Latest Information

New law for house builders

25/06/2008

From 1/09/08 all discounts & incentives to be reported to mortgage providers.

A change in the law means that from 1 September, all discounts and incentives offered on new build homes will have to be reported to mortgage providers.

Banks and building societies are concerned that the valuation and conveyancing processes do not always reveal the true value of properties which is leading lenders to unintentionally offer a mortgage based on a valuation of a property that is higher than the true price paid for it.

Many developers offer discounts and other incentives to entice and secure buyers, these deals often effectively reduce purchase price. The Council of Mortgage Lenders (CML) have been working with surveyors and house builders to ensure a more reliable valuation and from the beginning of September, lenders will require builders or developers of any newly built, converted or renovated property to complete a new 'disclosure of incentives' form.

David Johnson, partner with KBL comments “In the present climate, with high percentage mortgages no longer available, builders are offering some substantial discounts to tempt buyers. 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. Responsible builders and developers understand that lenders must have confidence in the valuation process. This requirement will ensure that the terms of a purchase are clear to all involved in the process.”

ENDS For more information, please contact Gill Hart or Kirsty Carss at KBL on 01204 527777