The Council of Mortgage Lenders (CML) is introducing new processes for conveyancing and valuing newly-built properties.
The new procedures, which come into effect from 1 September, are being implemented in response to lenders’ concerns over the current valuation and conveyancing processes.
Some lenders believe the current processes do not always capture discounts and other incentives that buyers may be able to negotiate with developers when purchasing newly-built property.
In some instances, this can result in a lender unintentionally offering a mortgage based on a valuation of a property that is higher than the true price paid.
The new procedures aim to ensure the conveyancing and valuation processes capture the true value of the property, reducing risk for both borrowers and lenders.
Lenders will now require builders or developers of any newly built, converted or renovated property to complete a new 'disclosure of incentives' form. This will be reinforced in the CML's Lenders' Handbook, which sets out specific requirements for conveyancers acting on behalf of lenders in property transactions.
Michael Coogan, director general of the CML, argues the new measures will improve confidence in the new-build sector.
“Lenders need to know about discounts and other incentives so they can be sure that the decision to offer a mortgage is based on a reliable valuation of the property. The new measures will provide additional security and safeguards for borrowers, as well as lenders,” he says.
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