On 1 September 2008, the Council of Mortgage Lenders (CML) will bring into effect new procedures that will require builders and developers of newly built, converted or renovated property, to complete a "disclosure of incentives" form. This form will show the lender what discounts and other incentives are being offered to the borrower, and so enable the lender to identify the true value of the property. The aim is to reduce the risk that the lender unintentionally offers a mortgage based on a valuation of a property that is higher than the true price paid for it.

The new requirements will be set out in the CML's Lenders' Handbook.

The changes in these new procedures have been discussed between the CML, the Home Builders Federation (HBF) and the Royal Institution of Chartered Surveyors (RICS). Equivalent changes were made in April 2008 to the HBF's voluntary Homebuilder Code of Conduct. For details, see Legal update, Mortgage lenders and buyers to benefit from greater transparency on new build prices. In September 2008, the RICS is also expected to amend guidance to its members to reinforce the requirement to disclose incentives to lenders.

Source: CML: CML introduces new process for conveyancing and valuing newly-built properties.