Enter to open, tab to navigate, enter to select
Mortgage lenders and buyers to benefit from greater transparency on new build prices
Practical Law UK Legal Update 9-381-3478 (Approx. 3 pages)
Mortgage lenders and buyers to benefit from greater transparency on new build prices
by PLC Property
| Published on 22 Apr 2008 • England, Wales |
On 16 April 2008, the House Builders Federation (HBF) announced changes, to take immediate effect, to its voluntary Homebuilder Code of Conduct, to ensure that its members make prices for new build houses more transparent.
There has been concern that sales incentives offered by some developers selling homes "off plan" (where homes are sold before construction is completed), may distort the value of a property for borrowing purposes and conceal the real amount paid. Fraudsters may be able to exploit these situations.
The HBF, which is the principal trade federation for private sector home builders, has discussed amendments to the Code with the Council of Mortgage Lenders, to ensure that discounts and incentives are transparent. Under the amended Code, HBF members agree to:
- Provide customers with a sales reservation confirmation showing the gross sale price, any sales incentives and the net sale price, and disclose sales incentives and the net sale price in the sale contract.
- Make the sales reservation available to the buyer's conveyancer as a matter of course, and to the lender or valuer on request.
- Disclose to the buyer's conveyancer, all payments above 5% of the gross sale price to third parties that relate to the sale, including introductory and commission payments, but excluding payments to instructed selling agents.
- Notify the buyer's conveyancer of any sales incentives provided to the buyer after the date of reservation but prior to exchange of contracts, which the buyer's conveyancer must then disclose to the lender.
For a copy of the original code, see HBF: Customer Service Code of Conduct. A copy of the amended code will be published shortly.