COMMENT
What value the surveyor? If we want progress in the housebuying process, the surveying industry must evolve, says Alison Beech.
T
oday’s uncertain economic environment is putting pressure on the surveying industry. By focusing on developing a
collaborative relationship, surveyors and lenders can secure both their interests, ensuring the property valuations profession has a sustainable future and that low risk lending remains a priority. The past five years have witnessed
significant transformation across all sectors of the UK economy with numerous challenges, not least the property and financial services industries. We’ve had to adapt to coming out of a market boom into a downturn as well as to changes in guidelines and regulation and a plethora of technological innovations. Not only have these changes been significant in themselves, but they have also been underpinned by a fundamental shift in attitudes to the property market cycle and consumer sentiment.
Boom and BuSt While there have been other notable periods of boom and bust in the recent past, commentators agree that the credit crunch and recession of the noughties has been unique in terms of its depth and longevity. The surveying industry, in particular, has
been presented with many challenges which have prompted its relationship with lenders to evolve. House price growth in the twelve
months to December 2005 was weak compared to that in the first part of the decade. However, as prices climbed to a new peak in 2006, in a particularly bullish and fast moving market that kept surveyors busy, talk turned to the rise of Automated Valuation Models (AVMs). The prediction was that AVMs would account for up to 60 per cent of valuations
34 NOVEMBER 2011 PROPERTYdrum
SurveyorS under preSSure Today, it seems clear that surveyors’ relationship with lenders continues to be put to the test as they work individually to adjust to the new market conditions, as well as the pressures on performance and cost levied by the authorities and market forces. Lenders, who had been faced with
repairing their balance sheets and getting their capital requirements in order, have placed a new and determined focus on low risk lending. As a bi-product of this approach, until recently, homebuyers have needed much higher deposits and a spotless credit rating and very low levels of lending were carried out. While this cautious attitude has
Perhaps it is time for the
various industries
to take stock.” Alison beech spicerhAArt
by the end of 2008, so surveyors had to emphasise their USPs and strengthen their relationship with lenders. Within months, however, the credit
crunch had hit and valuations were reflecting the downturn in the property market. AVMs, which had not been tried or tested in a falling market, were not deemed to be reliable and their use was scaled back. As the extent of the downturn was
realised and mortgage lending fell to new lows, both lenders and surveyors came under scrutiny for the lending that had occurred in the rising market.
remained, we are now seeing lenders attempt to increase their lending once again in order to meet lending targets. This has manifested itself in new products becoming available, but also in the demand placed on surveyors to carry out mortgage valuations in tight turnaround times for low fees. And all this at a time when the surveying industry is already stretched due to declining numbers. Lenders are perhaps taking a different
type of risk now. One of the lessons to come from the credit crunch is that quality is more important than speed when it comes to lending against property. So it makes sense that a more considered valuation approach would more likely lead to a better lending decision. What’s more, quality may be compromised by squeezing the value chain too hard. With the sudden sharp downturn, and
from their own experiences, surveyors are only too aware of these risks. Their considerable and impartial experience can only help to strengthen the foundations on which the future of the property market is built.
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