Property valuations should reflect real market prices, you would expect that, but in the past some valuations of newly built properties failed to take into account any incentives offered by developers, for example early purchase discounts. These offers could mean that the real price paid for a property could be much less than it's valuation. That puts lender'sfinds at more risk than they calculated.

 

To fix the problem the Council of Mortgage Lenders (CML) is setting out new standards to be introduced in September that will make builders and developers publish any discounting arrangements in a 'disclosure of incentives' document.

 

The incentive is aimed at bringing more confidence to the valuation process and is being suported by RICS (Royal Institute of Chartered Surveyors, The Home Builders' Federation and Homes for Scotland in similar moves.

 

The incentive for builders to participate in the scheme comes from better availability of mortgages due to the more relaible nature of property valuations from September onwards.

 

As the property markets continues to contract we can expect a proliferation of incentives and discounting schemes aimed at shifting new build property portfolios that we're planned and commenced construction long before the current credit problems started to emerge.