Buy to let investor wins landmark court case
A buy to let investor has this week won a long-running court case against one of the UK’s leading surveying firms. The verdict, which adjudged that Colleys surveyors significantly over-estimated the rental income potential of a ‘buy to let’ property, is important as it could lead to a slew of similar cases from other property investors.
Over-estimating rental income
This case has been running for several years. Emmett Scullion, a self-employed builder, bought a property in Cobham in 2002 to help fund his retirement. The valuation by Colleys stated that the property was worth the asking price of £352, 950 and that it could be expected to rent for £2,000 per month.
However, Mr Scullion found that he was only able to let the property for roughly half of the surveyor’s estimate. After selling the property for a loss in 2006, Mr Scullion took the surveying firm to court.
The investor was awarded £72,000 in damages after the court found in his favour. The Guardian reports that ‘the damages cover his loss of rental income and the transaction costs of purchasing and then selling the flat.’
Judgement could pave the way for similar cases
This could well be a landmark case as it may lead to a number of similar claims from other property investors.
Alexandra Anderson of London law firm Reynolds Porter Chamberlain told The Guardian: “This is really significant because so many investors bought buy-to-let properties when the market was booming. Surveyors and their insurers will be concerned that the judgment could lead to many other claims by disgruntled landlords that their lenders’ surveyors overestimated the potential rental returns.”
Ms Anderson continued: “A lot of non-professional landlords entered the buy-to-let marke
t before the credit crunch. Many of them will have relied on the survey ordered by the [lending] bank. If the survey overvalued the rental income the property should achieve, they could have a similar claim.”