By using this website, you agree to our use of cookies to enhance your experience.
By Bruce Burkitt

Founder & Managing Director, Property Experts


Investors – how to avoid the down value trap

Recent reports that over half of all London homes on the market last year were downvalued by lenders was somewhat concerning but not surprising.

Homes in and around the capital have always achieved a premium, however, with the aid of technology the modern buyer is far savvier and lenders are more cautious than they once were, so it is crucial sellers and developers price correctly from the outset to avoid problems, potential delays and possibly losing thousands of pounds down the line. 

It is also crucial to monitor the markets, as there will always be periods of doom and gloom. For example, at the beginning of the year with a leading bank predicting a fall in house prices between 2-5% by year-end, were immediately quashed with the rush of activity, fuelled partly by the SDLT holiday, which saw the Treasury SDLT transactions rise by 168% in the first half of 2021 compared to the same period last year.


Despite a slight cooling following the end of the SDLT holiday and coming out of the typical property summer quiet period house prices have once again achieved record appreciation, with August seeing the largest monthly rise in 2021 at 2.1% totalling an increase of 6.8% in the year to date. Across the UK overall property values are up by 13.2% in the year to June 2021, the largest annual growth since November 2004, beating the records achieved in the great property boom of 2014.

This trend is unlikely to wane as the year comes to a close, with mortgage rates at an all-time low – some providers are offering short-term fixed rate of 1%, which is unheard of in the UK – the return to offices now in full swing and the gradual return of international travel driving activity further.

At one of our new developments, we have had value proposals revised three times in the past two months, as agents see the huge rise in activity and predict even larger value growths, so this goes to show that if a developer can produce a well-designed scheme in a good location then the values should always hold strong and when the time is right they could even achieve a sharp value growth. This would also pass onto the purchasers who would benefit from the same elements and the years pass by and the market matures.

Moving onto matters that are out of your control, bidding wars and gazumping is an aspect of the process that can be out of your control yet lead to lenders disagreeing with what was paid when conducting their own assessments. We have had to step in on a number of occasions to manage the bidding process, if mortgage buyers are involved, to ensure the final offer remains within reality. 

Another way to ensure you avoid being downvalued is to price your home or development realistically. A live example for us is a project we’re set to launch in South London. We have had three separate valuations for the multi-unit scheme, each differing in price and whilst it’s always tempting to opt for the highest amount we want to be sure that we go to market at the right level. We have followed this same method at our most recent project launches and each one has sold in record time with no issues, which is proof that if you price correctly you can sell quickly and move on to the next project instead of falling short of the finish line.

So, for those looking to maximise their asset values or achieve the highest possible price on their home, now is as good as time as any to enter the market and take advantage of the boom that has managed to clear the gloom that clouded the sector not even 21 months ago.

*Bruce Burkitt is the Founder and Managing Director of Property Experts


Please login to comment

MovePal MovePal MovePal
sign up