Rise in Surveyor Negligence Claims by Property Investors - Reports Lawyer

1st December 2011

A LEADING professional negligence expert at national law firm, Irwin Mitchell, is reporting an increase in the region of 20% in the number of cases in which homeowners have launched proceedings against surveyors for overvaluing their property before they bought it.

Daniel Brumpton, an Associate Solicitor in the Commercial Litigation  Team at Irwin Mitchell's Sheffield office, claims that the number of new enquiries from people who believe they are the victim of negligence by surveyors is on the rise - with the largest proportion of cases coming from buy-to-let investors. Commenting on the increase, Mr.Brumpton said: -The increase in buy-to-let property investment ahead of the credit crunch has been well-documented. Many of these landlords have however since struggled to find tenants due to an over supply in some cities and this in turn has forced many to sell in order to avoid defaulting on their mortgage. -Landlords rely on surveyors to provide both an accurate valuation of the property as well as the likely rental income that will be achieved. It appears, however, that an increasing number are alleging significant discrepancies between the true market value and the figures provided in surveyor reports.  A recent Court of Appeal decision in June 2011 (Scullion v Bank of Scotland Plc) provided some relief for surveyors when it supported a firm of surveyors in their role when providing valuation advice to a buy-to-let investor. In this case the judge argued that the surveyor did not have a duty of care as it would be reasonable, due to the size and sophistication of the investor, for them to expect that the buyer would have paid for their own report. Mr. Brumpton believes therefore that there is still scope for 'modest' buy-to-let investors to make successful claims. He said: -The Court of Appeal's decision in Scullion v Bank of Scotland Plc case earlier this year arguably made it more difficult for large professional property investors to successfully make claims for negligence. In the case of more modest investors however the door certainly hasn't closed and surveyors should be on notice of the risk of such claims. -I've noticed what is roughly a 20% rise in enquires during the last 12 months and there certainly hasn't been a fall since the Court of Appeal's decision. With the current state of the property market, I would expect the number of investors considering bringing such claims over the next year will go up even more.