Brokers claim ‘doomsday’ level equity release valuations are commonplace
Brokers claim equity release lenders have been down valuing properties by as much as £60,000.
Rita Kohli, managing director of The Mortgage Shop, said she has seen valuations 20 per cent lower than that of estate agents.
She said: “With the level of uncertainty on the economic outlook it’s understandable that surveyors would take a more risk-averse approach, but too often we’ve seen almost a doomsday value being provided with little to no evidence to support it.
“The whole valuation process, in particular for later-life lending, needs more transparency, and given the nature of some of the later-life lending products, a more long-term outlook of market value should be applied.
“Valuers should provide their evidence and reasoning which would make client conversations easier and lenders need to take a more common sense approach to their view on valuations.”
Another broker said they had seen one property down valued by nearly £60,000 despite similar properties in the immediate area being valued at the original value.
In another case, a property was down valued due to perceived flood risk, even though Environment Agency data indicated otherwise.
Dan Osman, head of later life lending at UK Moneyman, said the trend of down valuation had been seen more in urban areas.
He said: “There is a fear of urban decline in many areas with local businesses failing first leading to attractive communities becoming yet more dormitory suburbs.
“Simple interpretation, and unwillingness to re-examine, is a problem with houses close to rivers prone to flooding being declined despite being in such an elevated position that flooding of the property or its access would only result from truly biblical weather.
“The most common source of down valuation we experience is due to poor comparables which don’t take into account an individual property’s appeal.
“Rarely can this be challenged due to the lack of available contradictory evidence but sometimes, common sense should prevail.”
However, Holly Hensleigh, a planner at Laterliving Now, said the issue is common in rural areas.
She said: “In areas with low resale rates, this compounds this challenge as it seems that valuers are working predominantly on resale rates which are not the tell all story.
“Given we have a much smaller pool of lenders and valuers in the equity release space, this can be a real challenge and leave very few options for the client if they have received a down valuation from one lender.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tara.o’connor@ft.com
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