A number of intermediaries in the industry have noticed the trend, including Stuart Wilson, managing director of Equity Release Advisory Service..
He said: “Surveyors seem to be down-valuing when it comes to equity release. It’s got to be one of two things. Either pensioners are over-valuing their homes, which is extremely unlikely, or lenders are instucting surveyors to be more draconian with their valuations, If they are trying to limit the risk that’s fine, but we should be told this.”
Kevin Morgan, managing director of Consilium Financial Planning, agreed with Wilson. “This happens a lot, but even on a forced-sale basis then it should still be the current market value. I’m not sure what criteria is being applied but there always seems to be a discrepancy between lifetime and residential valuations.”
However, both surveyors and equity release providers were surprised such a difference in figures existed.
Richard Sexton, business development director at e.surv, commented: “In principle there should be no difference at all as we are asked to provide a market value of the property. If the lender explicitly asked for a tenanted valuation then this might bring the value down, but this doesn’t provide an explanation. There is more diligence in equity release as the lender has a longer interest in the property but we are not told to do anything differently.”
Simon Little, senior product manager at GE Life, added: “We are not aware of it. If it’s a reversion versus a residential mortgage, then that would be lower but this surprises me. You might find a property up for an equity release scheme might be a bit worn as it has often been lived in longer and it doesn’t have new décor but there is no evidence of any inconsistency in values.”
