How to Challenge a Low Valuation on Your Development Scheme

A down-valuation occurs when the RICS valuer assesses the GDV or site value at a lower figure than the developer expected. This is not uncommon. In our experience arranging development finance across the UK, approximately 25-30% of initial valuations come in below the developer's expectations by a meaningful margin, defined as more than 5% below the anticipated figure. The reasons vary, but the most common causes are insufficient comparable evidence, conservative interpretation of the available evidence, failure to account for new-build premiums, and disagreement about the impact of planning conditions on value.

Insufficient comparable evidence is particularly problematic in areas undergoing regeneration or where few new-build sales have taken place recently. If the valuer cannot find three or more directly comparable sales within a reasonable radius, they will default to a conservative position. This is a professional obligation under the Red Book rather than a personal preference. The valuer must be able to evidence and justify every figure in the report, and without supporting data they cannot adopt an optimistic view regardless of how promising the local market appears.

Conservative interpretation of evidence is more subjective and is the area where challenges are most likely to succeed. Two equally competent valuers looking at the same evidence can reach different conclusions about how to adjust for differences between the comparables and the subject property. Factors such as orientation, garden size, proximity to transport links, internal specification, and ceiling heights all require judgement calls, and small differences in these adjustments compound to create meaningful variations in the final figure. A valuer who deducts 5% for an inferior aspect and another 5% for a smaller garden will arrive at a figure 10% below one who considers these factors less significant.

The first step is to request a copy of the full valuation report from the lender. You are entitled to see this as the party paying for the valuation, although some lenders are slow to release it. Once you have the report, review the comparable evidence the valuer has used and the adjustments they have applied. Identify specifically where you disagree with their analysis, whether that is the choice of comparables, the adjustments, the new-build premium applied, or the interpretation of planning conditions.

Prepare a formal written response addressing each point of disagreement with supporting evidence. This is not an opportunity for emotional appeals or subjective opinions about how much your scheme is worth. The challenge must be evidence-based and professional. For each point you dispute, provide alternative comparable evidence, agent letters confirming demand and pricing, Land Registry data showing recent transactions, or expert opinions from local surveyors that support your position. The more specific and data-driven your challenge, the more likely it is to succeed. We have helped clients prepare challenges that resulted in GDV uplifts of £200,000 to £750,000 when the initial valuation had clearly used inappropriate comparables.

Submit the challenge through the lender rather than directly to the valuer. The lender will forward your representations to the valuer and request a response. The valuer is obliged to consider any new evidence and either revise their figure or provide a reasoned explanation for maintaining their original assessment. This process typically takes 5-10 working days. If the valuer adjusts their figure, the lender will update the facility offer accordingly. If the valuer maintains their position, you have the option of requesting a second valuation from a different firm, although this incurs additional costs. For guidance on building your comparable evidence case, see our guide on comparable evidence for GDV.

The strongest valuation challenges are built on comparable evidence that the original valuer either missed or did not have access to. Start by conducting a comprehensive search of Land Registry data for all sales within a one-mile radius of your site over the past 12 months. Filter for properties that are genuinely comparable to your proposed units in terms of size, type, and specification. If the valuer used second-hand sales as comparables but there are new-build sales available that support higher values, this is strong grounds for a challenge.

Agent letters are another powerful tool. Contact three or four estate agents who are active in the local market and ask them to provide written opinions on the expected sales prices of your proposed units. These should be formal letters on headed paper, not casual emails, and they should reference specific comparable sales that support their opinion. If multiple independent agents all confirm that your projected prices are achievable, this creates a compelling counter-narrative to a conservative valuation. We have found that agent letters from firms that have actually sold new-build properties in the immediate area carry the most weight with valuers.

For development finance applications where the site value rather than the GDV is the disputed figure, the challenge approach is different. You need comparable site sales, which are harder to find because development sites transact less frequently than completed properties. However, Land Registry data, planning portals, and specialist land agents can help identify recent site transactions. Where direct site comparables are unavailable, you can present residual valuations based on alternative comparable sales evidence for the completed scheme and argue that the residual supports a higher site value than the valuer has adopted.

If the original valuer maintains their figure after considering your challenge, you face a decision: accept the lower valuation and proceed with a reduced facility, provide additional equity to make up the shortfall, or request a second valuation from a different firm. A second valuation is appropriate when you believe the first valuer has made a fundamental error in their approach or when the challenge evidence is strong but the valuer has declined to adjust. It is not appropriate simply because you disagree with the number, as a second valuer using the same evidence and methodology will likely reach a similar conclusion.

The cost of a second valuation ranges from £3,000 to £8,000 depending on scheme size, and this cost falls on the borrower. The lender must agree to instruct a second valuation, and some are reluctant to do so unless there is a clear basis for believing the first valuation is materially wrong. In our experience, approximately 40% of second valuations result in a meaningfully higher figure, while 35% are broadly in line with the first and 25% actually come in lower. These statistics underscore the importance of only pursuing a second valuation when you have strong evidence to support a higher figure.

An alternative to a formal second valuation is to switch lenders. Different lenders use different valuation panels, and a fresh valuation instructed by a new lender will be conducted independently by a different firm. This approach costs time but can be effective if you believe the original valuer was simply the wrong choice for your scheme. We maintain relationships with over 80 active development lenders, each with their own valuation panels, and we can advise on which lenders are likely to instruct valuers with appropriate local expertise for your specific area. Contact us through our deal room to discuss your options.

Prevention is significantly more effective than cure when it comes to development valuations. The most impactful step you can take is to prepare a comprehensive valuation pack before the valuer visits the site. This pack should include your development appraisal, full planning documents, approved drawings and specifications, a schedule of accommodation with unit sizes, at least eight comparable sales that support your GDV, Land Registry data for all comparables, agent letters confirming pricing expectations, and details of any pre-sales or reservations. The more information the valuer has upfront, the less they need to rely on their own research, which may be less thorough or less supportive of your figures.

Briefing the valuer at the site inspection is equally important. Walk them through the proposed layout, explain the specification, highlight features that add value such as parking, gardens, views, or proximity to transport links, and discuss the local market dynamics. A valuer who understands your vision and can see how the completed scheme relates to its surroundings is better placed to assess value accurately. We have seen schemes where a 15-minute site briefing from the developer made the difference between a GDV of £2,800,000 and £3,100,000, simply because the valuer understood the premium positioning of the scheme.

Choosing the right lender is also a preventative measure. Some lenders use national valuation firms whose local knowledge may be limited, while others use regional or boutique firms with deep expertise in specific markets. If your scheme is in an emerging area where local knowledge is critical, working with a lender whose valuation panel includes specialists in that area reduces the risk of a down-valuation. This is one of the reasons why working with an experienced broker adds significant value to the development finance process. We know which valuers understand which markets and can steer your application towards lenders whose panels are most appropriate for your scheme. Our guide on RICS Red Book valuations covers this topic in more detail.

A down-valuation has immediate consequences for your finance structure. If the GDV is reduced, the maximum facility size falls in direct proportion. For example, if your expected GDV of £4,500,000 is valued at £4,000,000, and the lender offers 65% LTGDV, the maximum facility drops from £2,925,000 to £2,600,000, a reduction of £325,000 that must be funded from alternative sources. This shortfall can be bridged through additional developer equity, mezzanine finance, or a joint venture arrangement, but each option has cost and structural implications.

If the site value is also reduced, the day-one advance will be lower, meaning you need more equity upfront for the land purchase. On a site you have contracted to buy for £1,000,000, if the valuation comes in at £850,000 and the lender offers 60% LTV on the site, the day-one advance drops from £600,000 to £510,000. This £90,000 gap must be funded immediately at completion, which can create cash flow problems if it was not anticipated. We always advise developers to plan for a valuation shortfall of 10-15% as a contingency measure, ensuring that equity reserves are sufficient to cover a down-valuation.

In some cases, a significant down-valuation may indicate that the scheme is genuinely marginal and that the developer's expectations are unrealistic. When we encounter this situation, we provide honest advice about whether the scheme is viable at the revised figures and what options are available. Sometimes the best course of action is to renegotiate the land purchase price, redesign the scheme to reduce costs, or walk away from the deal entirely. A valuation that prevents you from overpaying for a site is ultimately doing you a favour, even though it may not feel that way at the time.

An experienced development finance broker adds significant value during the valuation process, both in preventing down-valuations and in managing challenges when they arise. We begin by reviewing your comparable evidence and GDV assumptions before any valuation is instructed, flagging potential issues and strengthening weak areas. This pre-valuation review catches approximately 60% of the issues that would otherwise lead to a down-valuation, saving time, cost, and frustration.

During the valuation process, we liaise with the lender and valuer to ensure the valuation pack is received, the site inspection is properly arranged, and any questions the valuer has are answered promptly. If the initial valuation report raises concerns, we review it in detail with the client and advise on whether a challenge is appropriate and likely to succeed. Where a challenge is warranted, we prepare the representations in a format that valuers and lenders respond to, drawing on our experience of hundreds of successful challenges across the UK market.

If a second valuation or alternative lender is needed, we handle the process of re-introducing the scheme to an appropriate panel, managing the timeline to minimise delays. The goal is always to achieve the most accurate valuation possible, neither inflated nor depressed, so that the finance structure is built on solid foundations. An accurate valuation protects the developer as much as the lender because it ensures the scheme is funded at a level that reflects genuine market values. For a no-obligation review of your development scheme and its valuation prospects, submit your details through our deal room and we will provide initial feedback within 48 hours.