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Mortgage borrowers repeatedly mis-sold valuation reports – surveyor

  • 18/03/2014
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Mortgage borrowers repeatedly mis-sold valuation reports – surveyor
Mortgage applicants are facing a misselling issue because they pay for the valuation, but are often unclear that they don't actually own the report, the director of Metropolis Surveyors has warned.

Karl Knipe, director of the Hertfordshire-based surveying firm, said customers are not being told when they sign the cheque for the survey that the report will belong to the lender and is not for the borrower’s benefit.

He said: “I find it amazing that within the industry we now operate there is no regulation in place which sets out that lenders or brokers have to explain to a client that the survey they have paid for is not their survey.” 

“It is a misselling issue,” he added. “Mortgage applicants are paying for something which they have very little input into in order for the bank to consider lending them money. I think that’s wrong and it’s not made clear. In fact it’s very murky.”

Knipe said this was not a criticism of mortgage lenders but a criticism of the industry as a whole.

In January RICS, the professional body for the surveying industry, commissioned an independent report into the property valuation sector which recommended that lenders took over the cost of the mortgage valuation.

It said that the responsibility for paying for the survey, which is to assess the market value of the property and not its structural soundness, should lie with the lender.

This would eliminate the confusion that the survey the applicant has paid for offers any individual benefit to them.

But the Council of Mortgage Lenders disagreed that this was a misselling issue.

A spokeswoman for the CML said: “Lenders’ own home-buying guides actively encourage borrowers to consider commissioning their own survey and consumer guides on our website are entirely clear and transparent on the issue.”

The trade body said borrowers should take the responsibility to read all the information provided to them seriously to avoid misunderstandings.

And she added that the lender, conveyancer, and the mortgage broker all played a role in ensuring the borrower understood the nature of the valuation and the costs and benefits of commissioning their own survey.

The Financial Conduct Authority said the valuation stage of the mortgage process fell outside its scope of regulation.

Jeremy Blackburn, RICS’ head of policy, said the issue of lenders covering the cost of the valuation report is something it will be exploring in greater detail over the coming months.


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