Inquiry launched into home-buyers' valuation fees: Monopoly investigation will focus on restrictions placed on choice for mortgage survey

THE WAY house-buyers are forced to pay for a valuation of their property before lenders will agree a mortgage is to be investigated by the Monopolies and Mergers Commission.

The Office of Fair Trading, which instigated the inquiry, has had complaints from individual valuers and surveyors, their representative bodies, and the public.

House-buyers have to pay for a valuation carried out for the benefit of the lender, which has to check that the property is worth at least the amount it plans to lend against it.

The chief complaint is that lenders only accept valuations from a limited list of surveyors. If a buyer wants to pay for a more detailed report on the state of the property, then a valuation for the lender's purpose can only be included if the surveyor is acceptable to the bank or building society.

Otherwise, the buyer will have to pay twice over - for the survey and a valuation.

A simple valuation which costs from pounds 90 to pounds 140 is taken by 82 per cent of borrowers; while 15 per cent take a house-buyer's report which looks at the structure of the building and typically costs pounds 150 to pounds 200; and just 3 per cent take a full structural survey which can cost pounds 300 to pounds 500.

Pamela Hirst, director of standards and practice at the Royal Institution of Chartered Surveyors, said there had been a marked reduction in consumer choice in recent years as lenders had cut down the number of surveyors on their panels as the property market slumped.

Many valuers work out of estate agencies. Ms Hirst admits that in some cases, deals are struck so that lenders only agree to put valuers on their panel who channel mortgage business their way, and estate agents direct buyers to lenders for whom they act as valuers.

Sir Bryan Carsberg, Director-General of Fair Trading, said: 'I am concerned that lenders have little incentive to keep down the cost of the service, because the cost is passed on. And I am concerned that borrowers have little opportunity to keep down the charges they have to pay because of restrictions on their ability to shop around.'

The Council of Mortgage Lenders said it believed the investigation would show that the procedures were prudent and reasonable.

Lenders will not usually accept a mortgage valuation brought along by a potential home-buyer. A CML spokesman said: 'Any lender accepting such a valuation would be surrendering control of a vital part of the lending process and exposing itself to an unacceptable risk of fraud.'

Lenders are also bound to follow guidelines imposed on them by insurance companies which insure them against losses on their mortgage business. They will frequently insist, for instance, that soleETHER write error practitioners are not allowed on the panel of surveyors because there is judged to be a greater risk of fraud.

The Consumers' Association said that the move was good news and was 'long overdue'.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Software / Web Developer - ASP.NET

£35000 - £45000 per annum: Recruitment Genius: This company produces a wide ra...

Recruitment Genius: Office / Sales Manager

£22000 - £32000 per annum: Recruitment Genius: Established and expanding South...

Recruitment Genius: Administrative Assistant / Order Fulfilment

£14000 per annum: Recruitment Genius: An exciting opportunity to join a thrivi...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones