Shortly after the Leave vote was returned in June, the Royal Institution of Chartered Surveyors issued a clause which could be used by valuers to alert lenders to the risks of market uncertainities.
It stated that valuers should express the context of the valuation in cases of market uncertainty due to unforeseen financial and macro-economic events. Steve Goodall (pictured), managing director, Legal & General Surveying Services, and British Mortgage Awards winner, said that while the Brexit clause may be well intentioned, it was hugely problematic for lenders because it sowed seeds of doubt about the valuation they were being offered.
Since the clause was introduced, lenders, lawyers and property experts have criticised the clause for holding back the market, as buyers and lenders become uncertain about the reliability of valuation reports.
Goodall said: “It’s no surprise lenders, brokers and buyers do not welcome this as it muddies the waters and can unnecessarily impact elements of lending such as loan-to-values where lenders understandably seek to protect themselves against the uncertainty.”
He explained that it was up to valuers to use their experience and expertise to derive a snapshot of an individual property’s value, within a market at that moment in time.
“It is not the job of valuers to set the market or try to second guess it,” he said.
“We have recommended our valuers should not routinely include generic Brexit-related phrases when reporting to lenders. Valuers should employ such a phrase in specific circumstances where the subject property’s market is materially affected due to supply and demand changes and where any use is in keeping with lender reporting expectations.”