A year ago we were slowly emerging from Lockdown 1 and beginning to get a sense of the pent-up demand that was beginning to be unleashed because of those two months when the housing market was ‘closed’.
Little did we know the Government would make a significant gesture in July with the introduction of the stamp duty holiday, and that this would act as a further catalyst to a market already benefiting from increasing demand.
Those two months through March to May were undoubtedly challenging for us all, however they present an ongoing opportunity for learning and growth which I think it would be remiss of us not to grasp.
That’s a difficult ask however when, pretty much since the date the housing market was effectively ‘reopened’, it has been full-on in terms of activity and many businesses might just feel they are running to stand still, let alone review how they work, what changed back then, and where there might be an opportunity for progression in how we work and the efficiencies we could achieve.
For us, and I suspect many in the lending sector, the major cause of consternation through that ‘closed’ period was around valuations, in particular the huge reliance on physical valuations which of course were simply not possible in the vast majority of cases during Lockdown 1.
A number of our clients were able to accept desktop valuations on, for example, residential cases, lower-value properties, etc, and throughout that period we were certainly able to progress a number of cases through the channels by dint of our desktop product.
However, that wasn’t a satisfactory outcome in the vast majority of cases. I’ll give you an example – when we were allowed to have our surveyors physically valuing properties again, almost without fail those earmarked for a desktop valuation were moved across to be physically valued instead.
So, while our desktop product had worked as a lifeline for a significant number of cases during lockdown, there was no doubting where the real ‘balance of power’ lay, and we also had to recognise that our desktop product would need to be beefed up and ‘industrialised’ to make it more robust and have better effectiveness in the future.
And that’s effectively what we have been doing since, because there is a demand from lenders for an excellent desktop valuation solution, which has much more data to lean upon, has a much higher strike-rate in terms of accuracy, and therefore can be used in a far greater number of situations and properties.
Plus, it also benefits from having the experience of a local surveyor running the desktop valuation so they can provide their input into it, further de-risking it, and we also wrap our PI around it, again providing an extra layer of security which should give the lenders far greater confidence in the results they get back.
And that is going to be incredibly important because we want desktops to be utilised far and wide, not just for those ultra-low-risk residential properties, but in other sectors such as buy-to-let and the like. We’re acutely aware that one of the major problems for those lenders that securitise is their investors wouldn’t accept desktop valuations and their process and pipeline pretty much came to a complete standstill during Lockdown 1.
It will be a question of convincing investors/funders, etc, of the veracity of the desktop product but we are certainly talking to those lenders who were in this boat last year, and who are looking for options should history repeat itself.
And, of course, even if it doesn’t, there are no lenders active who look away when you suggest these types of valuations can save them money and speed up the process. Last year, regardless of how positive the post-Lockdown 1 market went, most lenders made less profit as a result of the pandemic/lockdown, and they certainly don’t want to repeat that performance again. Robust desktop valuation products may help them recoup some of that lost revenue and add margin to their activities in the future.
Overall, therefore, lessons have been learnt, and action is being taken. Few of us would want to repeat March to May last year, and even though the housing market has been one sector which has got off relatively lightly during this period, the impact was still considerable. The aim is to ensure that, if this isn’t a once in a lifetime experience, we have the products, tools and services to make a much better fist of it next time.
Simon Jackson is managing director at SDL Surveying