Litigation experts are predicting fewer claims by lenders who seek damages for negligent property valuations made during the economic boom of the late Eighties after a House of Lords ruling last week.
Lawyers had been expecting a deluge of claims following a Court of Appeal case earlier this year. The court had ruled that lenders could claim for losses suffered as a result of the property slump, providing they could prove they had originally lent on the basis of negligent valuations.
But the House of Lords has capped claims at the difference between real and negligent valuations rather than allowing lenders to claim the entire market loss on a property. Consequently, the total potential liabilities of valuers and their professional insurers will be far less than anticipated.
David Stevens, property litigator at Norton Rose, said: “Lenders will only take action if there is a big differential between real and negligent valuations. Those hoping to recoup all their losses from a decline in values will be disappointed.”
Myfanwy Badge, litigation partner at Lovell White Durrant, agreed but added: “Valuers will still, in many cases, bear a significant proportion of the losses suffered by lenders – the more negligent a valuation, the more of the lender's loss they will bear.”