News - Legal
Mortgage Solutions | 13 Oct 2011 | 08:00
The latest Mortgage Solutions poll has revealed 70% of brokers believe that home buyers should not have to pay for a lender's valuation costs, while 30% disagree.
The response followed comments made by RICS residential director David Dalby at the Mortgage Solutions Surveyor’s Breakfast Briefing, where he said that lender's should pay for property valuation costs.
However, Simon Webster, managing director of brokerage Facts & Figures, said that it does not matter who pays for valuations, because the consumer will still ultimately pay the cost.
He said: “The lender will just add the cost onto the arrangement fee, so the consumer is unable to escape paying the cost.
“If someone lends you money, they are going to set a number of hoops for you to jump through and they are going to set a price.
"It is ultimately up to the consumer to make a judgement to decide whether they consider that price to be fair and reasonable.”
Webster added that the valuation fee is not of huge concern to borrowers, saying it is only a “small sum to pay” compared to the overall cost of a property.
However, he insisted that valuation costs could be considered unfair when looking at properties at the lower end of the market.
He said: “Where people are paying between £50,000 to £80,000 for a property, a valuation fee becomes a slightly more material figure and maybe even a slightly higher percentage of the overall purchase price.
"There is always an underlying cost to get a valuer to get out of bed, go to a property, look at it and write a report.
"However, it does not go up significantly beyond that because the valuer still has to do the same amount of work no matter how big the property is."
*Poll result accurate at the time of writing
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Recent comments
Try moving to Scotland - as the lender does not even arrange a survey (so they cannot skim £150 off what they pay the Surveyor) as they will accept the Home Report. It is a complete con in England and Wales that you get ripped off by lenders skimming - clearly the FSA should be doing something about this, sorry I forgot that they do not enforce TCF in the banks as they are to timid to do anything about actualy help Joe Public.
George Williamson
13 Oct 2011 | 12:50
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It is true that a borrower will end up paying for the valuation, how the real issue for borrowers is the difference in valuation fees between lenders/packagers, how can one lender justify a valuation fee of £450 on a puchase price of say £150,000 and another lenders charges only £280 to do the same thing, surely a more even playing field is waht is needed!!??
Ceiron Simmons
13 Oct 2011 | 13:49
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If you/I were lending our own money on an immoveable asset, I feel sure we would require a reliaable assessment of true value. The real issue surrounding lender instructed valuation of property is not cost to borrower but 'valuation bias'. By all means require a RICS Survey, but let the buyer instruct an independent professional without allegiance to any lender.
John
13 Oct 2011 | 14:05
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I agree that the borrower will pay for the valuation by whatever means. I'm also not daft enough to expect this to change any time soon. But I do think that the lender paying for it and loading the arrangement fee would be a happier position for all concerned. The current situation encourages the borrower to believe that they have paid for a survey so they can rely on it to tell them that they are buying a sound property. But nothing could be further from the truth. The valuation isn't for them and it doesn't give them any protection. If the lender paid for the valuation at least the borrower might realise they should take out a separate Condition Report, as a minimum. We wouldn't buy a secondhand car without a test drive but borrowers are being lulled into buying a home without even kicking the tyres, metaphorically-speaking! (And the lender can load whatever premium they like on to the Arrangement Fee without any questions about how much the Surveyor is actually getting paid to do the job - which is not nearly enough...)
Tim Hague
14 Oct 2011 | 11:18
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