The Council of Mortgage Lenders (CML) has announced new procedures for the valuation of new build properties, which will take into consideration discounts and incentives offered by residential developers.

From 1st September all buyers and developers will be required to fill out a ‘disclosure of incentives’ forms and provide it to their lender. The CML has responded to concerns raised by lenders that they were unintentionally lending based on the valuation of the property, which was higher than the true price paid.

The CML has been working with surveyors and house builders to ensure that valuations for new-build properties are more ‘reliable and robust’. The new procedures have the backing of the Royal Institute of Charted Surveyors (RICS), the Home Builders Federation and Homes for Scotland, who will all be amending their guidelines to encourage greater transparency about discounts and incentives.

Sarah Robson, spokesperson for the CML, told PIN: “These changes will benefit existing and prospective new build property owners. If a valuation is inflated because the incentives have not been disclosed, then this is at the detriment of all buyers of new build property. Valuations are registered with the Land Registry and used as a basis for other valuations of similar properties in an area, eventually over-inflation is discovered, particularly in a slowing housing market. Later down the track when borrowers go to sell new build properties on which valuations have not been robust, as a result of the direct or indirect effects of undisclosed incentives, they will find the property is now worth less than their mortgage.” Robson added “The changes will help to restore lenders confidence in lending on new build property.”