The move, the most radical change to property financing since financial deregulation, would save homebuyers an average of about pounds 200. It has been prompted by attempts to cut the time and costs involved in property transactions - the valuation survey adds at least a week to the buying process. It is also seen as a step towards European harmonisation in the financial services sector - no other European country has a similar home-buying process to the UK, or recognises surveying as a distinct profession.
According to a report in the current issue of Building Engineer, mortgage lenders, both individually and within the Council for Mortgage Lenders, have been reviewing for some time the need to commission a surveyor's valuation on every property. Until recently, building societies were required by an act of Parliament (The Building Societies Act, 1986) to commission a valuation on every property used as security for a mortgage or loan. But now that most major building societies have become banks, they are no longer obliged to do so.
The Bristol and West building society, now part of the Bank of Ireland, has been reviewing its position and is likely to be the first to stop commissioning valuations. Decisions to lend will be based upon the credit- rating of applicants, with addresses and post codes of properties being used to estimate values. Random checks will be made. The other major mortgage lenders are expected to follow.
Ian Kennedy, Bristol and West's director of operations, said: "This move would benefit the consumer by saving them around pounds 200 for the valuation fee and reduce the time to receive a mortgage offer."
Arwell Griffith, of the Association of Building Engineers, who has been monitoring the proposed changes, said: "Most mortgage-lenders feel that credit-scoring techniques are now so reliable that they do not need individual valuations for each and every property. Some lenders are planning to check 20 to 30 per cent of properties; some will check one in 10."
The Royal Institution of Chartered Surveyors (RICS) has 94,000 members, some 10,000 of whom are involved in residential valuation work. Adrian Britton, director of professional services at the RICS, said: "We would be surprised if we see a loss of work; we think people will still want an expert report on the condition of the property they are buying."
At present, though, only one buyer in five pays for the more expensive homebuyers' survey, 80 per cent relying solely upon their basic mortgage valuation report - it is questionable how many of these will pay out for an independent survey if their mortgage application has already been approved without one.
Homeowners and sellers could forfeit 1 per cent of the asking price of houses if they break new contracts designed to crack down on "gazumping" and end delays, reports yesterday suggested. The Government is said to be considering plans whereby vendors and buyers would have to sign legal contracts and put up the money in a scheme to accelerate buying, deter "frivolous" offers, and stop owners selling to a higher bidder after initially accepting a lower offer. The money would go to the other side if either pulled out of the deal.Reuse content