In a market shaped by post-pandemic shifts, technological disruption, and evolving consumer expectations, informed perspectives are more valuable than ever.
In this candid interview, we sit down with Paul Lancaster, Managing Director of Valunation - one of the industry’s most experienced voices in property surveying and valuation, to explore the state of the UK housing market, the growing role of automation and AI, and the enduring importance of professional insight.
Q: What’s your assessment of the current market?
I would say that the current market is slightly improved on this time last year, and it's probably the best market we've seen for some considerable time.
But it is a changed market. It's clear that since COVID lenders are, rightly, in my view, relying on automated and other types of valuation products which don't necessarily require a physical inspection, which obviously means, that there's a drop in the number of physical inspections being carried out.
Therefore, the number of surveyors involved in valuation work is less now than it was five years ago. We're lucky that we're one of the few larger firms that still carry out large volumes of valuation work, but increasingly, we carry out a larger volume of private client surveys. So while physical valuation work is diminishing in volume for everyone, we have filled that gap.
Technology and human insight
Q: What’s been the impact of technology on your business, and will AI continue to erode the demand for physical property inspections?
I think AI will complement the current automated / desktop valuation processes that are in place. As an organization, we are looking at AI, how we can use it, and how it may impact our business. I think what AI can't do is replace the eyes of an experienced chartered surveyor walking around a property undertaking a survey, even more so if that property is particularly difficult or complex.
Many properties still require a surveyor to go around and value them accurately. And in a challenging market, that insight from surveyors is arguably even more important.
In a growing market, automated valuations will always be on the right side of the curve. I think that we all agree that low LTV, mortgage lending on standard properties is the domain of automated valuation models these days. But we should not forget these products also require data, and that has to come from somewhere or someone.
If you're not feeding real, on-the-ground data into them, you may ultimately be building in an error into the model at some stage. It is, of course, entirely a matter for lenders’ property risk teams and their own policies.
Technology, in my opinion, should be complementary to our current business and our skills, and our experience, and not wholesale replacing it.
Most of the AI we experience today effectively trawls the internet and regurgitates information that's already out there. So if there is wrong information out there, then it may well get replicated in that process as well. We should welcome AI but also be cautious about how quickly we embrace it and inevitably, we want the AI output to checked or verified to ensure that it is correct and also appropriate.
Q: Has technology evolved a lot or do you feel that the fundamentals are still what they were ten of fifteen years ago?
I think the relationship is the same. I was involved in developing the first AVM business, which would have been 25 years ago. I'm very pro-AVM, and I think they absolutely do have a place. But I think you have to keep a very close eye on these models to make sure that the outputs are sound and that the confidence levels are high.
COVID proved that you could use AVMs and desktops for increasingly higher LTVs, and
that has continued, but in terms of complex valuations, complex properties, I think you'd always want a surveyor involved.
We want reassurance as well as answers. I heard a very good analogy many years ago. Would you want a robot doing a hip replacement for your aging relative? No? Well, in time, you might well have a robot doing a hip replacement, but you'll still want a skilled experienced surgeon overseeing it. The eyes of an experienced professional are still really, really relevant in the right circumstances.
It's about what is important for customers. Technology can be the right answer. I think upfront decisioning, at Decision in Principle, is a good example – where an AVM can pass or even provide an interim decision as to whether a mortgage will be granted on the property. That is the right thing for the customer. If the customer is not going to be underwritten or the property is not suitable for that particular loan, then it's important that the customer, their agent, and the broker are told quickly.
The role of surveys
Q: Is there a greater role for private survey work?
I think we would all agree that there are not enough surveys being done. The industry itself is partly to blame for that because we haven't, over the years, articulated and sold the benefits of a survey to home buyers and home owners. I still believe that when people make the biggest purchase of their life, getting a survey is absolutely the right thing to do.
I would advise my children to do it, and I've advised my friends and family and frankly everybody I know to do it. Yes, it's a significant cost, but, you know, potentially it can save you a large amount of money if you move into a property and find defects that you knew nothing about.
I run a surveying business that's part of an estate agency with 160 branches and 700 plus mortgage brokers, so we frequently have conversations around the benefits of surveys. We articulate it inside our businesses and our mortgage brokers understands that it constitutes good customer advice.
Q: But penetration rates remain low?
Yes, I think depending on who you talk to, it will range from 8% to 15%. I think probably nearer to 8%. We need to look at how we can speed up the process of buying and maintain the quality of checks and balances in the value chain. I’m very pro Home Information Packs. There were lots of parts of the HIP that had considerable merit. Today, conveyancing is reportedly taking 19 to 21 weeks, up from a historic average of 12 to 14 weeks. That can't be right for customers. My own son sold his house, and it took the best part of 20 weeks to complete with no chain! That’s not the fault of mortgage lenders, it's not the fault of surveyors. It's the fault of the whole system.
Q: Can technology help with that?
Well, this is not my core area, but a lot of work is rightly going on, I believe, to try to alleviate the situation. Inevitably, technology will be able to speed things up. I do get the sense that things are changing, not in the way that we all interact commercially, but in terms of where and how we interact.
Q: Has the role of regulation helped or hindered progress?
Better energy efficiency information is probably essential for the country going forward. The challenges are around funding and delivery. There are a lot of good retrofit ideas and schemes, and initiatives, but some, which invariably hit the headlines, have been very poorly implemented. Whilst there's lots of activity about sustainability and retrofitting and green energy, there has not been a concise, concerted approach from any part of either government or the private sector. When you're talking about customers and putting customers first, it's quite a challenge to put customers first and then tell them they've got to pay more for X, Y, and Z, isn't it?
Q: Does that uncertainty make running a valuation and survey business harder from a PI point of view?
To be fair, it is so far down the road, it's not really impacting us at the moment. We work hand-in-hand with our PI insurers as these issues arise. It’s not an issue as yet, but it will come in due course. You need only look at the issues with spray foam insulation. How do you compensate and deal with these sorts of cases? Very often, the homeowners are elderly and vulnerable and suddenly find themselves having to pay thousands to have spray foam removed from their properties.
Growing momentum
Q: If you looked back over the last 12 months, what would you say were the highlights for you as a business?
Everybody will be pleased that the market has improved and, in terms of our business, I’m pleased that our penetration and sales rates of private survey products are growing and continue to improve week on week.
There's plenty of scope for further improvement. The RICS Level 2 report is a good product, and with the RICS’s current consultation on the new home survey standards currently underway, hopefully it'll be an even better product. It’s in the customers' interests. So I'm pleased that there is growing momentum.
Purchasers are more aware of their survey options, but still, 85% or more of people aren’t having a survey. It is a massive communications job for the industry to do to grow that awareness, and a great opportunity for surveying businesses. We should do it because it makes sense commercially and morally right for customers. That focus in turn will improve the quality of the UK’s housing stock as people recognise the importance of improvements, repairs, and energy efficiency.
Anything that improves the quality of the UK housing stock should be commended, but we're not, we're not going to solve a century’s worth of problems in the next five years. There is a lot of hard work to do yet.
Most people still want to own their own home. I don't hear people saying, "I want to rent my own home." I hear people saying, "I want to own my own home." That's still the aspiration for most people, and we need to help them.
