Important Message - Changes to UK Lending Criteria
The Policy has been updated to remove some of the overly prescriptive elements. This will allow the underwriter to apply discretion, to self-employed applications, where marginal reductions or fluctuating net profits have been seen. These cases should be referred to the underwriter for consideration.
New Build Valuation
The Society has moved away from the “second-hand” approach to valuing new properties. Valuations will be based on the Royal Institute of Chartered Surveyors(RICS) new build guidance, in line with industry practice. The LTV restriction of 80%, for new build properties (excluding specific Government Scheme properties) remains unchanged.
Following a review of self-build cases the Policy has been updated to require full planning permission to be in place before application.
House in Multiple Occupation (HMO’s)
The Policy has been updated to provide further clarification where the property is a House in Multiple Occupation (HMO’s), a summary is given below:
- HMO’s are acceptable for properties with up to five bedrooms.
- A valid HMO licence is required for HMO applications.
- If a HMO licence is NOT required then confirmation of this should be obtained.
- Rental income, as provided by e.surv, should be used in the rental calculation.
- For applications with multiple applicants on multiple tenancy agreements, each of the tenants must have an individual AST for their own room, and a right to use shared parts of the property.
Further to discussions with the Society’s valuers, the Lending Policy and the Valuers Guidance notes have been updated to clarify the position where the plant Japanese Knotweed is found. Properties where Japanese Knotweed is found, and considered high risk by the valuer, are likely to be deemed unacceptable.
Properties must be of a standard construction and must be free of any occupancy restrictions. E.g., Holiday parks.
Builders / Vendors Deposits
Where an incentive is being granted with a new mortgage application, this should be notified to the valuer, who will consider the incentive as part of the valuation. The applicant will be required to provide, the appropriate deposit, in accordance with the Policy and product
The changes will be effective from close of play Thursday 25 January, 2012 and apply to all areas of lending (primary and additional). Current applications in the pipeline will be considered under the previous criteria, providing that the fully packaged case is received at Head Office by Tuesday 31 January, 2011.