Mortgage lenders, housebuilders and estate agents have agreed new rules intended to stamp out a scam where buyers of newly built homes have obtained mortgages based on far bigger prices than they actually pay.
From September, builders will have to fill in a “disclosure of incentives” form, telling mortgage lenders of any discounts or special deals that effectively lower the price.
In the past it has been possible, sometimes fraudulently, to obtain mortgages based on the developer’s full asking price.
As a result some lenders have become reluctant to grant mortgages.
“We are introducing these measures to help sustain confidence in the market for newly-built property,” said Michael Coogan, director general of the Council of Mortgage Lenders.
“Lenders need to know about discounts and oth“We welcome the support of the Royal Institute of Chartered Surveyors and house-builders in implementing this solution. Responsible builders and developers understand that lenders must have confidence in the valuation process.
“They are supporting our initiative because they understand that, in making these changes, we will reinforce confidence in the new-build market.”