Firm sets aside £17m to meet claims
A leading firm of surveyors says it has put aside another £17.3 million to meet claims from lenders who offered mortgages during the property boom.LSL Property Services, which owns e.surv chartered surveyors as well as estate agencies Your Move and Reeds Rains, said the provision covered claims between 2004 and 2008 - a period surrounding the market boom and the subsequent fall in prices which left many people stuck in negative equity.
It said this "relatively high-risk" period saw lenders generally offering mortgages at high loan-to-value (LTV) ratios and considerable levels of buy-to-let and sub-prime lending.
The company outlined the extra £17.3 million provision in its results for the first half of this year, saying the rise in claims it has seen has partly been prompted by anticipated changes to "no win, no fee" rules next year.
LSL, which has already put aside or paid out £20 million over the issue, said that high levels of claims have been "industry-wide" and it has tightened its own internal controls as the market has changed.
Steven Gould, director of regulation at the Royal Institution of Chartered Surveyors (RICS), said the body has seen some "market distress" among its members due to generalised claims being made as a result of house prices going down.
He said that while claims relating to negligence over surveys where something has been missed were relatively easy to prove or disprove, ones relating to valuations are often more complicated to deal with as claims tended to be less specific.
The value of the property on the day of the survey is based on comparisons with similar homes, he said.
Lenders who often use no win, no fee solicitors are increasingly pursuing claims "aggressively" before any changes to the law take place, LSL report said.
The £17.3 million, which equates to £13.1 million after tax, will be partly offset by a programme to dispose of some freehold properties currently held in the balance sheet which is expected to raise around £9 million.
Steven Gould, director of regulation at the Royal Institution of Chartered Surveyors (RICS), said the body has seen some "market distress" among its members due to generalised claims being made as a result of house prices going down.
He said that while claims relating to negligence over surveys where something has been missed were relatively easy to prove or disprove, ones relating to valuations are often more complicated to deal with as claims tended to be less specific.
The value of the property on the day of the survey is based on comparisons with similar homes, he said.
Lenders who often use no win, no fee solicitors are increasingly pursuing claims "aggressively" before any changes to the law take place, LSL report said.
The £17.3 million, which equates to £13.1 million after tax, will be partly offset by a programme to dispose of some freehold properties currently held in the balance sheet which is expected to raise around £9 million.
© 2013 Press Association