A builder who entered the ‘buy to let’ market after acting on a negligent valuation has been awarded more than £70,000 by the court.
He intended to buy a property to let it out and engaged a firm of surveyors to value the property and to advise on the expected open-market rental. The valuation provided was £353,000 and the expected open-market rental was estimated to be £2,000 per calendar month.
The builder bought the property but then found that the expected rental was not achievable. As he would not have bought the flat based on a reasonably accurate estimate of the rental value, he sued the valuers for compensation.
The court found that the highest non-negligent rental valuation would have been £1,350 per calendar month, a rental which would not cover the mortgage interest on the purchase. The valuation of £2,000 was well outside the acceptable margin of error for such valuations.
Damages were awarded to the builder for the negligent valuation and to compensate him for the fact that he could not let the flat for a rental which would give him sufficient income to cover his basic outgoings on the property.
Damages were assessed for the period between 2002 and 2006 at £72,000.
Click here for guidance on things to consider before buying to let.