House prices will fall again in 2012, surveyors say, as more homebuyers sue for negli

geneer

http://blogs.telegraph.co.uk/finance/ianmcowie/100013916/house-prices-will-fall-again-in-2012-surveyors-say-as-more-homebuyers-sue-for-negligence/

Bit of a feedback loop going on.
More falls to come it seems.
And Rics will be the one taking their foot of the break.

House prices will fall by a national average of 3pc next year, the Royal Institution of Chartered Surveyors (RICS) predicts, but cynics may suspect the surveyors’ newfound pessimism is a reaction to rising litigation from homebuyers who have already lost money.
While 2012 predictions may or may not come true, solicitors Irwin Mitchell claim there has been a 20pc increase in the number of people seeking to sue surveyors for negligent valuations which led to property being bought for more than it was worth in 2011. Most litigants were buy-to-let landlords.
Simon Rubinsohn, RICS chief economist, emphasised that the surveyors are not predicting a house price crash and that valuations are likely to continue to be supported by shortage of supply. He said: “The lack of supply in the market is likely to prevent any significant house price declines.
“Transaction levels should see a slight increase, although mortgage lending is likely to remain subdued which will limit the scope for improvement. As a result of this, the lettings market will remain firm which means that rents are likely to increase further, albeit at a slower pace than in 2011.”
Similarly, estate agents LSL Property Services, report rising income and gains for buy to let landlords. But Daniel Brumpton, professional negligence expert at Irwin Mitchell, says falling house prices and rising rental voids are already prompting more homebuyers to go to court to recoup losses. He said: “We have seen an increase in the region of 20pc in the number of cases in which homeowners have launched proceedings against surveyors for overvaluing their property before they bought it.
“The increase in buy-to-let property investment ahead of the credit crunch has been well-documented. Many of these landlords have however since struggled to find tenants due to an over supply in some cities and this in turn has forced many to sell in order to avoid defaulting on their mortgage.
“Landlords rely on surveyors to provide both an accurate valuation of the property as well as the likely rental income that will be achieved. It appears, however, that an increasing number are alleging significant discrepancies between the true market value and the figures provided in surveyor reports.”
However, there is a limit to how much buy-to-let investors can hope to gain from playing the blame game. Earlier this year, the Court of Appeal ruled in the case of Scullion versus Bank of Scotland that surveyors may owe a lower duty of care to professional investors than owner occupiers.
Mr Brumpton commented: “The Court of Appeal’s decision made it more difficult for large professional property investors to successfully claim for negligence. In the case of more modest investors however the door certainly hasn’t closed and surveyors should be on notice of the risk of such claims.”
As other commercial lawyers sometimes say, where there’s a loss there’s litigation. If RICS is right and house prices continue to fall, expect more homebuyers to reach for their lawyers.

homelessskilledworker

geneer wrote: »

http://blogs.telegraph.co.uk/finance/ianmcowie/100013916/house-prices-will-fall-again-in-2012-surveyors-say-as-more-homebuyers-sue-for-negligence/

Bit of a feedback loop going on.
More falls to come it seems.
And Rics will be the one taking their foot of the break.

3%, and the rest!!

The UK economy is as good as stuffed in it's present state, house prices will plummet regardless of immigrants going home are low house building.

Graham_Devon

Trying to sue due to overvaluing house prices!?

Thats a bit pathetic. Is the BTL landlord trying to suggest he or she cannot take a look at the price themselves? Surely they have an idea themselves as to whether a house is overvalued or not. That is, afterall, THEIR business.

Or are they suggesting they are that stupid, they would pay any price the surveyor suggested it was worth?

Thrugelmir

This what the court of appeal ruled.

Court of Appeal Findings

However, at the Court of Appeal the judge decided that this was a “commercial transaction,” that people investing in let property were usually richer, were more likely to have multiple properties and were more “commercially astute.” As such, he implies that unlike someone buying a property to live in for themselves, they ought to be expected to do their own due diligence and, if necessary, obtain their own survey on rental valuation and capital value.

Also, the judge said, the lender was really only interested in the capital value of the property and any advice on rental value would be provided simply to confirm the property was suitable for rental purposes.

In summary, the decision was that the surveyor who provides a valuation to a lender does not owe a duty of care to a borrower who is seeking funds to buy a property for investment purposes.

Graham_Devon

Thrugelmir wrote: »

This what the court of appeal ruled.

Thanks Thrugel.

Sense prevailed!

Generali

Graham_Devon wrote: »

Trying to sue due to overvaluing house prices!?

Thats a bit pathetic. Is the BTL landlord trying to suggest he or she cannot take a look at the price themselves? Surely they have an idea themselves as to whether a house is overvalued or not. That is, afterall, THEIR business.

Or are they suggesting they are that stupid, they would pay any price the surveyor suggested it was worth?

1. Caveat emptor
2. There's no consumer protection for BTL products so they'll have an extra hurdle to get over I would imagine. NDG probably knows but she's presumably off sunning herself in the SE.

ReadingTim

Didn't this get posted the other day? In that case, I may as well say this again:

I'm not sure the extent to which one could sue on the basis of an opinion, and usually one that has so many caveats as to be practically useless.

Also, doesn't the article suggest that the large majority of claimants are BTL landlords suing over rent voids, rather than lower house values? In light of the Court of Appeal's rulling that surveyors owe a lower duty of care to professional investors than owner occupiers, it's correct that the door has been closed to the large professional investors; but it certainly isn't wide open for the rest, and I don't think you can say surveyors are on any more notice than they were before.

Finally, while the number of claims has, or may, rise; the article is silent on the number of sucessful claims, which is an entirely different matter!

Heyman_2

geneer wrote: »

http://blogs.telegraph.co.uk/finance/ianmcowie/100013916/house-prices-will-fall-again-in-2012-surveyors-say-as-more-homebuyers-sue-for-negligence/

Bit of a feedback loop going on.
More falls to come it seems.
And Rics will be the one taking their foot of the break.

Have you decided which solicitor you're going to use?

tartanterra

geneer wrote: »

http://blogs.telegraph.co.uk/finance/ianmcowie/100013916/house-prices-will-fall-again-in-2012-surveyors-say-as-more-homebuyers-sue-for-negligence/

I think a bit of context is needed here.

"We have seen an increase in the region of 20pc in the number of cases in which homeowners have launched proceedings against surveyors for overvaluing their property before they bought it"

20% increase of how many court cases?

I can't imagine it's very many.

Bit of a "non story", I think.

homelessskilledworker

Graham_Devon wrote: »

Trying to sue due to overvaluing house prices!?

Thats a bit pathetic. Is the BTL landlord trying to suggest he or she cannot take a look at the price themselves? Surely they have an idea themselves as to whether a house is overvalued or not. That is, afterall, THEIR business.

Or are they suggesting they are that stupid, they would pay any price the surveyor suggested it was worth?

It is not all that long ago that many property rampers were getting on their high horse about the nasty surveyors who refused to price property more than what many sellers and buyers were prepared to sell and buy for, they were getting it in the neck for freezing up the whole property market.

With accusations like this I can see surveyors digging their heels in even more.