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.”

 

Location Sales vol – last 12 months Properties down valued % Est properties down valued – last 12 months
South East 137,107 44% 60,327
North West 96,506 56% 54,043
London 80,965 59% 47,769
Yorkshire and the Humber 72,654 58% 42,139
East of England 90,408 39% 35,259
West Midlands region 69,880 50% 34,940
Scotland 100,671 31% 31,208
South West 88,741 26% 23,073
Wales 36,170 63% 22,787
East Midlands 66,171 27% 17,866
North East 33,805 43% 14,536
Northern Ireland 24,691 50% 12,346
England 736,237 44% 323,944
United Kingdom 897769 43% 390285
Source Transactions between May 2020 and April 2021 (latest available) Gov.uk UK House Price Index Bankrate Devaluation Report % of down valued properties applied to transactions in the last 12 months
Location AveHP – June 2021 House price after est down value cost of £7,500 Est down value cost %
North East £149,521 £142,021 -5.0%
Northern Ireland £153,449 £145,949 -4.9%
Scotland £173,961 £166,461 -4.3%
Yorkshire and the Humber £194,518 £187,018 -3.9%
Wales £195,291 £187,791 -3.8%
North West £200,222 £192,722 -3.7%
East Midlands £226,846 £219,346 -3.3%
West Midlands region £231,429 £223,929 -3.2%
South West £294,906 £287,406 -2.5%
East of England £327,017 £319,517 -2.3%
South East £355,948 £348,448 -2.1%
London £510,299 £502,799 -1.5%
England £284,029 £276,529 -2.6%
United Kingdom £265,668 £258,168 -2.8%
Source Gov.uk UK House Price Index (June latest available) Down value cost applied to average house price Bankrate Devaluation Report

1 Comment

  • test

    “Up to 400,00 transactions affected by lender down valuations”

    System out of control. How much lost through abortive transactions?

    Ban marketing without certificate of mortgage-ability

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