Expert Reveals How Decision Will Affect Valuation Advice
A property law specialist at Irwin Mitchell has called on buy-to-let landlords not to ignore a Court of Appeal ruling which looks set to impact on rights relating to mortgage valuations.
The Court has upheld an appeal made by the Bank of Scotland, trading as Colleys, against a ruling in relation to a claim by buy-to-let landlord Emmett Scullion, who claimed the company had overvalued a new build buy-to-let property he purchased nearly a decade ago and was originally awarded £72,000 over the issue in October last year.
Colleys valued the property at £353,000 with an estimated rent of £2,000 a month, when Scullion was only able to let it at a monthly rate of £1,050.
The firm was successful by suggesting that it was surprising, considering the property was an investment, that the landlord would only rely on its report rather than seeking further advice on a valuation.
Lisa Shenton, a Partner in Irwin Mitchell’s conveyancing team who specialises in helping people buy and sell property, said the appeal ruling overturns an earlier High Court decision and has a significant impact on buy to let landlords.
She explained: “This decision will undoubtedly have an impact on the high number of people looking to buy property as an investment, as it is a clear that they cannot solely rely on a lender’s mortgage valuation in order to gauge the value of the investment property or the level of income they should expect.
“It is a firm decision which could spell the end of a number of claims made by landlords over buy-to-let mortgage valuations and also brings to light clear differences in how homebuyers and landlords should be viewing advice on property values. The Court of Appeal considered there is a distinction between those buying to let and those buying to occupy as their residence, with the latter being more deserving of protection by the law against the risk of negligence. .
“With the current increased demand for rental properties buying property as an investment remains an attraction for many people, but it is vital that they do their research and ensure they obtain professional valuation on any potential investment property."