e.surv joins debate on valuation approach

Richard Sexton, e.surv director, said: “e.surv is the largest supplier of mortgage valuations in the UK and our primary obligation is to provide a valuation against which a lender can make an informed lending decision.”

The information relating to every e.surv valuation remains on file for a minimum of 15 years and is subject to audit by clients on a regular, open basis.

In respect of buy-to-let cases, Sexton acknowledges a growing problem with the average size of ‘builders incentives’ - which can make arriving at the correct valuation figure more difficult. He points out that there is a related, and perhaps more troubling, development, which is the apparent attempt to disguise the presence of these incentives by some parties until just prior to completion, if at all. The result being that the lender has very little time to revert to the valuer in order to establish whether or not the incentive impacts on actual valuation (they usually do).

Sexton continued: “Valuations are made based on the information made available, or identified by the valuer following research - therefore there is clearly an issue if there are deliberate attempts to mislead, or outright fraud. Of particular concern is the use of post completion rebates.

“e.surv is fully aware of the phenomenon of incentives, and has brought this issue to the attention of its individual lender clients regularly over the past year, and will continue to work with them to minimise their individual risks. Critically, in order for lenders to achieve comfort in this area, our advice is that they must also consider the profile and quality of the specific valuation firms that they employ.

“There have been several new valuation management firms enter the market in recent months, encouraged by the potential opportunities of Home Information Packs. These organisations, to a greater or lesser extent, have made it clear that they assume no responsibility for the valuation reports they commission on behalf of the lender. A worst case scenario for lenders who use these organisations could be that they find themselves in a situation similar to that of the late 80’s and early 90’s, when the industry experienced a significant number of valuation issues, which were at least in part exacerbated by reliance on broad panels without appropriate levels of control and accountability.”