Professional negligence claims against property agents drop by two thirds

High Court claims against estate agents and surveyors for profession negligence fell 65 per cent in 2014, City firm RPC research has found.

Lenders accounted for 86 per cent of all claims against property surveyors in 2014, with high-street banks Barclays, Santander, and RBS launching the bulk of actions against property firms and surveyors. The number of claims brought against property agents fell from 193 in 2013 to 67 in 2014

Alexandra Anderson, a partner at the firm, commented: 'Professional negligence claims against valuers surged during the recession as residential and commercial property prices plummeted and lenders sought to recoup some of their losses.

'Over valuations of property carried out during the height of the pre-2007 property boom culminated in nearly 200 claims reaching the High Court in 2013, but the fall in claims in 2014 suggests that we are now reaching the tail end of these types of claims.'

Anderson explained that with claimants having a six-year window in which to launch legal proceedings against a valuer, claims relating to falling house prices incurred during the recession have dropped off.

'Lenders with high exposure to subprime mortgage lending or high yield commercial property were heavily impacted during the financial crisis so it is not surprising to see that they were the most aggressive litigators. When house prices go into free fall as they did in 2008, surveyors who have valued the collateral for the loan are often left vulnerable to professional negligence claims,' she added.

Negligence claims against surveyors and estate agents typically include the over valuation of residential property development; over valuation of commercial premises like retail units; and the valuation of a property revealed to be fraudulent as property prices fell.

The broad based recovery in the UK property market has also helped to reduce losses incurred by lenders on repossessed properties, thereby lessening the motivation for lenders to pursue claims.

Anderson added: 'Some insurers who withdrew their cover from the property market or greatly reduced their book during the credit crunch, are now considering re-entering the market following the fall in claims against property agents.'

 

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD