Property experts have warned about a surge in “atrocious” down valuations as valuers become “overly cautious with the values that they are putting their names to” in a stagnant property market. One landlord said the mortgage valuation process has passed from a “professional service into a game of Russian roulette”. 

Adam Stiles, Managing Director at London-based mortgage broker, Helix Financial Partners, says he has had three properties downvalued by over £1m in recent weeks and says valuers are “marking their own homework”.

Adam said: “Ground control to property valuers. We’ve had some atrocious valuations of late through a mix of different types of property finance. One valuer went round to value two finished new builds and gave a value of £1.7m. We then took the deal to another lender that instructed a different valuer who, two weeks later, valued the properties at £2.8m.

“That’s a £1.1m difference in value and it’s simply crazy. In another example, a freehold house in prime London estimated at £3m was worth £1.4m. This is after previous valuers had agreed with the estimates of the borrower for their existing funding. There needs to be more accountability and means for impartial appeal as currently valuers are ‘marking their own homework’.”

Jack Tutton, Director at Fareham-based broker, SJ Mortgages, also said down valuations are becoming more common: “We have seen a higher number of down valuations than we have experienced for a long while. Recently, we had a surveyor reduce the value of a client’s property by 10% versus the value that they placed on the property only a matter of months before. The surveyor placed a value on the property of £250,000 in March only to reduce this to £225,000 in June.

“I am not aware of anywhere in the UK where the housing market has reduced by 10% in such a short period of time. If it had, a lot of people would be in serious trouble. Whilst the cause of the down valuations can sometimes be people overstating the value of their properties, surveyors are being overly cautious with the values that they are putting their names to as a result of the stagnant market that we currently have. Stagnation can create conservatism when it comes to valuing homes.”

Ken James, Director at London-based Contractor Mortgage Services, says properties being down valued as they are at present is creating a headache for all, especially estate agents: “We’re seeing more and more down valuations now, which is creating a real headache for everyone involved. Estate agents fight tooth and nail against any renegotiations and, if a property is downvalued, often want you to try an alternative lender to see if they will value it higher.

“This, of course, is not always going to get you the outcome they want, and when a lender states the value is lower, the prospective buyers will often then suspect the property’s real value is not what they were prepared to pay. In some cases, they will then question whether they should progress with the purchase at all.”

Patricia McGirr, Founder at Repossession Rescue Network, said the issue of down valuations has turned the property market in a lottery: “It’s valuer lottery season and buyers and sellers are paying the price in a high stakes game. I’ve had two cases down valued recently, one in London down valued by 17%. This was less than six months from the previous valuation with another RICS valuer. If valuers are following guidelines then I think the rulebook needs a serious overhaul. Some of the comparables being offered are shambolic and sloppy. At the moment, it’s more like heads I win, tails you lose.”

Babek Ismayil, Founder at homebuying platform, OneDome, added: “Down valuations tend to happen when there is uncertainty around the direction of house prices or a lack of properties being sold, which can make valuing them harder as there are fewer benchmarks. That appears to be where the market is at currently.”

Meanwhile, property developer Kundan Bhaduri, Entrepreneur at The Kushman Group, said the whole valuation process has turned into a game of Russian Roulette: “In my corner of Kent, where I develop properties typically under £500k each, the mortgage valuation process has gone from a professional service into a game of Russian roulette. Nearly half of all property transactions are now being impacted by this phenomenon, with the average down-valuation in the South East carving a brutal £11,000 from the agreed sale price. This is the cold, dead hand of institutional fear strangling deals before they can draw breath.

“Last month, a two-bedroom terrace in Ashford, agreed at £325,000, was valued by the lender’s surveyor at £290,000 (a downvaluation of circa 10%), citing “market uncertainty” despite three identical neighbouring properties having sold for more in the preceding quarter.

“Valuers are having a laugh at our expense to mask a future claim against their professional indemnity insurance. The perverse incentives at play have created a system where there is no accountability for the surveyor, yet catastrophic risk for everyone else in the chain.”