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Almost half of UK property transactions down valued during pandemic – HBB Solutions

  • 26/04/2022
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Almost half of UK property transactions down valued during pandemic – HBB Solutions
Nearly half of UK property transactions during the pandemic could have been down valued, with Wales, London and Yorkshire hit particularly hard.

Around 866,906 out of a total 1.95 million property transactions may have been down valued between January 2020 and January 2022, according to research from HBB Solutions based on UK House Price Index data from HM Land Registry.

Proportionally, Wales had the most down valuations, impacting around 63 per cent of transactions. England and Scotland came to 45 per cent and 31 per cent respectively.

This was followed by London at 59 per cent and Yorkshire with 58 per cent.

The South West, East Midlands and East England had the lowest proportion of down valuations at 26 per cent, 27 per cent and 31 per cent respectively.

However, HBB Solutions found that numbers-wise the South East had the most down valuations at 129,394 property transactions. The North West came second with 118,696 down valued property transactions, and London third with 107,168.

Northern Ireland had the lowest number of down valuations at 26,954. North East and East Midlands had 32,011 and 38,913 down valued property transactions respectively.

Down valuations don’t always mean the sale has to fall through

HBB Solutions pointed out that a down valuation didn’t always mean a clients’ home isn’t worth what they think, and another buyer with a different lender could agree to their price. However, this would mean repeating the process of finding a buyer.

The company said: “You can choose not to budge and leave the ball in the buyer’s court for them to find a solution, or you can rectify any issues that have been highlighted as the reason for the down valuation.”

HBB Solutions said the “quickest path to a resolution” is for sellers to renegotiate a price, or they could wait for house prices to rise so the down valued price increases in line with their expectation.

It added that a buyer could try a different lender to carry out the survey if the seller won’t budge, take out a loan to cover the shortfall or increase their deposit to “negate the cost of the down valuation”.

Chris Hodgkinson, managing director of HBB Solutions, said: “Down valuations can be an extremely frustrating part of buying or selling a property, especially when both buyer and seller have agreed on a price they are both happy with, only for the sale to be scuppered by a third party opinion.

“In many cases these reductions are justified, but in a market running as hot as we’ve seen during the pandemic it’s not unheard of for lenders to influence this decision due to their own fears around escalating market values.

“Unfortunately there’s not a great deal that can be done to immediately remedy the issue other than the buyer coughing up or the seller reducing the asking price. So it’s hardly surprising that many sales, and the wider chains they sit within, can be jeopardised due to a down valuation.”

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