Mortgage Strategy has been informed of a case in which a client agreed to buy a new-build property off-plan based on the developer’s valuation of £180,000.
One year on, it is worth £110,000 and the client is unable to raise a mortgage for a property he no longer wants to buy.
Jonathan Burridge, managing director of Quantum Mortgage Brokers, says: “Surveyors are paranoid about new-builds. They control the value of property and always look to downvalue because their professional indemnity insurance is at stake.”
Christian Barth, director at London-based brokerage Bespoke Mortgages, says: “New-build developments are being sold on future values and you pay a premium for that.
“There are good opportunities with new-builds but I would not advise clients to buy off-plan at the moment.” Richard Sexton, director of business development at chartered surveyor e.surv, says brokers are being too quick to judge surveyors and that they are simply complying with lenders’ instructions.
He says: “Most lenders are asking us surveyors to provide second valuations based on the price we think properties would fetch if they had been bought, sold and occupied.
“We are following lenders’ instructions rather than making stuff up as we go along.”