Agent LSL takes £25m hit after banks claim it overvalued homesComments Off on Agent LSL takes £25m hit after banks claim it overvalued homes
LSL, the owner of agents including Your Move and Marsh & Parsons, had already made a £12 million provision for claims from lenders over repossessed homes that ended up being worth much less than its original valuations between 2004 and 2008.
But a review prompted it to add up to £25 million to the bill because of a larger-than-anticipated number of claims, as well as much higher legal bills than expected. Finance director Steve Cooke is leaving the company with “immediate effect”.
Insiders say lenders have been much more aggressive than expected in pursuing claims, in particular investors who have snapped up mortgage loan books at a discount looking to milk as much money as possible out of their portfolios. The claims are not limited to LSL as rival Countrywide has continued to incur costs on valuation claims relating to surveys undertaken in the boom years.
LSL’s provision will wipe out at least half of the £40 million in pre-tax profits pencilled in by house broker Numis this year. Its shares today fell 11.25p, or 4%, to 280.75p although the damage was stemmed as LSL stressed its low borrowings and high cash generation: “As a result the board remains confident in its current dividend policy.”
The firm said last month that it was cautious over prospects for 2015 amid general election uncertainty but added that the longer-term market “remained positive”.