Property: Have you ever felt undervalued?

WHEN Martyn Saunders- Rawlins put his four-bedroom house in Willesden Green, north London, on the market, one agent suggested a price of pounds 160,000, another pounds 165,000. After two weeks he had an offer of pounds 160,000; when that sale collapsed, for reasons that will become clear, he had a second offer of pounds 165,000. The value of Mr Saunders-Rawlins's house, tested by the criterion valuers are supposed to apply - what it would sell for if put on the market tomorrow - would appear to be pretty clear.

The Halifax Building Society valuer saw it differently. He said the house was worth pounds 124,000, causing the collapse of the first sale. When Mr Saunders-Rawlins asked for an explanation of the figure, he was told by the managing director of Colleys Professional Services, which carried out the valuation, that this information was 'of course, confidential to the lending institution'. (This, despite the fact that it is normally the hapless buyer, not the lender, who pays for the valuation.)

Mr Saunders-Rawlins then wrote to the Halifax, which owns Colleys, and asked for an explanation. 'Houses similar to ours are selling for considerably more than pounds 124,000,' his letter pointed out. 'We assume that the surveyor has arrived at this value by making comparisons with other similar properties in the area, in which case perhaps you might ask him to provide us with details.'

Not least because the Saunders- Rawlinses would be round like a shot to snap up such a bargain. Unfortunately, no such details will be coming. The Halifax, speaking for itself and Colleys, said it did not have to justify valuations to a vendor. 'The mortgage valuation prepared was fully supported by evidence of comparative property sales,' it said. 'It took fully into account the valuer's experience in valuing similar properties in the area.'

Jim Murgatroyd, head of corporate affairs for the Halifax, said: 'No one wants down-valuations for the sake of it. We have looked at this case thoroughly and are satisfied with what happened.'

This case is not unusual. It is exactly the kind which prompted an inquiry by the Monopolies and Mergers Commission into valuation reports. The MMC report has just concluded that, although a complex monopoly does exist, 'the majority of lenders' arrangements for mortgage valuations do not operate against the public interest . . . Nor does the MMC consider that the use of in-house valuers leads to lower standards of service to borrowers.'

Mr Saunders-Rawlins, along with thousands of fellow buyers and sellers, would beg to disagree. He thinks the reason his house was undervalued was because the valuer came from Harrow, not from Willesden Green.

This was the essential complaint which prompted the MMC inquiry - that lenders were not necessarily choosing the valuer with the best knowledge of the area, and borrowers had no right to challenge their findings.

The other victims of the system have been independent valuers and surveyors, who set up an association to challenge the building society monopoly. Their chairman, Stuart Parrett, said: 'We are extremely disappointed. It seems the MMC has totally ignored the question of freer access to chartered surveyors, which is probably the most damaging thing from the public's point of view.'

Many building societies feared that, even if the MMC allowed the current system to continue, it would force the lenders, rather than would-be borrowers, to pay for the valuation. A number of lenders, led by the Cheltenham and Gloucester, tried to steal a march by abolishing the valuation fee, to pull in customers.

They need not have worried. The Commission was perfectly happy with the current arrangements, positively supporting the practice of lenders preferring valuers who could bring them reciprocal business. In the absence of a challenge from the Commission, it remains to be seen how long the free valuations continue. Mr Parrett gives it six months.