The Council of Mortgage Lenders (CML) has issued new guidance on valuing new-build properties, to take full account of incentive schemes.
The measures are designed to help prevent mortgage fraud and ensure new-property is accurately valued, to protect lenders and borrowers.
From today, lenders will require builders and developers must complete a ‘disclosure of incentives’ form for any new-build, converted or renovated property.
Recently, lenders have imposed strict lending criteria on many new-build homes, over fears that incentive structures are distorting true market values and buyer affordability. Recent television documentaries have also highlighted widespread use of builder’s incentives by fraudsters.
Michael Coogan, director general of the CML, comments: “These measures to reinforce confidence in the accuracy of valuations of new-build properties will help underpin this segment of the market.
“This is particularly important at a time of limited funding availability for house purchase transactions.”
The CML will amend its standard industry instructions to conveyancers, meaning they will need a completed disclosure of incentives form from the developer before continuing.
Coogan is hopeful the new guidelines will make lenders more confident in lending for the new-build market, but says borrowers will need hefty deposits to buy newly built homes until confidence is restored.
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