick in down valuations in recent months. He stated that the average markdown is around 10%, with the south-east and London being worst affected due to higher property values.
The Regional Price Divide and Budget Jitters
Official Land Registry data revealed a stark regional divide. While UK house price inflation was 2.6% in the year to September, London prices fell by 1.8% over the same period. The property portal Rightmove added that budget speculation is creating widespread market uncertainty.
A down valuation occurs when a surveyor acting for a mortgage lender decides a property's market value is less than its agreed sale price. The consequences can be severe:
- Buyers may try to renegotiate the price with the seller.
- They might switch to a different lender for a new valuation.
- If unsuccessful, they must find a larger deposit, borrow more, or abandon the purchase entirely.
Patricia McGirr from Repossession Rescue stated that down valuations are causing chaos and stress, noting that valuations have become a postcode lottery. She recently handled a case in London where a property was down valued by a stark 17%.
Real-World Fallout for Buyers
Alvarez Herrera provided a concrete example: a £3.1m property was down valued to £3m. While a small percentage drop, the client was unable to provide the extra £100,000 deposit and could not renegotiate, leading to the purchase collapsing.
Vijay Rabadiya from The Mortgage Vine noted that while most down valuations are moderate (2-5%), new-build flats, unique properties, and homes in slower southern markets face the most scrutiny from surveyors. Other brokers report discrepancies of 5% to 15% below recent comparable sales.
The Royal Institution of Chartered Surveyors (Rics) offers a different perspective, stating that what is termed a 'down valuation' is often just the difference between an individual's perceived worth and the official market value. They emphasise that the surveyor's client is typically the mortgage lender, not the homebuyer.
