Landmark BTL ruling could spell end to claims against surveyors

28 June 2011 | By Natalie Thomas

In October 2010 the High Court awarded landlord Emmett Scullion £72,000 plus interest following a legal case against Bank of Scotland, trading as Colleys.

He had accused Colleys of grossly overvaluing the market rent for a buy-to-let new build he purchased in 2002.

Colleys had valued the property at £353,000 and estimated a rent of £2,000 a month, but the property only let for £1,050 per month.

But the judge has upheld Colleys appeal, ruling that due to the investment nature of the purchase it was not sufficiently clear that it would have been foreseeable by Colleys that Scullion would rely on its report rather than obtaining his own advice.

Marie-Louise Gobbi, the solicitor at Walker Morris who represented the valuer, says: “The decision is good news for surveyors and provides a clear basis for resolving similar claims brought in the buy-to-let sector.”

She adds: “The explosion of interest in the buy-to-let sector and ownership of property as an investment during the recent property boom and bust has prompted a surge in professional negligence claims.

“There will continue to be plenty of scope for dispute and debate. However it is hoped that this case and the important liability and quantum principles established, will encourage the swift and sensible resolution of many such claims.”

Scullion became interested in property investment after attending a seminar on how to make money from properties with very little investment. It was there he met a couple who later went on to set up Portfolios of Distinction.

Although the purchase price was £352,950, there was a provision which provided for a 15% gifted deposit and a provision whereby 10% of the purchase price was deferred.

The effect of the 15% gifted deposit, the 10% deferred payment and the mortgage of £290,766 meant that Scullion did not have to pay any of his own money on completion.

In his conclusion to the case, Judge Richard Snowdon QC, said his decision was not one he had reached with any satisfaction. He said Scullion appeared to have been taken advantage of by Portfolios of Distinction and innocently involved in a mortgage scam orchestrated by a number of people and to have been misinformed by Colleys.

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