Property Valuation Guidelines For Mort˜a˜es...2018/12/02 · MB business is originated via brokers who are regulated and authorised by the Financial Conduct Authority (FCA). MB

Property ValuationGuidelines For Mortgages

Date of Issue: December 2018 | Version: 2

Every attempt has been made to ensure that the contents of these Guidelines are complete and accurate, and that all details are covered by these Guidelines. Masthaven Bank (MB) reserves the right to amend these Property Valuation Guidelines at any time. Any such amendment to the Guidelines will be notified in writing. This document is the property of MB and its contents should not be released, copied or divulged to third parties without prior written approval from MB.

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IntroductionMB provides first and second charge mortgage finance secured on residential owner-occupied and residential investment properties in England, Wales and Scotland.

MB business is originated via brokers who are regulated and authorised by the Financial Conduct Authority (FCA). MB operates vetting, authorisation and monitoring processes for all of its Introducing Brokers.

All applications are assessed individually by experienced and fully trained MB underwriting staff, with all underwriting decisions subject to a proper assessment of the borrower’s ability to repay the loan without undue hardship and without resort to the security, taking full account of all relevant circumstances and any reasonably foreseeable future circumstances. If a loan application is deemed not to be in the interests of the borrowers, as a responsible lender MB reserves the right to decline the application or ask for additional documentation to support the application.

These Guidelines aim to ensure that valuers only recommend properties for mortgages that comply with MB Lending Policy. Properties may be declined for various reasons, including marketability, construction and how the property is occupied. Whilst MB’s Lending Policy is not determined by other lenders, if most other lending institutions are not prepared to lend on a particular type of property, the valuer must consider the effect on marketability, and should not recommend the property for mortgage to MB.

These Property Valuation Guidelines set out in entirety MB’s required approach to property valuation on its behalf, which applies to all MB mortgage lending.

Valuers are expected to follow these Guidelines when completing residential mortgage valuation reports on behalf of MB. The Guide aims to address the main queries that valuers may have when completing such reports. Whilst this document provides guidance on the completion of reports, the individual skills and judgement of valuers are paramount with regard to the appropriate professional advice that they provide.

Valuers should be aware that MB relies on valuers to inform it of all relevant factors that may become apparent to the valuer before, during and after the inspection of the property so that a correct lending decision can be made. Valuers must not assume that MB considers a property to be a suitable mortgage security simply because it has instructed a valuation, or an Introducing Broker has instructed a valuation to be carried out on its behalf.

It is essential that the reports are completed correctly. Specifically, care must be taken to ensure that the appropriate boxes are marked within the report and that standard phrases are used where appropriate. A list of preferred standard phrases is provided in this document.

Compliance with the RICS Red Book is mandatory. The purpose of the RICS standards is to provide users of valuation services with confidence that a valuation provided by an RICS qualified valuer has been undertaken in compliance with the highest professional standards. It also assures users that the valuation is independent, objective and consistent with internationally recognised standards set by the International Valuation Standards Council. Regard may be paid to guidance in the Red Book to the extent that they do not differ from MB’s guidance. If there is a conflict between the two, MB’s policy must be followed. There is a requirement that reports will be completed and signed off by RICS qualified valuers.

Property Valuation Guidelines For Mortgages

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Contents1. General Requirements 6

1.1 Geographical Area 6

1.2 Site Notes 6

1.3 Comparable Evidence 6

1.4 MB Lending Policy 6

1.5 Mortgage Fraud 6

1.6 Speed of Service 6

1.7 Conflicts of Interest 6

1.8 Confidentiality 7

1.9 Valuation Forms 7

1.10 Panel Management 7

2. Lending Policy - Property 7

2.1 Legal Title 7

2.2 Location 7

2.3 Minimum Value 7

2.4 Tenure 7

2.4.1 Acceptable Tenure 7

2.4.2 Unacceptable Tenure 8

2.5 Property Insurance 8

2.6 Property Types 8

2.6.1 Acceptable Property Types 8

2.6.2 Unacceptable Property Types 8

2.6.3 P.R.C. Approved Licence Systems 9

2.6.4 Acceptable Concrete Houses Not Covered Under PRC Licence Systems 11

2.6.5 Concrete constructions not acceptable 12

3. Valuation Type 13

3.1 Full Internal Inspection 13

3.2 Automated Valuation Models (AVM) 13

3.3 Rightcheck 13

4. New Builds 13

5. Use of Property 14

5.1 Owner-Occupation 14

5.2 Other Occupiers 14

5.3 Investment Properties 14

6. Risks within General Area 14

7. Property Defects 14

7.1 Structural Movement 14

7.2 Underpinning 15

7.3 Specialist Reports 15

7.4 Properties not currently habitable 15

7.5 Stage Payments 15


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Contents8. Completion of the Valuation Report 15

8.1 Property Inspection 15

8.2 Application Reference 15

8.3 Application Instruction 15

8.4 Applicant Names 15

8.5 Property Address 15

8.6 Location 16

8.7 Property Type 16

8.8 Property Style 16

8.9 Purpose Built 16

8.10 Flats and Maisonettes 16

8.11 Plot 16

8.12 Approximate year built 16

8.13 Gross External Floor Area of Dwelling 17

8.14 Significant Alterations 17

8.15 Accommodation 17

8.16 Other Accommodation 17

8.17 Outbuildings / Common Facilities 17

8.18 Garage & Private Parking 17

8.19 Construction 18

8.20 Services 18

8.21 Tenure & Legal 18

8.22 Occupation 18

8.23 Tenancies 18

8.24 Non Residential Use 18

8.25 Solar Panels 18

8.26 Other Legal 18

9. Matters Considered Essential for Mortgage Purposes 19

9.1 Risks 19

9.2 Movement 19

9.3 Specialist Reports 19

9.4 Essential Repairs 19

9.5 Further Matters 20

9.6 Demand 20

9.7 General Remarks 20

9.8 Valuation 20

9.9 Market Value 20

9.10 Projected Market Value 20

9.11 Insurance Reinstatement 20

9.12 Photographs 21

9.13 Declaration & Signature Section 21


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Contents10. Buy to Let 21

10.1 Let-ability 21

10.2 Current Rental Passing 21

11. Comparables 21

12. Conduct of Valuers 22

12.1 Discretion 22

12.2 Communication with Third Parties 22

12.3 Dealing with the Applicant/Borrower 22

12.4 Valuation or Technical Challenges 22

13. Panel Appointments 22

13.1 Conditions of Panel Appointment 22

13.2 Change of Address or Contact Details 23

13.3 Quality Control 23

13.4 Complaints 23


Property Valuation Guidelines For Mortgages 6

1. General Requirements1.1 Geographical Area

MB permits valuers to only work from one office which must be located within a 25 mile radius of thesecurity property. Within the M25 the maximum distance is 5 miles or unless otherwise agreed by MB.

Only valuers based on the Isle of Wight are permitted to undertake valuations there.

1.2 Site Notes

MB expects valuers to make and retain notes regarding the inspection and valuation, and MB willrequire a copy of these site notes when carrying out audit checks.

1.3 Comparable Evidence

The valuer must keep a record of the comparable evidence used to support their valuation. This recordmust include the valuer’s reasoning in using a comparable, i.e. how it differs from or compares to theproperty valued.

1.4 MB Lending Policy

Valuers are expected to report in accordance with MB’s Lending Policy, as set out in these Guidelines.

1.5 Mortgage Fraud

Valuers must inform MB at [email protected] of any suspicious circumstances which theymay encounter. Such circumstances may include, or be a combination of:

• Undeclared Buy to Let where the applicant has claimed that the property is their primary residence,or vice-versa.

• Several applications on the same property in succession.• HMOs apparently being purchased for owner occupation.• Multiple applications on one block or site, particularly with a previously poor sales record.• Applications from builders or property developers.• Name of vendor or applicant recurring frequently, often in similar areas.• Inconsistencies in information provided.• Tenanted properties – non-buy to let remortgages where the applicant does not live at the property.

Once the case has been brought to MB’s attention by the valuer, further investigations will be undertaken and the case will be allowed to proceed or be declined based on these findings. The applicant/broker/vendor will not be informed that the valuer has raised any such suspicions with MB.

1.6 Speed of Service

The normal speed of service requirement is for reports to be despatched back to MB, or the introducing broker acting for MB, within 48 hours of receipt of instructions.

Appointments to inspect should be made, whenever possible, on the day of receipt of instructions, or, for those arriving late in the day, by 12 noon on the next working day.

Access or other unavoidable delays that will exceed the four working day standard should be notified to MB or the broker.

1.7 Conflicts of Interest

Valuers are expected to inform MB or the broker immediately when there is, or might be, a conflict of interest that would preclude them from carrying out the work. Inability to proceed with the instructions must be reported immediately to MB or the broker to enable instructions to be redirected without delay.


1.8 Confidentiality

Both the valuer firm and MB will each keep confidential and will not, without the prior written consent of the other, disclose to any third party any technical or commercial information or other information of a confidential nature that it has acquired from the other as a result of any discussions, negotiations and other communications between them.

1.9 Valuation Forms

MB requires that a copy of the valuation report is sent to [email protected] as well as to the instructing broker (where applicable).

Valuers are required to ensure that they always use the up-to-date versions of MB’s valuation report form.

1.10 Panel Management

The Head of Underwriting is responsible for maintaining MB’s valuer panel and, subject to MB’s policies, decides which firms should be on the list.

2. Lending Policy - Property2.1 Legal Title

Title to the subject property must be good and marketable, and free from onerous restrictions and

conditions. MB’s security will normally be by way of a first or second mortgage.

2.2 Location

The security must be on a residential or investment property in England (excluding the Isle of Man and

the Channel Islands), Wales and mainland Scotland.

The valuer will provide details where the property is above or adjacent to commercial property. The MB

underwriter must satisfy themselves that any such property provides suitable security

and marketability.

2.3 Minimum Value

The minimum property valuation for residential owner occupied properties is normally £100,000.

The minimum property valuation for investment properties is normally £100,000.

2.4 Tenure

2.4.1 Acceptable Tenure

The following are acceptable:

• Freehold houses and bungalows.• Commonhold.• Leasehold houses, bungalows, flats and maisonettes - minimum 75 years remaining at the end of

the loan term, although in some circumstances a minimum of 60 years is acceptable (refer to MBunderwriter if purpose of loan is lease extension).

• Scottish title.

MB will consider lending on a good leasehold or possessory title subject to approval by our title insurers.


2.4.2 Unacceptable Tenure

The following are unacceptable:

• Freehold flats and maisonettes.• Flying freehold - although, where the extent of the flying freehold is less than 10% of the

overall floor area (i.e. covered passageway between two properties) and it has no effect on themarketability or potential sale price of the property, the underwriter has authority to deem it asacceptable. The underwriter may seek guidance from the valuer or from a lawyer prior to doing so.

2.5 Property Insurance

Where the property is already owned, details of a valid building insurance policy must be provided for the property.

2.6 Property Types

2.6.1 Acceptable Property Types

The MB panel Valuer must confirm that the property is for residential use, is of standard construction and is one of the following:

• Detached, semi-detached or terraced house or bungalow.• Flat or maisonette (purpose-built or converted).

2.6.2 Unacceptable Property Types

MB reserves the right to decline any property as security that it considers unsuitable or where the valuer makes any adverse comments about its mortgageability or marketability, including occupancy restrictions and falling property prices.

The following property types are not considered to be suitable security:

• Commercial properties/live-work units/semi-commercial properties.• Concrete houses which are listed as defective under the 1984 Housing Defects Act.• Farms or smallholdings.• Flying freehold where the % exceeds 10% of the overall floor space.• Flats located on the 4th floor or above where the property is not serviced by a lift.• Freehold flats/maisonettes.• Grade 1 listed buildings.• Mobile homes.• Properties affected by an agricultural restriction.• Properties affected by an invasive growth such as Japanese Knotweed.• Properties classed as uninhabitable.• Properties containing Asbestos in the main walls.• Properties containing Mundic Block materials unless classified as class A.• Properties located on contaminated land.• Properties where the valuer has recommended a retention, which cannot be ignored.• Shared ownership.• Steel framed properties.• Studio flats that are less than 30 square metres – MB will only lend if the property has self-

contained facilities.


MB may consider the following property types on referral:

• Flats over commercial premises with own street-facing entrance.• Flats in blocks of over 6 storeys.• Flats with deck/balcony access.• Leasehold properties with less than 75 years remaining on the lease.• Properties affected by assignable contracts.• Properties affected by dry rot.• Properties with flat roof that exceeds 25% of the total roof area.• Properties with thatched roofs.• Timber framed properties built prior to 1970.• 100% modern timber construction.• Ex-local authority flats up to a maximum 70% LTV, providing the valuer confirms undoubted

mortgageability and marketability.• Properties with solar panels that are not subject to a lease.• Where the property has been owned for less than 6 months by the applicant or vendor.• Modular housing• Retirement accommodation• Multiple unit freehold blocks

2.6.3 P.R.C. Approved Licence Systems

The following PRC repair schemes will be accepted subject to:

• Confirmation from a structural engineer that the repairs have been carried out under supervisionand in accordance with a licensed PRC product.

• Insurance-backed guarantee supplied by the firm which must be lodged with the title deeds.• Any adjoining property must also have been repaired under a fully licensed PRC product.• Surveyor must confirm that the property is mortgageable.

Approved Licence Systems House Type Designer Licence

NumberHouse Type Designer Licence

Number

Airey Curtins Cons Eng 005 Airey Blaenau Gwent Borough Council 007

Airey Thos Morgan Ptner 011 Airey Rok-Crete Units 012

Airey PRC Design Assoc 014 Airey Michael Dyson Assoc 018

Airey Swan Developments 033 Airey Leeds City Council 033

Airey Swan Developments 076 Boot M Dyson Assoc 054

Boot L B Richmond 079 Cornish Curtins Cons Eng 001

Cornish Swan Developments 002 Cornish John Laing Construction 009

Cornish Rok-Crete Units 013 Cornish William Davies Ltd 015

Cornish Michael Dyson Assocs 016 Cornish PRC Design Assoc 024

Cornish Kirkham Williams Lewis 032 Cornish Walsall MBC 049

Cornish Curtins Cons Eng 064 Doran Dinardo & Partners 060

Gregory Curtins Cons Eng 072 Newland Calderdale MBC 069

Newland Curtins Cons Eng 081 Parkinsons Avebury Design Assoc 042


Approved Licence Systems House Type Designer Licence

NumberHouse Type Designer Licence

Number

Parkinsons Michael Dyson Assoc 050 Parkinsons KPA Consulting Engs 071

Parkinsons Brittan Hadley Ptnrs 083 Reema HP Michael Dyson Assoc 017

Reema HP Curtins Cons Eng 046 Reema HP KPA Consulting Engs 063

Reema HP Brittain Hadley Ptnrs 082 SCH/Hawks Michael Dyson Assocs 065

SCH/Hawks Kirkham Williams Lewis 070 SCH/Hawks PRC Design Assocs 074

Smith Curtins Cons Eng 051 Stent Swan Developments 004

Stent Curtins Cons Engs 056 Unity Curtins Cons Engs 007

Unity John Laing Construction 019 Unity Curtins Cons Engs 020

Unity Michael Dyson Assoc 021 Unity PRC Design Assoc 029

Unity The Johns Ptnership 035 Unity J R Bacon 039

Unity Swan Developments 061 Unity Kirkham Williams Lewis 067

Unity Craddy & Partner 078 Waites Michael Dyson Assocs 023

Waites Broadway Const Ltd 041 Waites Swan Developments 043

Waites Curtins Cons Engs 045 Waites Lovell Cons Ltd 047

Waites John Laing Const 058 Waites Kier Ltd 059

Waites PRC Design Assoc 075 Woolaway Purpose Built Ltd 040

Woolaway (Houses) Curtins Cons Eng 006 Woolaway (Houses) Michael Dyson Assoc

025

Woolaway (Houses) Bristol City Council 028 Woolaway (Houses) Ove Arup & Partners

044


2.6.4 Acceptable Concrete Houses Not Covered Under PRC Licence Systems

Concrete-built properties shown below are acceptable to MB, although some require a satisfactory full structural engineer’s report.

Structural reports must be carried out within the guidelines for inspection of concrete houses. Whilst MB is prepared to consider properties subject to a structural engineer’s report, applicants must be made aware of the cost and that a decision to proceed with the loan cannot be made until the report has been fully assessed.

Applicants must also be made fully aware of the possible cost for future remedial works, repairs, and maintenance. The structural report must be sent to the valuer to confirm that the property is acceptable security for MB.

Approved Concrete Type Structural

ReportType Structural

Report

Aberdeen Corporation Concrete Yes Aberdeen In-situ Concrete House Yes

Argisol Yes Argyll Yes

Balancey Yes Balfour Beatty Yes

Banton No-Fines Yes Beanland No 2 Yes

Beaucrete Yes Bellrock Yes

Bellstone No Blackburn Yes

Broadmead Yes Bryant Yes

Brydon No Cast Rendered No-Fines No

Clegg Yes Clugston Yes

Concrete Block No Corplite No-Fines No

Drury System 3 No Corvus Yes

Duo Yes Duo Slab (acceptable only if refurbished after 1980)

Yes

Edron Yes Fidler No

Gadey No Gateshead Butterfly No

Hamish Cross Yes Incast Houses No

Jemm Flatted Yes Jones & Harvey Yes

Kenkast Bungalows 1970s No Laing Easiform No

Lamella No Lawrence Mark 1 Yes

Lawrence Crosswall Yes Lesser Yes

Maxim No Miller No-Fines No

Miller Temporary Bungalow Yes Morrell Yes

Mowlam Yes Nissen Petren No-Fines No


Approved Concrete Type Structural

ReportType Structural

Report

New Decade Yes O’Sullivan No-Fines No

Schindler Gohner Yes Scotconystem 3 No

Shepard Yes Solvyt and Brick (Newcastle Area) Yes

SSHA Cellular Concrete Commissioner Houses

No SSHA Commissioners Resumption Houses

No

SSHA Wartime Cellular Concrete Houses

No Stour Yes

Tee-Beam (England & Wales) Yes Thain No

Thompson No Townson Yes

Unitroy (England & Wales) Yes Weir No

Wilson Blocks Yes Wimpey No-Fines (Two Storey) No

Woolaway Bungalow No

2.6.5 Concrete constructions not acceptable

MB will not accept the following concrete construction types as security:

• A & C Barvis Gerrard ‘Incon’• Anglian Glasgow Foamed Slag• Basingstoke Dev. Group G.L.E• Beale & Son Gregory Crosswall Houses• Belfry Harlow Haddow• Bison Harry Neal Battery Cast• Boswell (England & Wales) H.S.S.B. System• BTS Type 4 Jesperson• Camus LA’s Own: Dudley• Carlton Lasen & Nielson (T.W.A)• Cebus Lecaplan• Crudens Skarne M.F.C• Dare Mac-Girling• Duplex Foamed Slag House MacGregory• Dyke (England & Wales) Metracon• Edlo Mitchell Camus• 4L Factory Finished Homes Modus• Forrester-Marsh Myton (England & Wales)• Fram Gerrard Myton-Solway• Fram Russell N.C.B.• Gateshead Experimental Oakbridge• P.A.C. or P.A.L. Tracoba

• Permabuild Trento• Polystyrene Concrete Sandwich Panels

Truscan• Ridgeway T.W.A.• SB2 Underdown (England & Wales)• Selleck Nicholls Williams Universal• Shepard Spacemaker Waller (England &

Wales)• Sir Lindsay Parkinson Wates• Skarne Watcon• Southend 3M Weedon• Stonecrete (England & Wales)• Stubbings Ind. Low Rates Whitcon• Sundh Whitson/Fairhurst• Winget House (England & Wales)• Tarran (England & Wales) X.W. (Sellick

Nicholls)• Tarslag Y.D.G• Taylor Woodrow Anglian Y.D.P. Systems,

X, XXX and Y• Wessex (England & Wales)


3. Valuation Type3.1 Full Internal Inspection

Where an internal report is required, the report must be instructed by the broker or MB and completedon the relevant MB template by an approved RICS qualified surveyor.

Valuations remain valid for a period of 3 months after the date of inspection. Re-typed valuation reportsare acceptable without referral to MB, providing the original date of inspection was no more than 3months previous to the date of retype.

MB, or the Introducing Broker should ensure that all relevant details are given to the valuer at the pointof instruction, particularly purchase price and date and the number of years remaining on the lease ifapplicable, as these factors can affect the valuation figure.

The report must be completed in the appropriate MB Mortgage Valuation Report form (the standardform for owner occupied properties and the BTL version for investment properties). All sections of thevaluation report must be completed in full by the valuer and contain either his original signature or hispersonal secure ID pin code.

The property must be considered an unconditionally suitable security for mortgage purposes andcomply with MB Property Valuation Guidelines. The MB underwriter will also obtain and review aRightcheck on all applications.

If it comes to MB’s attention that the security property is currently for sale, confirmation will berequired from the applicant that it has been removed from the market.

3.2 Automated Valuation Models (AVM)

Hometrack AVM are permissible on our Residential owner occupied product range subject to certaincriteria being met. MB reserve the right to request a full internal inspection.

3.3 Rightcheck

A Rightcheck report may be obtained to validate the information supplied within the valuation report orAVM. The use of Rightcheck is at the Underwriter’s discretion.

4. New BuildsAny property built less than 10 years ago must have the benefit of one of the following:

• Building Life Plans• Build Zone• Checkmate• LABC New Home Warranty• NHBC• Premier Guarantee• Zurich• CML Professional Consultant’s certificate and indemnity.

Alternative policies may be considered on referral and subject to approval by the Transactional Credit Committee.


5. Use of Property5.1 Owner-Occupation

Where the property is the applicant’s main residence, the whole property must be used as the family

residence, with no part letting.

It is normally acceptable for a lesser proportion of the property to be used as an office, or for

other commercial purposes where this does not involve structural alteration from purely

residential accommodation.

MB will consider lending on a second home, subject to referral at the outset to an MB underwriter. If

agreed, this may be subject to an increased rate.

5.2 Other Occupiers

The valuer will state whether, on the basis of information provided, anyone other than the applicants

resides at the property.

Any occupier or proposed occupier of the property who is 17 or over at the date of application, and who

is not a party to the mortgage, must sign a waiver.

5.3 Investment Properties

The applicant will be required to confirm that an AST agreement is in place.

The property should be let to a single-family unit, under a single tenancy agreement, although holiday

lets and Airbnb lets may be considered. In all instances, a rental figure based on an unfurnished

property on an AST basis should be provided on the report.

MB may consider lending where it appears that the property is a house in multiple occupation (HMO).

6. Risks within General AreaThe valuer will provide details in the ‘Matters considered essential for mortgage purposes’section of the Mortgage Valuation Report’ on the risks to the property in terms of flooding, subsidence and contamination.Where the valuer has stated that any such risk exists, the application should be referred immediately to MB. The MB underwriter will discuss this with the valuer and must be satisfied that any such risk does not detrimentally affect marketability and mortgageability before proceeding.The MB underwriter must also take into account any comments made by the valuer in the General Remarks section of the Mortgage Valuation Report regarding special factors, such as pylons, nearby commercial property or void property, that are likely to result in the security suffering inferior demand on resale.

7. Property DefectsMajor or progressive defects could adversely affect future value and/or saleability. The criteria set out below are designed to exclude and mitigate any such risk.

If the valuer advises that mortgageability is restricted in any way the property will be declined as an unsuitable security.

7.1 Structural MovementWhere the valuer has indicated the presence of ongoing or progressive movement or the need to monitor repaired structural movement the case will be declined.

Where the valuer has indicated the presence of past structural movement, and this does not need to be repaired or monitored, and its presence does not adversely affect mortgageability, MB will normally lend without the need for a structural report.


7.2 Underpinning

MB will not lend on properties underpinned in the prior three years.

Properties that were underpinned over 3 years prior to the application will be considered on referral, subject to a 20 year guarantee from a reputable company warranting the works undertaken.

Properties that have been underpinned in the past but show evidence of further movement will be declined.

7.3 Specialist Reports

If the valuer states that a specialist report is required, such as damp and timber, the underwriter will assess the requirement and assess whether the report is essential.

Coal mining reports are not generally required unless the valuer makes specific reference to the structure of the property or future saleability of the property in relation to coal mining activity.

7.4 Properties not currently habitable

MB will not lend where the valuer states that the property is not currently habitable and/or does not have standard amenities.

Where works are to be carried out to rectify this, MB will only complete the loan on receipt of satisfactory confirmation from the valuer that this has been done.

7.5 Stage Payments

MB will not lend on a stage payment basis.

8. Completion of the Valuation Report8.1 Property Inspection

Inspections should be undertaken in accordance with the Red Book and any specificMB requirements.

8.2 Application Reference

A reference number is provided in the valuation instructions e.g. Z000150512. This referenceshould automatically map across from the instructions to the report. If not please complete thereference in the appropriate space.

8.3 Application Instruction

Ensure that the full applicant details are entered and note who the instruction has come from.The instruction should only come from one of MB’s accredited broker partners or from MB.

8.4 Applicant Names

This information will be provided in the valuation instruction. Include the titles and initials ofeach mortgage applicant. Please ensure that the applicant(s) name is correct on the valuationform and typed in upper and lower case.

8.5 Property Address

The address on the instruction will be as provided by the applicant via the broker. Thisinformation cannot always be relied upon. Valuers must check the address during theinspection and make sure it is correctly shown on the report, correcting any errors. Thepostcode is vital, as it is used for insurance purposes; please ensure that this is correct. If apostcode is not provided in the valuation instructions, try to find this out and give at least thefirst part of the postcode.


8.6 Location

Valuers should use their judgement and select one from the following options that best describe the location:

• Urban.• Suburban.• Rural.

Provide detail if the security property is above or adjacent to commercial property.

8.7 Property Type

The options are mutually exclusive; valuers should select one from the following:

• House.• Bungalow.• Flat.

• Studio Flat.• Maisonette.• Other.

Where the property does not fit exactly into a category, valuers should use their judgement and select the option that best fits the type of property valued.

8.8 Property Style

The options are mutually exclusive; for houses/bungalows, valuers should select one from the following:

• Detached.• Semi detached.• Mid terrace.

• End terrace.• Details if other.

Where the property does not fit exactly into a category, valuers should use their judgement and select the option that best fits the style of property valued.

8.9 Purpose Built

Detail if the property is purpose built; use other if the stated options are not applicable.

Detail if the property appears to be an ex-local authority/housing association property. MB will lend without additional restriction where the property is a house or bungalow. Restrictions may apply where the property is a flat or maisonette.

8.10 Flats and Maisonettes

State the number of floors in the block.

State the floor(s) on which the unit is located, using abbreviations rather than words e.g. LG, G, 1, 2, 3. A forward slash is permissible for split level accommodation in flats or maisonettes e.g. 1/2.

State whether a lift is provided by selecting ‘Yes’ or ‘No’.

8.11 Plot

Where the property has additional land beyond the immediate garden, the valuation must be carried out against the house and the first 2 acres only.

8.12 Approximate year built

Enter the approximate year of construction (not conversion). The format must be four numbers, e.g. 1960. Do not enter text such as “late 1800’s”, “18th Century” or “1930’s”. An approximationto the nearest ten years will be adequate, but state the actual year of construction if it is known.It is appreciated that it is difficult to be precise when dealing with period properties and in suchcircumstances an “educated guess” will suffice.


8.13 Gross External Floor Area of Dwelling

State the approximate gross external area in m2, rounded to the nearest m2. Floor space with headroom of less than 1.5 metres and integral garages should be excluded. The floor area of flats should be measured to include the width of external walls and to the centre line of party walls. Common parts, common halls and staircases should be excluded. Valuers must exercise their own judgement as to whether extensions such as conservatories should be included in the floor area or recorded as outbuildings.

8.14 Significant Alterations

The valuer must state whether there are significant alterations or additions to the property by entering ‘Yes’ or ‘No’. If ‘Yes’, the valuer must provide details.

8.15 Accommodation

Using numbers, state the number of principal rooms. Where the current use of a room varies significantly from the use for which it was designed, e.g. a bedroom used as a study, valuers must use their judgement to include such rooms in the most appropriate category.

Number of living rooms - do not include kitchens unless they are part of a kitchen/dining room.

Number of bedrooms - do not include “box rooms” if they are so small as to be incapable of use as a bedroom. In the case of a studio flat/bedsit state “0” bedrooms and “1” living room.

Number of bath/shower rooms - include any en-suite bathroom/shower room. Do not include separate WCs unless a bath or shower is provided in that room.

8.16 Other Accommodation

Detail any other rooms within the property that are not listed under Accommodation.

8.17 Outbuildings/Common Facilities

Briefly describe outbuildings that are permanent and which contribute to the value of the property, e.g. conservatories which are not considered to be part of the main accommodation should be includedhere. In particular, include any outbuildings that have been included in any recommended rebuildingcost. Do not comment about the condition of outbuildings in this section.

Only describe those common facilities that are significant and contribute to the value of the property. In the case of flats, it is not necessary to describe normal common parts, but any unusual features, such as shared sports facilities, should be described.

If there are no outbuildings/common facilities, state ‘None’.

8.18 Garage and Private Parking

Valuers should use their judgement and choose the most appropriate generic garage/parking facility by selecting one from the following options:

• No garage.• Single garage.• Double garage.• Other – provide a brief description to clarify the garaging

and parking facilities, e.g. “garage space for three or more vehicles”.• No private parking.• Private parking on drive.• Allocated private parking.


8.19 Construction

The valuer must state whether the property construction is standard, with reference to section 2.6 above. If ’No’, details are required. For non-conventional construction, valuers must make appropriate enquiries to establish the name of the system, e.g. “Wimpey No-Fines”. If enquiries are unsuccessful, state “Not known”.

If applicable, state whether the area of flat roof exceeds 25% of the total roof area, and provide details.

8.20 Services

Detail the services the property benefits from, including mains water, electricity and drainage.

8.21 Tenure and Legal

State the tenure of the property:

• Freehold.• Leasehold.• Former Feuhold.• Commonhold.

If leasehold, provide the remaining term in years, as advised along with confirmation of service charges and ground rent if amounts are known.

8.22 Occupation

The valuer must state, to the best of their knowledge, who occupies the property. If the applicant and their family appear to occupy the property, state whether they occupy more than 40% of the living accommodation. If ’No’, provide details.

8.23 Tenancies

If the property is tenanted at the time of inspection, answer ‘Yes’. In addition, details should be provided on how the valuer knows the property is tenanted, e.g. ‘access was provided by someone who advised they were the tenant’.

8.24 Non Residential Use

If any part of the property is used for non residential purposes (e.g. trade, professional, commercial or agricultural use) at the time of the inspection, answer ‘Yes’ and provide details

8.25 Solar Panels

If solar panels are present at the property, answer ‘Yes’.

If ‘Yes’, the valuer must state whether, to the best of their knowledge, these are owned or leased. If not known, choose this option.

8.26 Other Legal

Where any legal matters (e.g. roads/pathways, rights of way, flying freeholds, restrictions, easements etc.) that might be considered material for mortgage purposes have been brought to the valuer’s attention at the time of inspection, answer ‘Yes’, and provide details.


9. Matters Considered Essential for Mortgage Purposes9.1 Risks

If any of the following risk factors are brought to the attention of the valuer at the time of the inspection,answer ‘Yes’:

• property is at risk of flooding.• property is at risk of subsidence heave landslip/coastal erosion within influencing distance.• significant contamination is present which might affect saleability.

If the valuer has answered ‘Yes’ to any of the above, they must provide full details.

9.2 Movement

If there is any evidence of structural movement, such as structural movement, landslip or heave, at the property, answer ‘Yes’. If ‘Yes’, state whether the evidence appears to be longstanding and unlikely to be progressive. If ‘No’ to this question, provide full details. It is important that the valuer reports all evidence of movement, even though this may be slight. There are four categories into which any evidence of structural movement can be placed:

• Evidence of movement was observed in the form of (brief description). This appears to be a minordefect which is not thought to have any serious structural significance.

• Evidence of movement was observed in the form of (brief description). This appears to be longstanding and non-progressive and the likelihood of further significant movement seems remote. Nostructural works are considered necessary.

• Evidence of movement was observed in the form of (brief description). It is not possible to say thatfurther significant movement will not occur. Further movement would seem unlikely but from asingle inspection this cannot be positively established and further specialist advice may be prudent.

• Evidence of movement was noted in the form of (brief description). This appears significant andlikely to be progressive.

9.3 Specialist Reports

If the valuer feels that any specialist reports are required for the security property, answer ‘Yes’. If ‘No’ is selected, the text field should be left blank.

In addition, further comment is required regarding any reports the valuer feels are required on the security property. The recommendation for specialist inspections should normally require the whole property to be inspected and reflect the inter-related nature of defects, e.g. where there is evidence of rising damp, there is always the risk of associated timber decay.

9.4 Essential Repairs

Answer ‘Yes’ if any essential repairs are required for mortgage purposes.

In addition, further comment will be required detailing the extent of the repairs.

Cosmetic repairs or improvements should not normally be included. Works of improvement should only be included when the valuation instruction specifically states that it is the applicant’s intention to undertake improvements.

All requirements should be typed in a numbered list, giving precise details of the repairs required in an instructional format to ensure that the applicant and underwriters know what is required to progress the loan, e.g. ‘Obtain the advice of a structural engineer or chartered building surveyor on the need to strengthen the roof structure and undertake recommended work.’

Valuers must not include statements such as ‘subject to estimates’, nor recommend undertakings, maximum LTVs etc.


9.5 Further Matters

If any further matters are considered essential for mortgage purposes, answer ‘Yes’. In addition, further comment will be required detailing any matter the valuer feels essential.

9.6 Demand

If the property is one which, due to special factors, such as pylons, nearby commercial or void property, etc., is likely to suffer inferior demand on resale, answer ‘Yes’. In addition, further comment should be provided detailing those factors which may have a negative impact on re-saleability.

9.7 General Remarks

Any further details or remarks the valuer feels are necessary and important to mention in view of the valuation report should be mentioned here. If further explanation is required on any of the items during the report or a continuation of notes is required, these should be made here.

9.8 Valuation

The valuer must confirm ‘Yes’ if the property complies with the detail in this document.

The valuer must also answer ‘Yes’, to confirm that the property is likely to be mortgageable by the majority of mainstream UK lenders.

If ‘No’ to either of these questions, the valuer must provide details of the relevant factors.

9.9 Market Value

The market value of the security property in its present condition must be stated, i.e. prior to any essential repairs.

The valuer must then state the market value of the security property after essential repairs have been completed.

If a retention is required, answer ‘Yes’, and enter the amount of retention in the next box. The valuer should note that the retention amount is not an estimate of costs, and should be aware that MB’s minimum retention is £2000.

MB considers the definition of market value to be in accordance with the relevant definition provided in The Red Book. If the valuer provides a market value, this is taken as confirmation that the property is mortgageable in its condition/use at the time of inspection.

A valuation should always be given except when:

• The property is not acceptable for mortgage.• A new build property is not close to completion.• A full retention is made.

In these cases complete ‘not applicable’ in the valuation fields. Where the property is not acceptable for mortgage an explanation must be provided.

9.10 Projected Market Value

The valuer will state the Projected Market Value in its present condition, given 90 days to exchange.

9.11 Insurance Reinstatement

MB will request details of a valid insurance policy. The level of buildings insurance cover must cover the reinstatement cost of the property. If the property is unsuitable for BCIS calculation £0 should be entered.


9.12 Photographs

Photographs should be attached to all reports: front, rear, kitchen, bathroom and a street scene. Answer Yes if attached.

9.13 Declaration & Signature Section

This section of the form must be completed in full, with:

• The valuer’s name.• The RICS qualification held.• RICS number.• Confirmation whether the valuer is a member of the RICS Valuer Registration Scheme.• The valuer’s signature or security code.• The valuation firm’s name, address and telephone number.• The date that the inspection took place.• The date that the report was completed.

10. Buy to LetIf an application has been made for a BTL mortgage then this section should befully completed.

If an application has been made for a BTL mortgage, this should be clearly shown on thevaluation instruction from MB or the introducing broker.

The valuer must confirm that the property is considered suitable for private renting.The valuer must then confirm that there is satisfactory demand for this type of property inthis location.

If the answer is ‘No’ to either of these questions, further comment must be provided.

The valuer will then detail what type of letting the property is suitable for, e.g. family,single, HMO, etc.

10.1 Let-ability

The valuer must confirm whether the property is reasonably let-able, with standard amenitiesin situ in its present condition or whether the property is considered to be reasonably let-ableafter reports and repairs have been conducted.

If the answer is ‘No’ to either of these, further comment is required indicating what additionalworks would be required to bring the property up to a let-able standard.

10.2 Current Rental Passing

The valuer must state the monthly rental figure that is currently in place for the property,as advised to the valuer (this figure is not required to be verified by the valuer).

The valuer must also provide an estimated monthly rental value of the unfurnishedproperty on an Assured Shorthold Tenancy basis after completion of all reports, repairs andadditional works.

11. ComparablesMB quality control procedures require valuers to include a justification for each valuation intheir inspection records. A minimum of three comparable transactions should be shown andadjustments made to relate these to the subject property. Details of any alternative valuationevidence should be recorded, e.g. opinions sought from other valuers.


12. Conduct of Valuers12.1 Discretion

Valuers are individually responsible for any advice they give within the scope of theirprofessional expertise. Panel valuers must avoid giving gratuitous advice to anyone on theirown or MB’s behalf.

12.2 Communication with Third Parties

The findings of the inspection and the content of the report should not be discussed with anythird party. They are confidential to MB, its introducing broker and the applicant.

12.3 Dealing with the Applicant/Borrower

As a general rule, valuers will not need to communicate directly with the applicant. Wheneverpossible, direct dealings with the applicant should be avoided and any queries channelledback to the introducing broker or MB.

Often the inspection will involve meeting the applicant/borrower or their representative.Care should be taken not to be drawn into open discussion with regards to the condition,acceptability or value of the property. Valuers should record the details of any discussions intheir site notes to cover the possibility of any subsequent challenge.

12.4 Valuation or Technical Challenges

When a valuation is being challenged, usually by the introducing broker, the valuer has twooptions – to amend, or confirm the original valuation.

In the case of an amendment, an amended report should be created on Quest/XIT2.The report must state that the amended report contains a revised valuation and supersedesits predecessor.

When any other form of technical challenge is received, the valuer should respond tothe origin of the request and, in cases where a reporting error is to be corrected, anamended report should be issued, with the valuation report containing a brief explanationof the amendment.

13. Panel Appointments13.1 Conditions of Panel Appointment

Panel firms will have confirmed their understanding of an agreement with these guidelinesprior to panel appointment. Due diligence checks will have been carried out prior toappointment. The following are the principal conditions:

• MB requires that its inspections and valuations must be carried out by RICSqualified surveyors.

• Reports must be personally signed by the inspecting valuer and include his/herprofessional designation. Reports must not be inspected by a non RICS qualified memberof staff and signed off by a superior.

• Appointment to MB’s Panel of Valuers vests in the corporate body of the firm, not in anyindividual partner, director or employee. Thus panel appointees must satisfy themselvesas to the knowledge, experience and competency of any employee carrying out work onbehalf of MB.

• All firms must carry valid professional indemnity cover of at least the minimum requiredby MB (currently £1 million). A copy of the renewal certificate must be held by MB.

• The firm must satisfy standard Data Protection Act requirements.• The firm must undertake rigorous pre-employment checks, including CRB and credit

checks. The firm must also demonstrate ongoing competency of each valuer.

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13.2 Change of Address or Contact Details

The firm must inform MB of any changes to a panel appointee’s name, address or telephone number.

13.3 Quality Control

The quality control of panel valuer reports is intended as a positive exercise, designed to provide feedback to valuers and guidance as to compliance with MB’s guidance standards. During the course of each year, panel valuers may be contacted by MB and requested to provide copies of:

• Selected reports together with site notes.• The original inspection instruction.• Justification of value evidence used/logged in support of the valuations provided.

13.4 Complaints

Complaints against panel valuers may originate either pre- or post-completion and involve either the borrower/applicant or introducing broker. When a complaint is received, MB will forward details of the complaint to the valuer firm, which will be requested to comply with the following procedure. MB will maintain a watching brief to ensure that neither MB nor its customer is disadvantaged by the failure of the valuer or their PI Insurers to handle the complaint fairly and expeditiously.

• Acknowledge receipt directly to the complainant within 48 hours.• Inform PI Insurers, if appropriate.• Take appropriate steps, without any delay, to investigate and resolve the complaint,

if necessary with re-inspection of the property.• Respond to the complainant or representatives either directly or as instructed by

PI Insurers.


Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (Firm reference number 719354).

Documents

Property Valuation Guidelines For Mort˜a˜es...2018/12/02 · MB business is originated via brokers who are regulated and authorised by the Financial Conduct Authority (FCA). MB