MASTHAVEN MASTERCLASS: What Valuers Really Look for on Development Finance Cases

Every development finance case has that one moment everyone braces themselves for: “valuation report incoming…”

And despite how it can feel if a valuation derails your deal, it is important to remember:  a valuer isn’t there to destroy dreams; they are there to ensure the numbers truly stack up for everyone involved. Is the land value realistic? Are the build costs credible? Is the GDV supported by what’s currently happening in the market?

When the valuation supports the figures, everyone involved has the confidence to move forward. And when they don’t, that’s a signal that something needs to be reconsidered to better protect the client further down the line.

In our latest Masthaven Development Finance Masterclass (Q4 2025), Sales Director, Jim Baker and Head of Development Finance, EJ, were joined by guest speaker: Colin Horton of Project & Co. Surveyors to explore how valuers and underwriters really look at property development schemes, what brokers can do to keep cases on track – and what actually happens when a client wants to appeal a down valuation.

Below are the questions we covered during the Q4 2025 Masterclass:

What information should be provided to the valuer before a site visit?

This is one of the easiest ways to avoid delays and confusion, and yet, it’s one of the most common things missed. Valuers love clarity; it helps them understand a project and reduce the risk of surprises.

Here is what Colin said:

1. A detailed schedule of accommodation (room, spec, floor plans, visuals)
2. Schedule of works including associated costs
3. A clear note explaining which plot or unit is being assessed
4. Any specific concerns from the underwriters should be noted

Sharing this information early means less confusion over what is being valued, a faster assessment, and most importantly, a more accurate valuation report for your client.

Do valuers ever tank a valuation?

Yes, it came up – this question always does. Colin’s first answer, “I can neither confirm or deny…” certainly earned a few laughs, but he quickly got serious and explained:

1. A professional valuer will place utmost importance on putting their own name on the valuation report and ensuring that it reflects what they genuinely believe the property is worth
2. Ultimately, while industry pressures exist, he stressed that integrity is critical, and the figure he signs off on should represent his honest assessment, not external preferences

So, while the rumour lives on, the truth is: valuers don’t “tank” deals; they merely report what the numbers support.

What’s a residual valuation?

Colin explained that residual valuation is often the bit that clients understand least and rely on most.

The approach is simple:

1. Start with the GDV
2. Deduct build costs, fees, finance, stamp duty and other costs
3. Deduct developer profit, usually around 20% of GDV for safe fallback
4. What’s left is the land’s residual value – the maximum sensible price

The process involves using cost data for accuracy (like from BCIs – Building Cost Information Service), and build costs are compared with these databases

Using proper data and realistic assumptions is key, and good communication is needed to confirm what is achievable for that specific scheme.

What actually determines the numbers in a valuation?

Valuation figures aren’t plucked from the air. They come from a blend of:

1. Residual calculation methodology
2. Accurate build cost benchmarks
3. Local GDV comparables
4. Stamp duty and transaction costs
5. Profit expectations
6. Subjective but informed professional judgement
7. Conversations between brokers, underwriters, and valuers

It’s calculations + data + professional experience – nothing more mysterious than that, according to Colin.

Why does contractor history matter?

Contractor selection is one of the biggest risk factors in any scheme.

Here’s what valuers want to know:

1. Does the contractor have a solid track record? (Request a CV, especially if ground-up developments)
2. Can they show previous projects to prove the quality of their work? (visit their website or request a portfolio)
3. Do they understand the target market/ area? (Does their work show attention to detail and relevance to the expected buyers/ tenants?)
4. Do they deliver on time and on budget? (Do they have examples of a similar scheme?)
5. Are their costs realistic for the location and specification? (Make sure they understand the specifics and quality standards required for the project’s success.)

Though if a client does choose a cheaper or lesser-known contractor, the deal isn’t dead, but the numbers do get checked more closely.

How are less experienced contractors assessed by lenders?

The aim is to protect both the lender and the client; too-tight budgets raise the risk of unfinished or unsellable properties, as well as regulatory compliance issues.

So, we follow these steps:

1. Compare build costs against current benchmarks
2. Look at the headroom in the LTGDV
3. Flag unrealistic costs early
4. Decline if costs + risk leave no safety margin

In summary, a lender will evaluate whether the cost-saving choice is genuinely workable, is supported by sufficient financial margin, and doesn’t expose the client or lender to risk.

If a client wants to appeal a down valuation, what should they submit?

Colin explained a strong valuation appeal includes:

1. New comparables not included in the original report (and must be of sales and not values of property listed for sale)
2. Comparables must be as recent and as identical as possible to the subject property
3. Additional property details or documents that strengthen the valuation
4. Corrections to factual errors (such as misstatements about size, condition, location, or specification)
5. A clear explanation (in bullet points) linking evidence to the requested review

However, it’s important to note that valuers are unlikely to overturn a valuation unless genuinely new, objective, and relevant evidence is provided.

What are the most common errors in property development projects?

Across the Masterclass, a few offenders came up:

1. Underestimating timelines and build costs
2. Weak upfront planning
3. Choosing contractors on price rather than capability
4. Poor communication with monitoring surveyors/QSs
5. Designing for unit count, not buyer demand
6. Cutting corners on quality
7. Not giving the lender enough detail early
8. Only sharing issues when they can no longer be hidden

Most of these are avoidable through conversations early on in the process, selecting the right team and slightly more realistic budget expectations.

What research do underwriters do on an application?

Underwriters sense-check early because it protects the client from wasting money on valuations or legals later down the line.

They’ll often:

1. Review local day one comparables via Rightmove and Zoopla
2. Check realistic build cost per sq. ft and compare it with expected market rates
3. Assess finish quality vs the target buyer
4. Question any numbers that don’t stack up
5. Sense-check risk factors based on experience

At what stage does this due diligence happen?

We can’t speak for every development finance lender, but for Masthaven, typically at enquiry stage, even before a DIP.

Why? Because clarity early on:

1. Saves time and money for everyone involved
2. Stops unrealistic cases from progressing
3. Allows issues to be fixed before further commitment
4. Reduces stress for everyone involved
5. Builds trust and credibility with our brokers, and in turn, your client with you as their broker

We believe an early review helps reduce the risk of wasted effort or resources.

How do lenders decide which valuer to instruct?

Again, we can’t speak for every lender, but for us, three main factors guide our decision:

1. Location: the valuer must cover the area
2. Relationship and trust: we use valuers who are thorough, fair, communicative and reliable
3. Experience with similar projects
4. How quickly can they deliver on tight timescales
5. Proven experience of their attention to detail

Final Takeaways from the Masthaven Masterclass

Valuers aren’t the villain of the story; they’re simply the sense-check that keeps clients from stepping into something riskier than it first appears on paper. Most development challenges don’t come from the valuation itself, but from assumptions that need a little refining, and once those are adjusted, the path forward often becomes much clearer.

That was very much the spirit of the Masterclass: support the broker, protect the client, and give development projects the best chance of moving forward with the least amount of stress.

If you have a development finance case you’d like to discuss, send us the case outline here – we’re happy to take a look at your client’s options.