Richard Sexton, director of business development at e.surv, welcomed the attention given to the valuation process in a post-HIP environment.
CML commissioned researcher, Dr Michael Octavia, dispelled the myth that all valuations will be undertaken using Automated Valuation Methods (AVMs) the day after HIPs are introduced. His research showed that for the average lender it would take an estimated five years to reach 40 per cent of their AVM requirement, suggesting a figure of 8 per cent or less in year one.
Sexton, commenting on the CML research, said: “As e.surv had expected, lenders did indicate that they would consider moving towards using AVM’s over time. However, as Octavia’s research shows, this is unlikely to happen overnight. My belief is that the five-year timescale relies on continued benign market conditions. It is interesting to consider what has happened in North America, the home of the AVM, where penetration has reached only 10 per cent over a period of 15 years.”
Whatever the actual figure turns out to be, in the first year following the introduction of HIPs it appears lenders will still need to make use of the more traditional methods for a large proportion of their lending.
Also speaking at the CML conference was Richard Footitt, head of private housing sector for the Department for Communities and Local Government (DCLG), who highlighted concerns still exist regarding the number of qualified home inspectors that will be available at the time HIPs are launched.
In light of this concern, and changes to the traditional valuation processes it suggests to e.surv that lenders and future pack providers ought to work reasonably quickly to ensure that their own valuation/inspection requirements can be satisfied before, during, and after HIPs are introduced. There is some evidence that this is happening. Sexton believes that in keeping with e.surv’s own plans, the wider valuation/home inspector industry will ultimately give first priority to those relationships which have been mapped out in a contractual fashion. e.surv is recommending those using valuation services, at whatever level, give careful consideration to their needs over the next 18 months and make appropriate arrangements.
