The slide in commercial property prices was responsible for a decline in the accuracy of surveyors’ valuations last year, according to a report published today.

The Royal Institution of Chartered Surveyors (RICS) said that there was an improvement in accuracy across Europe as a whole in 2008. However, in the UK, where commercial values sank by 26 per cent in 2008 and by 45 per cent from peak to trough, there was a decline in accuracy over the year.

RICS found that 59.5 per cent of valuations fell within the acceptable limits of 10 per cent of the sales price, compared with 60.4 per cent a year earlier. France, Germany and the Netherlands, the three other countries studied by RICS, all showed improvements.

Despite the slide, RICS said that this figure was “better than expected”, given market conditions. The publication of the report comes as valuers grow increasingly worried that they will be sued for negligence by banks for valuing property that has sunk in value, taking the loans into breach of their loan-to-value covenants.

RICS said that although banks had so far been reticent to sue because legal action would make public the extent of some of the lenders’ losses, valuers were “acutely aware” of the threat, and were doing as much due diligence as possible with current valuations.

The head of one of the UK’s biggest property consultancies said: “No valuers have been sued yet, but we expect to see one or two. Today, the level of accuracy is higher. Surveyors are looking in much more detail. They are being forensic.”

Luay Al-Khatib, the author of the RICS report, said: “The conditions that prevailed for much of 2008 undoubtedly have tested valuers. It is relatively straightforward to value something when there are many concurrent transactions in the sector, but what do you do when the flow of transactions stops? Where there is a huge degree of uncertainty and volatility, it is even harder to value.”

Mr Al-Khatib said that surveyors were growing increasingly concerned about lawsuits by lenders. He said: “Valuers are always concerned about negligence claims, particularly in relation to bank lending as banks are quite active in pursuing cases wherever they can.”

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