Buy to let investors claiming surveyors overvalued their properties are unlikely to win their claims as a landmark appeal has been withdrawn from the Supreme Court.
The important case of Scullion v Bank of Scotland was set to be heard before Britain’s highest court, but has now been withdrawn by the claimant property investor Mr Scullion.
He had first launched legal action in 2010 following the valuation of a property and projected rental yields which were not realised.
Mr Scullion had claimed that the valuer acted negligently in overstating the capital value and expected monthly rent that could be achieved.
The valuer was employed by Colleys, which is now part of Bank of Scotland, and instructed by Mortgages plc. Mr Scullion bought a property in Cobham, Surrey and applied for a £283,000 mortgage against the £353,000 purchase price. The valuation agreed with this price and said the achievable rental income would be £2,000.
But the property never rented for more than £1,100 a month, which did not cover his mortgage repayments of £1,400. He later sold the property for just £250,000.
His first case for damages went to court in 2010 and Mr Scullion was awarded £72,000 for the losses he incurred. The judge said Mr Scullion was an amateur investor and relied on the valuation to make his investment decision.
Previous case law had shown that the valuer’s duty of care extended to the property buyer, not just the lender commissioning the valuation report.
But at the Court of Appeal the following year the ruling was overturned and judges said buy-to-let investors are more likely to be more commercially astute than regular homebuyers..
Mr Scullion had lodged an action in the Supreme Court in an attempt to get this second judgment overturned but the case has now been withdrawn. There has been no indication of whether an out-of-court settlement has been reached.
This means valuers appointed by lenders have no duty of care to buy-to-let investors. Any claims against bank or building society surveyors that suggest negligence in their valuations are now likely to be rejected.
