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When purchasing apartments or seeking to refinance lenders have restrictions and tighter lending criteria regarding size.

Any valuation undertaken for mortgage is required to include commentary and risk if the unit has a living area of less than 50 square metres. This is not a valuers opinion as to whether it is a risk, it is an instruction from lenders that the valuer must identify risk in this circumstance.

The method of measurement used is to be in accordance with The API Standard which is a Founding Member of the International Property Measurement Standards Coalition (IPMSC).

The difficulty is in executing this standard.

Developers and agents often advise purchasers of the living area being 50 sq m or more. If it is less than 50 this often results in harder lending requirements.

In arriving at the size of an apartment the valuer is required to measure in accordance with a standard however this requires measurements to midpoint of walls and exterior faces of walls – as the valuer cannot determine the width of walls it must be estimated.

The problem can be best demonstrated from the below surveyors plans which show both the internal living areas and the measurements in accordance with the standard. In accordance with the standard the area is 50 square metres; as noted on the plan; however the area of the internal measurement is only 44 square metres.

In this case, the valuer measured the living area accurately at 44 sq m however added only 5% to allow for the depth of walls resulting in a living area of 46 square metres; and included the required risk and as a result, the purchaser's finance was declined.

Prospective purchasers/brokers/developers should be aware of the ramifications of living areas on value and commentary.