Valuation Appeals in Development Finance: When and How to Challenge

In development finance, the terms appeal and challenge are often used interchangeably, but there is a distinction worth understanding. A challenge is the initial process of responding to a valuation you disagree with by submitting additional evidence or representations through the lender to the original valuer. An appeal is a more formal process that involves escalating the matter beyond the original valuer, either by requesting a review by a senior partner within the same firm, instructing a completely new valuation from a different firm, or in exceptional cases raising a formal complaint through the RICS regulatory process.

The vast majority of valuation disputes in development finance are resolved at the challenge stage without the need for a formal appeal. In our experience, approximately 60% of challenges result in some upward revision to the original figure, although the increase may not be as large as the developer hopes. The remaining 40% result in the valuer maintaining their original assessment, at which point the developer must decide whether to accept the figure, pursue a formal appeal, or explore alternative strategies such as switching lenders or restructuring the deal to work within the lower valuation.

It is important to approach valuation disputes professionally and evidence-based rather than emotionally. Valuers are regulated professionals who must justify every figure in their report, and they will not adjust a valuation simply because the developer is unhappy with it. The only basis for a successful challenge or appeal is new evidence that the original assessment did not adequately consider, or a demonstrable error in the methodology or comparable analysis. Understanding this from the outset helps you focus your efforts where they will be most productive.

A valuation appeal is justified in several specific circumstances. The first and most clear-cut is when the valuer has made a factual error. This might include using the wrong floor area for the proposed units, incorrectly recording the number of units in the scheme, applying the wrong planning use class, or misidentifying the tenure of comparable properties. Factual errors are relatively rare in professional valuations but do occur, and they are straightforward to correct because the evidence is objective and verifiable.

The second justification is when the valuer has used inappropriate or insufficient comparable evidence. If the report relies on three comparable sales of terraced houses to value a scheme of detached houses, or uses comparables from an area with materially different characteristics to the subject location, this is grounds for challenge. Similarly, if you can identify relevant comparable sales that the valuer has not considered, particularly new-build sales or very recent transactions that post-date the valuer's research, submitting these can justify a revision. We recently assisted a client whose valuation was based on second-hand sales averaging £325 per square foot, when three new-build sales within 400 metres had achieved £390 per square foot. The revised GDV increased by £280,000.

The third justification is when the valuer has applied excessive or unsupported adjustments to the comparable evidence. Every adjustment the valuer makes should be quantified and explained. If the valuer has deducted 10% from a comparable for an inferior aspect but the aspect difference is minimal, or has applied no new-build premium despite clear evidence that new-build commands a premium in the area, these adjustments can be challenged with evidence. However, challenging subjective adjustments is harder than correcting factual errors, and the outcome depends on the strength of your counter-evidence.

The first step is to obtain and carefully review the full valuation report. Pay particular attention to the comparable evidence used, the adjustments applied, the assumptions stated, and any caveats or qualifications. Create a detailed schedule noting every point where you disagree with the valuer's assessment, and for each point identify the specific evidence that supports your alternative view. This schedule forms the basis of your written representations.

Prepare a formal written response, typically 3-5 pages plus supporting evidence appendices. Structure the response clearly, addressing each point of disagreement in turn. For each point, state what the valuer has assessed, explain why you disagree, present your alternative evidence, and state what revised figure you believe the evidence supports. Attach supporting documents including Land Registry printouts, agent letters, property particulars, photographs, and any other relevant evidence. The tone should be professional and evidence-based throughout. Personal opinions, emotional arguments, and threats to complain are counterproductive.

Submit the representations through the lender, not directly to the valuer. The lender's valuation team will forward the response to the valuer with a request for review. The valuer is required to consider the representations and either revise their assessment or provide a reasoned response explaining why they maintain the original figure. This process typically takes 5-10 working days. If the valuer revises the figure, the lender will update the facility offer accordingly. If they maintain their position, you can request an escalation meeting, a second valuation from a different firm, or accept the original figure and adjust your plans accordingly. For more on building your evidence case, see our guide on comparable evidence for GDV.

The most persuasive appeal evidence is comparable sales data that directly contradicts the valuer's assessment. If the valuer has assessed three-bedroom houses in your scheme at £425,000 but you can identify three or more sales of similar new-build houses within a mile that achieved £460,000 to £475,000, this is compelling evidence for an upward revision. The comparables must be genuinely similar in terms of size, specification, and location, and the transactions must be recent enough to reflect current market conditions. Sales from more than 12 months ago require time adjustment and carry less weight.

Agent letters provide qualitative support for quantitative evidence and are particularly persuasive when they come from agents who have sold the comparable properties you are referencing. If an agent can confirm that they sold three-bedroom new-build houses at £470,000 on a neighbouring development and expect similar values for your scheme, this carries more weight than a generic market opinion. Request that agents provide specific data points rather than general statements, and ensure the letters are on professional headed paper and dated within the last three months.

Pre-sales evidence from your own scheme is the strongest possible support for an appeal. If you have already reserved or exchanged contracts on units at prices above the valuer's assessment, this is direct market evidence that the valuer's figure is conservative. For example, if the valuer assessed your two-bedroom apartments at £295,000 each but you have three exchanged contracts at £310,000, this is virtually irrefutable evidence that the market supports a higher value. Even reservations with deposits, while carrying less certainty than exchanged contracts, provide meaningful evidence of buyer willingness to pay at the developer's asking price. To explore your options for challenging a valuation or finding an alternative lender, submit your scheme through our deal room.

If the valuation appeal is unsuccessful and the original figure stands, you have several strategic options beyond simply accepting a smaller facility. The first option is to switch lenders. Different lenders use different valuation panels, and a new valuation from a different firm may produce a more favourable result, particularly if you have identified evidence that the original valuer did not consider. The cost of a new valuation is typically £3,000 to £6,000, and the additional time is 3-4 weeks, but if the potential uplift in facility size exceeds these costs by a meaningful margin, it is a worthwhile investment.

The second option is to restructure the finance to work within the lower valuation. If the GDV has been reduced from your expected £4,000,000 to £3,600,000, the 65% LTGDV facility drops from £2,600,000 to £2,340,000, a shortfall of £260,000. This gap can potentially be bridged through mezzanine finance, which provides additional leverage at a higher cost but reduces the equity requirement. Alternatively, reducing the scope or specification of the scheme to lower the build cost can bring the total project cost within the reduced facility. In some cases, negotiating a lower site purchase price or deferred consideration terms with the landowner can also close the gap.

The third option, which applies when the valuation shortfall is very large and alternatives are impractical, is to walk away from the deal. If you have not yet exchanged contracts on the site, a significant down-valuation is telling you something important about the market's view of value. While this is a disappointing outcome, it is better than proceeding with a scheme that is marginal from the outset. The costs incurred on valuation and legal fees are an investment in information that has prevented a potentially much larger loss. We always encourage our clients to maintain discipline in the face of adverse valuations rather than emotionally committing to a deal that the numbers do not support.

The best appeal is one you never need to make. Proactive preparation before the valuation is far more effective than reactive challenges afterwards. The single most impactful step is preparing a comprehensive comparable evidence pack and ensuring it reaches the valuer before the site inspection. This pack should include at least eight comparable sales with full details, three or more agent letters confirming pricing expectations, your development appraisal with detailed cost and revenue assumptions, and approved drawings and specifications for the proposed scheme.

Briefing the valuer during the site visit is equally important. Walk the valuer through the site, explain the proposed layout and specification, highlight features that add value, and discuss the local market dynamics. Bring printed copies of your evidence pack in case the emailed version has not been reviewed. A 30-minute face-to-face briefing can make a significant difference to the valuer's understanding of the scheme and their confidence in supporting your GDV figure. We have consistently found that developers who invest time in the valuation process achieve better outcomes than those who treat it as a formality.

Working with a broker who actively manages the valuation process provides an additional layer of protection. We review every valuation report issued against schemes we are managing, and if we identify potential issues, we engage with the lender and valuer proactively before the developer receives the report. This early intervention often resolves issues that would otherwise require a formal challenge. Our experience of hundreds of development valuations across the UK means we can quickly identify when a figure is out of line with the market and what evidence is needed to support a revision. For a professionally managed development finance process, submit your scheme through our deal room and our team will guide you from initial appraisal through to drawdown.