Valuation is central to risk management in property lending however it is becoming increasingly challenging as clients seek to recover losses by transferring the risk to valuers. This in turn pushes up the cost and availability of PII.
Key risks and liabilities in valuation for secured lending purposes
Valuation as a service is only viable if valuers are able to obtain PII at a commercially acceptable cost.
Guidance, available for download below, provides information on key legal concepts and areas of risk to help members develop terms of engagement which are fair and reasonable for all parties involved and help to mitigate these risks.
The guidance below is the first step in a programme of work that RICS will be undertaking with lenders, insurers and other stakeholders to raise awareness about the current market challenges so that improved public, client and professional protection is provided.
PII and the UK valuation market: RICS consultation and response
As a result of the financial crisis, RICS undertook a consultation on the impact on the property sector because of concerns that have arisen in the UK valuation sector about current risk and pricing in the market, and that these issues may have a long-term structural impact once the current crisis is over.
The consultation summarised the implications of the issues surrounding valuations for secured lending purposes in the UK for all stakeholders and sets out suggestions for further work.
The themes of the consultation paper have resonated with members and stakeholders.
The recommendations for action set out in this report outline the key issues raised by members and stakeholders. RICS will continue to work with members and all stakeholders to resolve these issues and provide clear policy and guidance to valuers in the UK.
No extension to the valuer’s duty of care: Scullion v Bank of Scotland
In a landmark result for surveyors, a buy-to-let investor has withdrawn his challenge to the Court of Appeal's decision that a surveyor who provides advice on value to a lender does not owe the borrower a duty of care.
The claimant's decision to withdraw his appeal closes off the risk of an avalanche of claims from people who came into the buy-to-let market during the last property boom and who have lost money as a result of the subsequent crash.