Upto 400,00 transactions affected by lender down valuations

The impact of rising house prices has seen nearly 400,000 transactions down valued in the lat year by surveyors working on behalf of mortgage lenders, who believe the price agreed by both buyer and seller was too high.

The latest analysis by London lettings and estate agent, Benham and Reeves, has identified that across the UK an estimated 390,285 homes have been down valued by as much as 5%.

The South East is the region to have seen the most transactions hit by a down valuation. Of the 137,107 homes sold in the last 12 months, an estimated 60,327 are thought to have been down valued.

The North West has also seen some of the highest levels of value adjustments during the selling process, with 54,043 of the 96,506 homes sold in the last year being down valued.

At 59%, London is home to some of the largest levels of down valued homes of all UK areas and it also ranks third in terms of the sheer volume of transactions impacted. Benham and Reeves estimate that 47,769 of the 80,965 homes sold across the capital in the last year would have been subject to a down valuation.

While half of all transactions in Northern Ireland are down valued, a lower level of homes sold means that a total of 12,346 transactions have been impacted in the last year – the lowest of all UK areas.

As a result, the average property across the UK will take a hit of between £5,000 and £10,000. A mid-range drop of £7,500 would see the average UK property down valued by -2.8%. Regional differences see properties in the North East suffer the largest decline at -5%, along with Northern Ireland at -4.9% and -4.3% in Scotland.

In London where house prices are at their highest, this valuation adjustment would result in a drop of just -1.5%.

Director of Benham and Reeves, Marc von Grundherr, commented:

“Down valuations can be a real thorn in the side of those eager to progress with a property transaction but unfortunately they are a prevalent occurrence within the UK property market.

They often occur due to over expectant sellers setting their asking price too high but we’re also seeing more lenders request a greater degree of caution by valuers in a market where prices are climbing at a rate of knots.

As a seller, you can look for a new buyer purchasing through a different lender and hope they agree on the value of your home. Or you can hold tight until values increase at the risk of losing your buyer or simply accept the lower value placed on your home.

As a buyer, you can also negotiate with the seller or lower your offer, or you can get the property valued by a different surveyor and lender. Otherwise, you face getting a loan to cover the shortfall or bumping up your deposit to cover the cost.”