"While it’s tempting to turn to AVMs as a quick fix, they can’t replace an in-person valuation"
While AVMs have their place, if the goal is to speed up the process then in my opinion there are better places to start than with the valuation.
The reality is a typical physical valuation only takes around four to five days to be ready, while the conveyancing process can stretch out for months on end. The market has seen some positive work through the Open Property Data Association (OPDA) to speed up the conveyancing side of things and the wider homebuying process, yet it can sometimes be frustrating when AVMs are singled out as having a significant impact on speed, when they don’t.
In fact, given the time it currently takes on the conveyancing side for residential mortgages, this should make an even stronger case for an in-person valuation to be carried out, as there is ample time for one to be completed. With UK Finance predicting an increase in lending in 2025, there is a strong argument for the market to focus on the importance of having a proper valuation of the property - or better still, a detailed survey, given such a large financial investment is being made.
The limitations of AVMs
Next year, UK Finance is forecasting an increase in both remortgage and house purchase activity. They anticipate an 11% rise in gross mortgage lending to £260 billion, with house purchase lending set to grow by 10% to £148 billion, while external remortgaging is predicted to rise by 30% to £76 billion.
As the remortgage market picks up, borrowers who haven’t remortgaged in a while - especially those who switched through a product transfer - might find their property’s condition has changed.
While AVMs have a role to play, they’re limited in what they can evaluate and can miss issues, such as subsidence, damp, boundary issues, or a poorly completed extension, which can go unnoticed without a physical inspection.
We continue to hear reports of homeowners who completed energy efficiency measures during 2024, only for some to have gone wrong - spray foam insulation in particular. This can lead to costly repairs for buyers or reduce the property’s future value, or, in the worst case, make the property unmortgageable.
Likewise, major improvements could have added value, which, in turn, could help with affordability by increasing the property’s worth.
Next year, it’s expected 1.8 million fixed-rate borrowers will need to renew their mortgage, many of which might have moved onto a product transfer. As UK Finance highlights, external remortgaging fell by 10% to £59 billion in 2024, while internal product transfer transactions - those not subject to affordability tests - dropped by only 7% to £224 billion. The trade association predicts the product transfer market will grow by only 13% in 2025 - against a 30% increase in remortgage business.
AVMs shouldn't be viewed as a quick fix
The market consensus is interest rates will fall next year and we’re already seeing a shift towards shorter-term fixes. Halifax recently launched its 1.5-year fix, and we may see other lenders follow suit if the product proves popular.
As activity picks up in 2025, lenders and brokers will need to juggle a busy market and maintain service levels. While it’s tempting to turn to AVMs as a quick fix, they can’t replace an in-person valuation and this may backfire if there later proves to be a fault with the property.
Especially for first-time buyers who may not have a budget to carry out repairs. Many first-timers simply don’t know enough about the properties they’re buying. Too often, they rely on minimal information from the seller, which might not include important details a thorough survey would uncover. A survey and even an in-person valuation can act as a preventative measure, potentially saving them from costly surprises down the line.
As lenders look to speed things up in 2025, a proper in-person valuation shouldn’t be sacrificed.
