Comments from a recent panel event held by Paragon, a major specialist BTL lender, gave some insight into flats affected by cladding and their position on valuation appeals.

Lee Dennett, regional surveyor at Paragon Bank, said that cash buyers were snapping up clad homes with discounts up to 15% – 20% with a view to making a significant profit when works are carried out. However there’s a real risk that service charges increase dramatically as the freeholders look to recoup costs over time. Its certainly a risky strategy, and onerous service charges are starting to have an impact on BTL mortgage affordability as more lenders factor these into their equations.

During a presentation before the panel discussion, Jason Wilde, national sales manager at Paragon Bank, spoke about the process of appealing a valuation: “If a surveyor has done their job properly to start with, then it should be naturally quite hard to appeal a valuation. Because they’ve got all their comparables and are using local market knowledge… it should be quite difficult to appeal.” 

In approximately 15 years at AALTO we have seen only a couple of successful appeals, usually on technical grounds rather than based on comparable data. The problem is that there’s zero incentive for a surveyor to change their opinion because by doing so they show they haven’t done their research correctly and no mechanism to compensate for the extra work. Much of a surveyors assessment is is very subjective though and it remains a very arbitrary and random factor in the process of valuing a property. The Scottish system of providing a valuation upfront on purchase does provide some better reliability but doesn’t usually factor rental income or any specialist information that might be required for Houses of Multiple Occupation or Holiday Lets.