Mortgage lenders and surveyors are deliberately undervaluing homes, causing house sales and remortgages to fall through, according to estate agents.
Approximately 75% of remortgage deals failed because of a lower than expected house valuation, according to one leading mortgage broker, while The National Association of Estate Agents (NAEA) said properties were having a tenth of their values knocked off by conservative lenders.
Building societies and banks, who can commission surveys to determine if the sale price matches the property's value, are looking to protect their investment in a falling market.
Buyers may be offered a smaller mortgage if the value of the house is deemed to be lower than the sale price, causing deals to fall through due to a lack of funds. The lenders also run surveys on homes up for remortgage.
Lenders can suffer a loss if they repossess properties and recoup less from the sale than the unpaid amount of the mortgage.
"(Lenders) are perhaps worried about their professional indemnity insurance," NAEA chief executive Peter Bolton King told the BBC. "They are thinking back to the 90s when surveyors were being sued by lenders for allegedly not getting the valuations right.
"They are perhaps worrying about the market and almost deliberately knocking off 10% almost regardless of what the property sold for.
"The other reason, which I found more worrying, is that we are hearing anecdotally that lenders are giving specific instructions to their valuers as to how they should approach these valuations."
The Council of Mortgage Lenders defended their surveys, stating that they worked with professionals who are "duty bound to give accurate valuations."
Managing director of independent broker Mortgage Talk Andrew Frankish said: "With the mortgages that are not completing, we believe up to half of them are affected by the valuation.
"What we mean by that is the valuation is coming back at lower than they predicted, which pushes them into a higher loan to value, which means the products are too expensive or the banks are reluctant to lend in that market at all.
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