'Rip-off' valuation fees hurt buyers and surveyors
An inquiry into property valuations has been launched amid complaints that lenders are exploiting borrowers and surveyors.
Despite charging hundreds of pounds for a valuation,
banks and building societies regularly keep most of the fee, paying as little as £55 to surveyors for each property assessment.
This has led to delays in home valuations
as many surveyors refuse to work for such small sums, holding up mortgage applications.
The lack of money and time pressure also forces some surveyors to do 'desktop' valuations where they simply check a local property website rather than inspecting a property in person.
In other words, borrowers are paying through the nose for a sub-standard or slow service.
Mortgage
valuations are not optional as they confirm to the lender that the property is worth what is being paid by the borrower. Fees are paid upfront by the potential homebuyer and are non-refundable if the purchase falls through.
Of the top four lenders only HSBC was prepared to disclose the amount it takes from its mortgage valuation fee.
‘We have a £35 admin fee and the rest goes to the surveyor,’ said a HSBC spokeswoman.’ We take a flat fee to cover our costs and the rest goes to the surveyors on our panel. We have two surveyors on the panel.’
However, Halifax, Nationwide and Barclays said the setting of valuation fees was a commercial arrangement and cited confidentiality issues for refusing to disclose how much they take.
All lenders have tiered rates, charging bigger valuation fees for more expensive properties.
For a £250,000 property HSBC charges a valuation fee of £197 compared to Nationwide’s £285, Barclays’ £355 and Halifax’s £400.
For a £400,000 property HSBC charges £263 compared to Nationwide’s £385, Barclays’ £450 and Halifax’s £525.
A Stockport-based valuer, who wished to remain anonymous, said he would charge £275 plus VAT for a private mortgage valuation. He added it was standard practice for a lender to charge around £380 to value a £100,000 pound property but give the valuer just £125 inclusive of VAT.
‘Half of the fee is going to the bank as an administration fee but I don’t know why because it is their job to organise the valuation,’ he said.
The valuer no longer works with banks, which typically have a panel of surveyors that outsource the work to local independent surveyors. Because they pay so poorly he said he would have to value 1,000 properties in 12 months in order to make £60,000 a year.
He said there fewer local surveyors are willing or able to work on
bank mortgage valuations meaning there are long
delays for borrowers. These delays, which can be up to five weeks in some areas, cause property deals to fall through.
The surveyor accused some lenders of 'ripping off' consumers with the practice of 'desktop' valuations.
He said it would make more sense if borrowers could provide a full survey or homebuyers' report that they have commissioned privately and use it to prove the worth of a property to a bank rather than ‘shelling out’ for both a private survey and a mortgage valuation.
‘Banks don’t accept individual mortgage valuations but they need to accept structural surveys, why should the customer shell out twice?’ he said.
Solving the problem
The Royal Institution of Chartered Surveyors (Rics) has launched a consultation to look at the problems with mortgage valuations in response to mounting concerns from its members about delays and unfair terms from lenders.
‘There are some members telling us it is not worth their while [to do mortgage valuations] and that goes back to needing a better balance.’
http://citywire.co.uk/money/rip-off-valuation-fees-hurt-buyers-and-surveyors/a696623
Well gosh Wally,
How did one guy get £900 when everyone else get's £55?
Couldn't be the quoted Appraisal Fee included the AMC or Bank split?? Could it?
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