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CML acts on new build property valuations

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by Gill Montia
CML acts on new build property valuations

The Council of Mortgage Lenders (CML) has published plans that will sharpen up lending practices in relation to new homes.

From 1st September, new standards for the professionals who act for lenders on newly-built property transactions will apply.

They aim to ensure that valuations and conveyancing procedures reflect the market value of a property and to make it more difficult for the cash incentives that certain property developers offer to remain hidden, despite the fact that they impinge on the valuation of the property.

In some cases such incentives have led to lenders offering a mortgage based on a valuation that is well above the actual price paid.

In the current property market downturn this has left some buyers of newly built properties exposed to the risk of negative equity.

Under the new measures builders or developers of any newly built, converted or renovated property will need to complete a “Disclosure of Incentives” form.

This will be backed-up by new CML guidelines for conveyancing professionals acting on behalf of lenders.

The Royal Institution of Chartered Surveyors is supporting the move and issuing new guidance to members with regard to the disclosure of incentives.

The Home Builders’ Federation and Homes for Scotland are also encouraging the initiative, taking the view that negotiable discounts reduce confidence in the new-build sector.

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News posted: June 11, 2008

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