What’s meant by a ‘rely on’- and why aren’t they always straightforward?

Video Transcript

A valuation is valid at the date of valuation. It’s then up to a lender how long they rely on that valuation for their underwriting purposes. Common timescales for lenders are that a valuation could be relied on for three months from the date of valuation. Then between months three and six, the original report can be used if the valuer confirms the reported values remain unchanged. This is commonly referred to as a ‘rely on’. In a stable or rising property market this isn’t usually a problem. But since the mini budget of 2022, there’s been some significant turbulence in the market, with values falling back in many sectors. As a result, it isn’t just a rubber stamping exercise anymore, as it used to be seen as, and valuers quite rightly want to reassess their reported values, benchmarked against any new transactional evidence. This can naturally cause challenges for urgent applications and can prolong the valuation process, but it’s vital that valuers report correct and up-to-date valuation advice to their lender clients. It’s also worth noting that rely ons are effectively a new valuation and reset the valuation date, which also exposes the valuer to additional liability under their professional indemnity insurance. So an element of caution is understandable.