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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Office and Customer Services Manager

£18000 - £24000 per annum: Recruitment Genius: This small but very busy (and f...

Recruitment Genius: Portfolio Administrator

£14000 - £16000 per annum: Recruitment Genius: This company has become known a...

Recruitment Genius: Mechanical and Electrical Engineer - Midlands

£35000 - £38000 per annum: Recruitment Genius: This leading provider of refrig...

Recruitment Genius: Sales / Account Manager

£22000 - £25000 per annum: Recruitment Genius: A Sales / Account Manager is re...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot