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Investors face huge buy-to-let losses after valuation errors

Buy-to-let investors who are facing huge losses say a panel surveyor used by their Government-backed lenders over-valued their properties – in some cases by almost double.

The lenders which mortgaged the six properties in question – BM Solutions and Bank of Scotland, now part of Lloyds Banking Group, and Mortgage Express, part of Bradford & Bingley, say they are not responsible for the valuations. These were all carried out by the same surveyor, a firm on their approved panels, this week’s Money Marketing reveals.

The three investors bought the properties in the same area of Sheffield in late 2007 or early 2008, which were each valued by Lexicon Surveying Services, now in administration.

The investors have not been able to earn the rental income forecast, leaving them struggling to cover mortgage repayments. One investor, who did not want to be named, has had her two properties repossessed and owes BM Solutions and Mortgage Express more than £300,000 as they sold for less than half the valuation price. All six properties were bought from the same development companies, Shevell Properties and Pimlico Property Investments, which have since changed their names to Camden Symonds and Symonds Camden respectively.

The property firms referred the borrowers to mortgage broker Ambergate Business Services, which is now in administration. The investor whose properties were repossessed says she has no means of repaying this debt. Her first property was valued at £335,000 in 2007 and sold for £145,000 after repossession this year while her second was valued at £325,000 and recently sold for £160,950.

The Nationwide house price index shows that a property in the region valued at £325,000 in Q4 2007 would have fallen by around 12 per cent to the current date.

Single mother Maureen Macdonald, 39, has handed back the keys for her three properties to her lender, BOS. She says independent revaluations have shown her properties had been over-valued by between 75 and 90 per cent.

In the worst case, a property valued at £325,000 by the panel valuer in December 2007 was retrospectively revalued by independent surveyor Hale Saunders as having been worth just £165,000 at the time of purchase. The revaluation said rental predictions had been “grossly excessive”.

The third borrower, Chris Fletcher, 53, is struggling with mortgage repayments to BOS with rental income around £400 a month less than forecast and his property apparently over-valued by £100,000. His complaint to the Financial Ombudsman Service was rejected.

Fletcher says : “Sure, we have all made poor decisions in this process and we all have to learn our lessons the hard way sometimes.

“But when the banking fraternity get bailed out with billions of pounds of taxpayers money to enable trade tocontinue, I find it sickening that I cannot even get a face-to-face meeting with BoS to discuss how to manage our joint crisis.

“We have been left on our own to sort this out. And if it all goes wrong, after taking all that I own, they will send on the bill for the shortfall to the tax payers. Banks need to be accountable for the people they engage to further their commercial needs.”

Fletcher adds: “We need the banks to agree to a rescue package like the one they received from the British taxpayers – whereby a lower interest rate would enable us to maintain the property and get it back into good shape.

“I’m not looking for billions, like the banks received, just time to help me get back on track.”

Lloyds Banking Group and Mortgage Express say they acted in good faith as the valuer was RICS-approved.

A Lloyds Banking Group spokeswoman says: “For those customers who subsequently find themselves in financial difficulty, we always ask that they make contact with us as soon as possible.”

A Mortgage Express spokeswoman says borrowers are encouraged to get their own more detailed valuation reports and any suspicion of wrongdoing would be investigated.

Camden Symonds and Symonds Camden could not be reached for comment.

If you have been affected by any of the issues raised by this story, please contact


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There are 18 comments at the moment, we would love to hear your opinion too.

  1. A vast overreaction to this will be why surveryors are now grossly undervaluing BTLs, both in terms of capital value and rental yield. I’ve got a client with a property currently let at £850pcm, but valued by the surveyor at £650pcm – ridiculous!

  2. If I were investing a third of a million I think I would be more careful. Sell to the greedy (this lot) buy from the desperate (probably the same people now) – first rule of investment.

  3. Single mother with three properties? Oh, bless. These are greedy speculators who got burnt and didn’t do their own research, blinded by the rigged market. Hopefully the properties will be bought by people who need a home, not resource grabbing ‘investors’.

  4. Dermot Brannigan 7th May 2010 at 10:11 am

    Since when do ‘investors’ like these ever pay any attention to a surveyors rental assessment?

    If he’d undervalued the rental, they would have told him he didn’t know what he was talking about.

    Trouble is the market thinks differently.

    The joke of it is that I bet each of these ‘investors’ considered themselves cautious investors, and yet put all their money in one property

  5. Whatever happened to caveat emptor?

    Does this mean that people should cross the road with looking and then claim compensation if the number 9 bus mows them down.

  6. Have to agree with the above comments. First rule of investing is do your own research!!!! Rather than sit at home watching Sarah Beaney thinking you can make easy money.

    Nobody deserves to be swindled, but come on people. The banks have been tucked up just as bad as the customers and what will happen? Nada

  7. Lee Jones owed these companies he worked for Morris Properties Previously, this matter needs investigating by the Serious Fraud Office

  8. Buying into just one asset class is not “investing”.

    Speculating yes investing no. Come on MM try and educate where you can.

  9. As if the banks would deliberately put themselves at risk by arranging for properties to be overvalued. Not only that, but to suggest that they are somehow responsible because the ‘surveyor was on their panel’ is like saying a mortgage broker is responsible for the actions of every lender on their panel – ridiculous! Banks are required to look at all cases of genuine hardship sypathetically under BCOBS, and FOS is careful to monitor arrears handling complaints, but I agree with all the earlier comments – these are greedy people, who didn’t properly research, probably self-certed their income, then wonder why it all went belly up.

  10. I agree that the ‘investor’ has been niave in the extreme, however, if the surveyor was on the banks “approved” panel and in effect acting for the bank (as valuation reports do), then i’d suggest that the surveyor will owe a duty of care to both the bank and anyone who would be likely to rely on the report, ie the purchaser. If the surveyor can’t be sued, then I’m pretty sure that the bank can. That said, I’m no lawyer. In this case though the introduction was via the mortgage broker and they may have some liability – definitely one for a legal opinion.

  11. I agree that the banks are not responsible, but find it hard not to sympathise with these people. Doesn’t it sound suspiciously like the original vendor and the surveyor (and possibly the mortgage broker) were working together to overprice the properties in 2007? How can borrowers (or the banks) be expected to realise that a surveyor is not doing his job properly, as in this case.

  12. Chris Fletcher 13th May 2010 at 10:22 pm

    I said that ‘we’ve all made mistakes’. I wasn’t trying to be greedy; this was hopefully going to increase the pension I don’t have – or ever will now.

    The reason I want this story told is to change the way things happen. An FSA registered broker, RICS surveyor, Law Society solicitor and a high street bank. I bought my residential house using that formula and everything seemed to work fine. I buy a BTL investment, now I’m greedy and should have done more research.

    When 23 properties are bought using the same circle of ‘professionals’ and then all go belly up with shortfalls of nigh on 4 million for someone to pick up the tab, call me old fashioned (and greedy if necessary) but I think this needs to be investigated.

    Pip, pip.

    The Greedy One

  13. How many of the investors burnt had to stump up a 15% deposit for these properties? At £325k value that would have equated to just shy of £50k….I’m assuming not many did.

    It is likely that the deposits were gifted, which made selling the initial proposition a lot easier.

    I can sympathise with Chris Fletcher et al, as the assumption would be that the professionals are there to protect you.

    The reality is that in “boom times” risky behaviour is prevalent among so called professionals and institutions which unfortunately endangers an unsuspecting (and unprepared) novice investor.

    In a downturn however, an investor is much more “protected”, but only as a side effect of increased financial regulation, and things such as banks protecting themselves (low loan to values), Surveyors protecting themselves (Conservative valuations) and Lawyers protecting themselves (more cautious due to increased litigation).

    – They will all of course say these measures are in place to protect, YOU.

  14. Darren Shaughnessy 7th July 2010 at 2:14 pm

    I think there is something fundamentally wrong here. The surveyors have come up with prices at the outset of a development in association with the developer and the developers lenders. if these valuations are just plain wrong then it is immoral at the very least for the developer to chase the intended purchaser for not completing on a property purchase where the property is not ‘fit for purpose’, ie: is suitable for mortgage purposes at the purchase price.

    I work for a company called the Financial Claims Centre and we specialise in surveyors negligence claims and this is a scenario that I am going to discuss with our solicitor and barrister. I will feedback to this forum once I have discussed this with them.

    • Hi Darren,

      Seven years on and I’m still challenging Lloyds (Bank of Scotland) to help me deal with the BTL overvaluations it was involved in back in 2007/2008.

      Many doors have closed along the way, as all the ‘third party’ professionals involved in the buying process have gone bust. Ambergate, the IFA, Lexicon Surveying Services (a RICS registered panel surveyor for Bank of Scotland), O’Rourke Reid, the law firm and Shevell/Pimlico Properties, the developer.

      My main hope was going for Lexicon, but they went into receivership and then within weeks, Vantis, the administrators also went bust?! And so lots of dodgy behaviour involving Lloyds went down the pan with little hope of getting it out in the open. Until recently when the Reading scandal was revealed.

      I have a letter from ‘the chief executives office’ at Bank of Scotland dated July 2010 in which the BoS employee sympathised with the plight of the troubled BTL investor, but wrote that the bank bore no responsibility ‘as we too were victims of the scam’!

      I think I’ve managed to hang on all this time just paying a percentage of my BTL mortgage by challenging BoS/Lloyds to investigate further, because of its admission to be involved in a ‘scam’. Lloyds has conducted numerous ‘internal investigations’ and writes to me to say that’s the end of the matter. I write back and ask to see what its investigations have unearthed and I’m told that this cannot be divulged. So Lloyds is judge and jury. I’ve got no price!

      Anyway, I’m still fighting and will one day get Lloyds to admit that it should have stepped in to help me and others from going down the pan. If it had joined me in bringing these ‘fraudsters’ to book, a lot of misery and heartache would not have taken place, but more importantly, many lessons would have been learned by both the investors and banks in dealing with this sort of scam effectively.

      I don’t know if you ever looked into this further, but I’d be keen to learn if you did.

      All the best,


  15. Chris Fletcher 17th July 2010 at 1:42 pm

    Myself and several other ‘investors’ who have been affected by the collusion of developers, financial advisers, surveyors and who knows, even solicitors, will all be keen to hear your take on our situation.

    As you can see from the case below, the banks are keen to chase surveyors when the problem affects them directly. All I’ve ever asked Bank of Scotland for is its help and access to advice from its departments which must include legal experts, fraud specialists and financial advisers. If I had been given a face-to-face chance to learn from BoS as to how to fight for justice, rather than a host of replies saying nothing and absolving BoS from any involvement, I would not have had to go running to the press.

    Luckily, I’ve always bowled uphill into the wind, so this situation is a perfect challenge for me – and I have a feeling that there’s going to be a very nasty shock around the corner for those professionals who were involved in this saga.

    Surveyors Negligence – Surveyors Negligence

    Outline case:

    Emmett Thomas Scullion, a buy to let investor purchased a flat in Cobham, Surrey. The purchase price of £352,950 was supported by a valuation from Colleys Surveyors (now part of Bank of Scotland). This valuation amounted to £353,000 with a rental assessment of £2000 per month. The developer offered a gifted deposit of 15% of the purchase price.

    Once Mr Scullion realised that his self-funding investment was in fact making a loss due to the rental income amounting to nearly half the cited figure he decided to sell and take a loan to cover his loss.

    Scullion subsequently took action against Bank of Scotland claiming that the surveyor owed him a duty of care. This 3rd party duty of care had previously been established in the case of Smith v Bush in 1990. This 3rd party duty of care was allowed on the basis that an average consumer in a relatively low value transaction (compared to commercial transactions) would rely on the lenders valuation report and that the surveyor would reasonably expect the purchaser to rely on his report.

    In the case of Scullion v Bank of Scotland the purchaser bought his property via a buy to let mortgage. There could be a suggestion that this should be treated as a commercial transaction and therefore not benefitting from the 3rd party duty of care. Richard Snowden QC sitting as deputy High Court judge on 18th March 2010 said that a buy to let purchase is no different to a residential house purchase in that the duty of care that was owed by the surveyor applies to buy to let purchasers also. In fact, Richard Snowden QC went on to add that the purchaser is more likely to be reliant upon the valuation of the surveyor as the purchaser is likely to be dependent upon the rental income from the property.

    This outcome is great news for the buy to let investor who has found themselves the victim of overvaluations by a surveyor.

  16. To all those understanding & lovely people who had nothing but bad things to say about the investors, perhaps he who is without sin should cast the first stone? Have you never made mistakes in your life? At the end of the day the scumbags behind this scam have effectively broken the law by committing mortgage fraud, but no one seems to have a bad thing to say about them!!! Perhaps they deserve a medal for causing untold misery and worry to decent people who were naive (or stupid) enough to get involved in their nasty little deals. You know very little about the personal circumstances of the ‘investors’ and it’s very easy to disrespect them instead of critisising the real villains of this whole sad and sorry affair.

  17. The reality is that there has been fraudulent activity amongst the property limited companies which is not abnormal.However RICS valuers and Solicitors who do not give duty of care to their clients are also fraudulent/neglectful. The fact that a person chooses to purchase investment property whatever amount does not mean they are ‘greedy’. The only people who use this label are those who are too scared to venture out into business themselves and relish in the ‘told you so’ culture. RICS valuations affect everyone not just buy to let purchasers.

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