The Intermediary – February 2026 - Flipbook - Page 50
RESIDENTIAL
Opinion
Why physical
valuations
still matter
On-site expertise remains the key to understanding a property’s true value
T
he market continued
to expand in 2025,
and with that growth
brings an even sharper
focus on how lenders
assess risk. At the
center of this risk assessment, of
course, is valuation, and in a complex
lending environment where loan
security underpins every decision, I
would argue that a physical valuation
remains one of the most reliable ways
to understand the true condition of
a property.
Within this, sectors such as
bridging, second charge and equity
release have all contributed to this
growth, which means that the
role of the valuation is even more
relevant than ever across these
individual markets.
In bridging, The Bridging &
Development Lenders Association
(BDLA) reported that completions
reached £2.5bn in Q3 2025, up 9.6%
on Q2 and 42% higher than the same
period in 2024. Lender loan books also
hit £13.7bn, more than 50% higher
year-on-year. In such a fast-moving
market where even the smallest delays
48
The Intermediary | February 2026
in the valuation stage can cause cases
to fall away, an early, in-depth physical
inspection can prevent surprises and
support cleaner exits.
The same paern can be seen in the
second charge sector. According to the
Finance & Leasing Association (FLA),
in November 2025, volumes were 27%
higher than the previous year, and
the value of new business was 28%
higher too. In fact, the second charge
mortgage market has reported growth
in new business volumes in all but one
month in 2025.
Equity release continues to grow as
well. The Equity Release Council said
that total lending reached £639m in
Q3 2025, slightly higher than Q2 and
4% up on Q3 2024.
The trouble with AVMs
Despite this growth, many borrowers
across the market are still holding on
to low fixed rates, so valuation plays a
major role in determining what they
can raise. When past improvements
have never been inspected on site, an
automated valuation model (AVM)
may not give a fair view of the current
value. Older properties and mixed
JAMES GILLAM
is managing director
at Pure Panel Management
construction types are common in
this market, and a physical visit can
oen highlight issues that influence
affordability and advice.
That’s not to say that physical
valuations are the only way;
automated valuation models (AVMs)
are now part of everyday lending.
They offer speed and can support
simpler cases, but they are still
generating information based solely
on historic data, not a live inspection.
They cannot see internal conditions,
judge the quality of works or comment
on the wider seing.
As lending grows, the limits of
AVMs become clearer, especially when
our housing stock gets older and older.
I say this as the UK has the oldest
housing stock in Europe, with around
38% of all properties built before 1946.
This significant proportion of older
homes can contain hidden defects
that only appear on a full inspection,
where only the eyes of a trained
valuer can spot structural movement,
insulation issues or signs of past
repairs that affect both value and risk.
Why this matters
Growth across many areas of the
property market is expected to
continue. With that expansion comes
a greater need for accurate assessments
and consistent outcomes.
Physical valuations do not slow
lending when used at the right stage.
They can protect cases from avoidable
delays, help brokers set expectations
and give borrowers a clearer
understanding of their property.
AVMs will continue to play a role,
but in a market built on complex
scenarios, physical valuations still
provide a level of assurance that
desktop models cannot match.
