Council of Mortgage Lenders announces regulations to combat mortgage scams from September
Housebuilders will have to declare buyers incentives from September under new rules designed to combat mortgage scams.
The Council of Mortgage Lenders (CML) has announced regulations which aim to stop loans worth more than the value of the home being granted.
The body said lenders feared they were not always told about discounts and incentives negotiated by buyers, causing them to offer mortgages higher than the true price paid.
From the beginning of September, builders or developers of any newly built, converted or renovated property will have to complete a 'disclosure of incentives' form.
Typical enticements include cash back, a new kitchen, or payment of the first year’s mortgage.
CML director general Michael Coogan said: “We are introducing these measures to help sustain confidence in the market for newly-built property. 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.”
He welcomed support from RICS and housebuilders, adding that “responsible builders and developers understand that lenders must have confidence in the valuation process.”