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Rics tightens standards for new-build valuations

Wednesday, 11 June 2008 12:00 AM

The Royal Institution of Chartered Surveyors (Rics) has announced it is to tighten the standards for the valuation of new-build property.

It is hoped the changes to the organisations 'Red Book' - the rules used by surveyors to make valuations - will allow experts to capture discounts and incentives offered against newly built homes.

Discounts of this kind have become increasingly prevalent of late, as developers attempt to entice buyers during deteriorating market conditions.

From September 1st Rics will make it mandatory for members to ask the seller, builder or developer on site, or their selling agent, for a copy of any 'disclosure of incentives' for the new home property under consideration.

The form, prepared in accordance with guidance from the Council of Mortgage Lenders (CML), will consist of 12 questions which disclose the full details of all financial and non-financial incentives and also details of any third party interest in the transaction.

This change will help restore confidence in the new-build market and help to improve transparency in the new build valuation process.

"This change to the 'Red Book' will protect the new build market from fraudulent activity. Buyer, lenders and valuers have all been victims of the non-disclosure of incentives by developers with many buyers left with a mortgage worth more than the property's real value.

"All parts of the property industry are in agreement that standard must be maintained and that the consumer must be protected from any disingenuous practice."

The changes will not be limited to the valuation process. The CML will also make changes to the conveyancing process requiring developers to disclose incentives, and the Home Builders' Federation (HBF), and Homes for Scotland have amended their code to encourage transparency amongst their membership.

These loop holes in the process have been reported as resulting in the increase in the number of frauds, particularly city-centre new-build developments with buyers being left with negative equity immediately after purchase.

Chris O'Toole

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