LSL set to make £12m further provision for valuation claims

The fall-out from the last property boom has returned as an unwanted guest to LSL’s accounts.

This year, it expects to make a provision of some £12m in Professional Indemnity insurance costs because of possible claims relating to over-optimistic property valuations between 2004 and 2008.

In an interim statement covering the four months to the end of October, LSL – parent company of Reeds Rains and Your Move – says that new claims have not decreased as expected, and that claims are for more money.

In June 2012, it made an additional PI provision of £17.3m, saying that this was its best estimate. Its extra provision is also described as its “best estimate” of likely claims costs, but LSL warns that a further provision could still be required.

The costs associated to do with valuation claims are the only spots of rain on LSL’s parade.

In its management statement, LSL says it has traded in line with expectations. It says trading momentum is now building on a  month by month basis, and that investment has been made “to build capacity in the improving estate agency and surveying markets”.

Total estate agency income is up 13% year on year, while lettings income has grown 6%. Headcount in agency branches has increased by 179 since July, while its London brand of Marsh & Parsons has opened three new branches in 2013.

LSL says it expects that the market will continue to grow next year, following the launch of Help to Buy.