Phil Spencer on valuations

One of the measures employed to value property has notably changed over the past few years. Blame all those foreign buyers, who re used to thinking in terms of square feet (or metres), rather than following that good old British tradition of counting the number of bedrooms. But are we setting too much store by size? Estate agents commission floorplans from specialist floor plan companies, of which there are many nowadays, but results vary in both quality and diligence. Why? Is it a wonky tape measure, wonky maths or wonky ethics? Take my own home, a semi-detached late-Victorian house in south-west London. As a test, I asked three local floorplan firms to measure it. It s not an especially complicated property, with no nooks and crannies, odd-shaped rooms or peculiarities that could lead to discrepancies. Yet all three reached varying estimates of how large it was. The difference between the biggest and smallest was 100sq ft the equivalent of a small room or about 4% of the total square footage. Given that houses in the street have been selling at about £700 per sq ft, that would mean a difference of £70,000. The discrepancy, it transpired, was due to differing policies on whether or not to include a walk-in wardrobe or a utility room. If I were selling, I would have wanted them included, but as I can t sit or sleep in either, their value is limited. In fact, the difference was quite modest. As a buying agent, I ve seen a variance of as much as 10% for one property in different brochures. A particularly blatant example was a London riverside penthouse flat I was shown last year, which, according to the sales particulars, measured 3,100sq ft. This was odd, as, when it was built in 2000, it was only 2,800sq ft and the owners could not, by definition, have converted the basement or extended into the roof. When challenged, the company said its policy was to include void areas. The flat had double-height ceilings with mezzanine levels and open areas to the side of staircases, which had been included in the square footage; so had a storage room deep down in the underground car park. Given that the flat was priced at £1,000 per sq ft, this made a difference of £300,000. After some fraught negotiations, £250,000 was shaved off the price, and our client cheerfully moved in. We acted for another purchaser last year who wanted to buy a detached modern house near Kingston upon Thames, Surrey. Three sales-agent particulars came up with different sizes from 5,100sq ft to 5,500sq ft (a variance of 400sq ft or 7.2% of the total). The asking price of the house was £2.5 million, which meant, at £454 per sq ft, a discrepancy of £181,600. The market was very hot at the time, and, although the vendor acknowledged the discrepancy, he continued to demand the full asking price. Our client reluctantly paid. No prizes for guessing which measurements he ll use when he sells. Even today s high-tech measuring devices leave room for user error , and, despite the Royal Institution of Chartered Surveyor s code of measuring practice, without stricter industry regulation, mistakes are made, which some people unwittingly pay for. This is a ridiculous state of affairs. Measurements should be a statement of fact. The solution would be for everyone to agree what s being measured: external, gross internal or net internal? Some firms include boot rooms, roof terraces, hallways, wine cellars, staircases, storage facilities and even outbuildings in the overall total living space. Others measure deep into eaves, fitted wardrobes or alcoves. And even when the methodology is clear, how many buyers check how accurate the plans are? Sometimes, people are paying for tens of thousands of pounds of space that doesn t exist or isn t useable. A well-proportioned six-bedroom family house in Oxfordshire with a couple of reception rooms, a study and a playroom will be about 4,000sq ft. If it was worth £450 per sq ft, and there was a 10% variance in total measurement, this would equate to a difference in valuation of £180,000. This could come to light when the house is next sold and accurately measured. When prices are rising, this is a risk some may be prepared to take. But if, as now, the market is wobbling, it could be more of a cause for concern. And in any case, even if we suppose these square feet have been accurately measured, is size actually that important? It may be the dominating factor if you re a buy-to-let investor comparing flats in a new development, but things aren t always that simple. Property in Britain comes in such a vast range of architectural styles that a pound-per-sq-ft calculation is never going to be as applicable here as in other parts of the world. How can you compare a Devon long house, a Cotswold manor house or a Kentish farm house square foot by square foot? For there to be any relevance, you need to compare apples with apples and pears with pears. Quite apart from the accuracy problem, there s so much more to a property s value location, condition, character, layout, aspect, privacy, land. Just think of all that when you see the agent reaching for the tape measure. For more advice, visit www.garrington.co.uk