Landlord wins compensation claim against surveyor

I was interested to see in the  Observer on Sunday, a report about Emmett Scullion, a buy-to-let landlord, who has won £72,000 compensation from a surveyor who overestimated the rental income the landlord’s property would generate.

However although this is a worrying decision for surveyors, it doesn’t mean that landlords can now go out and recoup all losses for low income generating properties from their surveyors!

In this particular case the surveyor was liable as he breached industry guidelines when he compiled his report. This will  not happen that often.

This is a landmark case though, as it is the first time that a surveyor/valuer has been held liable towards buy to let landlords in this way. The judge held that Scullion was entitled to rely on the advice provided by the valuer to the bank and that the valuer owed him a duty of care to ensure that any advice on likely rental income would be accurate.

The £72,000 awarded was in respect of the losses he had suffered which was attributable to the overstatement of the expected rental income in the surveyors report. The award included mortgage costs and other losses arising when the rent made on the property was not sufficient to cover his overheads.

Alexandra Anderson, a partner at Reynolds Porter Chamberlain in her firms report on the case said:

“A lot of non-professional landlords entered the buy-to-let market before the credit crunch because there was so much financing available and it looked like a safe way to make an investment for the future. Many of them will have relied on the survey ordered by the bank and if the survey overvalued the rental income the property should achieve, they could have a similar claim.”

The Reynolds Porter Chamberlain report gives the case citation, Emmett Thomas Scullion -v- Bank of Scotland (trading as Colleys) [2010] EWHC 572 (Ch) and [2010] EWHC 2253 (Ch). You can read the report of the damages part of the judgement here (many thanks to J and NE1 Investigations Limited for letting me have this). Does anyone have a link to the trial report?