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January 2016 Page 1 of 55

UK

Santander Residential Lending Policy – Guidance for Valuers Version: 1 Owner: D avid House

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Contents Page

Introduction 4 Key Requirements 5 Mortgage fraud 6 General Requirements 7 Reporting requirements 8 Mandatory Phrases Transcriptions Declining a Property Retentions

Upgrading an External Inspection Additional Lending Property Matters 11 Construction – Acceptable Construction – Unacceptable Condition Unacceptable Property Types New Build Flats Buy to Let Annexes Legal Matters 18 Tenure Lease Term Title Deeds Purchase Schemes Back to Back Sales Occupancy Restrictions Land Issues Commercial Use Environmental Issues 21 Mundic Solar Panels Coal Mining Japanese Knotweed Contaminated Land Asbestos Flooding Radon HS2 Private Water Supply

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Appendices 25 Appendix 1 – Construction Ty pes Appendix 2 – Mandatory Phras es Appendix 3 – Standard Phrase s Appendix 4 – Form Completion Guides

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Introduction These Guidance Notes set out the main policies, procedures and requirements that valuers are expected

to follow when completing residential mortgage valuations on behalf of Santander.

Valuers must recommend or decline all properties for mortgage in accordance with these Guidance

Notes.

Santander reports are processed automatically and may not be read by staff before a mortgage offer is

made. It is therefore essential that the reports are completed correctly. It is the valuer’s responsibility to

insert crosses in the appropriate boxes within the report and use the mandatory phrases in the correct

sections to ensure specialist report requests or retention recommendations are acted upon.

Form completion guides can be found in Appendix 4.

These Guidance Notes have been completely rewritten and all previous versions are superseded as from

18 January 2016.

LGSS act as panel managers for Santander and all queries should be directed as follows-

Technical Queries: [email protected] Telephone: 01226 230513

PVQ Queries: [email protected]

Santander Property Risk LGSS

Santander House (AHM147) 1-3 Churchfield Court

Grafton Gate East Barnsley

Milton Keynes South Yorkshire

MK9 1AN S70 2JT

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Key Requirements

To be acceptable Santander require that at the point of release of mortgage funds the property is

• Habitable

• Insurable

• Self contained

• A single dwelling

• A permanent fixed structure

• Within a curtilage of no more than 10 acres of land

Valuers must only recommend property as suitable security if it is readily saleable for owner occupation

across the entire market. If demand for the property is limited to cash purchasers or investors then it is

unacceptable. (Some limited exceptions to this rule may be made in certain Buy to Let cases – see page

16.)

A single dwelling in this context can include properties with annexes, outbuildings etc, proportionate to

the main house, the defining feature being that the property must be readily saleable as a single entity

for owner occupation.

If a ‘Market Value at the time of inspection’ is provided the valuer is confirming the property meets

the Bank’s lending policy and is in a mortgageable condition at the time of inspection.

However, a property should not be declined if it can be made to meet these key requirements by actions

that can reasonably be undertaken by the applicant.

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Mortgage Fraud

Valuers are in a unique position to assist the Bank in the prevention of fraud as they not only inspect the

property but often meet the applicant/vendor or estate agent who provides additional information

about the transaction.

Possible fraud scenarios can include any one or more of the following:

• Inflated purchase prices/estimated values

• Applicants or brokers arranging access on sales

• Several applications on the same property in succession

• Houses in multiple occupation being purchased for owner occupation

• Multiple applications on one block of flats/development site , particularly where no previous

transactions are recorded

• Applications by builders or property developers

• Name of vendor/applicant recurring frequently in a single location

• Inconsistencies between agreed price/loan/valuation

• Unknown estate agent from out of area

• Back to back sales

• Involvement of a property Investment Club

• Applicant remortgaging but appears to know little about the property

• Applicant not living at the property but remortgaging/seeking additional loan and not BTL

This is not an exhaustive list and if the valuer has any concerns at all they should inform the Bank by

emailing [email protected]

The valuer must not make any reference in the Valuation for Mortgage Purposes (VMP) but should

complete the form in accordance with these guidance notes. Once the Bank has received the email

further investigations will take place. The applicant/broker/vendor will not be informed that the valuer

has raised any suspicions to the Bank.

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General Requirements

In the absence of anything in these Guidance Notes to the contrary valuers should comply with the

relevant practice statements of the latest edition of the RICS Valuation-Professional Standards UK (The

Red Book). Where there is any conflict, the Banks’ Guidance Notes will take precedence.

When carrying out a valuation for mortgage purposes a head and shoulders inspection of the roof space

should be undertaken where it is safe to do so (record in site notes). Reinstatement cost figures should

also continue to be provided.

Santander accepts reports completed and signed off by FRICS, MRICS or AssocRICS qualified surveyors

who are RICS Registered Valuers and who are listed on the approved panel.

Valuers must only complete cases located within their approved areas of operations.

Valuers must make available their site notes, comparables and valuation rationales for audit purposes

when requested to do so either by the Bank or the panel manager.

If there is, or might be, any conflict of interest as defined by RICS Guidance valuers must inform LGSS

panel managers immediately and return the instruction.

Only PVQ’s received from LGSS panel managers should be responded to. The response time for PVQ’s is

48 hours. In the absence of the inspecting valuer Santander expect the Area Manager or equivalent to

ensure the query is answered within turnaround time.

Santander may refer specialist reports to the valuer even where they are not in the applicant’s name. For

Structural Engineer Reports the valuer is asked to advise the Bank whether on the basis of the report

submitted the case is likely to proceed or not. This is to save the customer the added expense and time

of obtaining reports needlessly. If the case is to proceed the valuer should only amend the mortgage

valuation on receipt of a report in the applicant’s name.

For all other specialist reports and estimates, the valuer should respond to the PVQ as appropriate but

additionally request that the report (if no work required) or the guarantee (where work is required or

has been completed) be transferred into the name of the customer. The mortgage valuation report

should be amended in conjunction with the PVQ response as the PVQ will not be closed until this has

been completed.

Where a PVQ results in any change to the original valuation or retention, valuers must sign off an

amended report on Quest, providing an explanation for the amendment in section 14b and changing

the date of the report. The PVQ will not be closed until the amended report has been completed. There

is no requirement for an amended report where the figures remain unaltered except in the

circumstances described above or where this is requested by the Bank/Panel Managers.

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Reporting Requirements

Mandatory Phrases

Santander requires the use of Mandatory phrases for New Build cases (including the CML form), Mundic,

LPS and PRC construction, Movement, Private Drainage, Trees, Japanese Knotweed, Title Plans, Lease

Term, Scottish HMO’s and Right to Buy cases. There are also Mandatory phrases to be used when the

Purchase Price/Estimated Value differs in any way from the Valuation and for amended reports. These

mandatory phrases can be found in Appendix 2.

Appendix 3 provides example standard phrases. These are not mandatory and should only be used

where appropriate. Free text or amended standard phrases should be used to reflect the individual

circumstances.

Transcriptions

Transcription reports will not be accepted where a valuer has previously completed a valuation report

commissioned by another lender.

Scotland – Where the valuer has carried out the Single Survey a transcription will be accepted by

Santander provided

• The transcription report is completed within 3 months of the date of the current report

• The office of the firm is on Santander’s panel for that postcode

No fee is payable by Santander where a transcription report is produced.

The information provided in the VMP should not differ from that provided in directly instructed cases.

The valuer should provide any additional information necessary to complete the form even if this had

not been provided previously in the Home Report.

Transcriptions are not permitted in the following circumstances:

• Where the valuation varies from the agreed purchase price by more than 10%

• Remortgage applications

• Right to Buy applications

• Private sales ( where the sale has not been negotiated through a recognised selling agent eg

estate agent or solicitor)

• Where the inspection was more than 3 months prior to the date of valuation request from

Santander

• Where a ‘refresh’ of the Home Report is instigated by the mortgage instruction

• Where the Home Report valuation figure differs from the valuer’s current valuation assessment

• BTL applications

• Where the transcription report cannot be completed by the inspecting valuer

• Where the original valuation was only of a portion of the shared ownership property being

purchased and not the whole (100%) property

• Where an inspection is required to update the valuation figure

• Where prior to producing the valuation either the valuer or an employee or partner of the same

surveying firm provided an estimated valuation of the property, whether verbally or in writing, to

the vendor or representatives of the vendor

Where a transcription valuation has been instructed but is not permitted, valuers must return the

instructions to the Bank’s panel manager.

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Declining a Property

Properties should only be declined where they do not meet the Bank’s lending criteria and they cannot

be made acceptable by any reasonable action undertaken by the customer.

In all other instances, a total retention should be imposed, with the actions required for the property to

meet the key requirements clearly stated in sections 11 and/or 14 as appropriate.

A property may be unacceptable because it fails on a specific policy such as LPS and PRC flats and

maisonettes or land in excess of 10 acres or because, in the valuer’s opinion, it fails to meet the Bank’s

Key Requirements.

When completing a VMP for a property that is being declined

• Do not request any reports, plans or Title Plans

• Do not suggest any repairs

• Do not provide any reinstatement figure

• Do not provide any Valuation figures

• Do not provide any rental figure (BTL cases)

• Do provide an explanation in Section 14b as to why the property is unsuitable

• Do not provide any other comments in section 14

• Do not use any standard phrases which include the words ‘this is reflected in the mortgage

valuation’

When declining a property Valuers must not in any circumstance make any suggestion that the

property might be acceptable if certain works are done. If the property is unsuitable because it fails to

meet more than one lending criteria all reasons must be stated in section 14b.

Retentions

Valuers should note that retentions of less than £2,000 are rarely imposed by the Bank.

A figure equal to the whole advance (as shown on the instruction) must be used whenever a total

retention is required.

Total retentions are required when either the property is not suitable for lending without certain works

being completed or the valuer is unable to confirm the property is suitable for lending without being

provided with additional information. Provision of the additional information will enable to the valuer to

confirm whether the property meets Santander’s lending policy. An example of this is the provision of

documentation to confirm details of the repair scheme carried out to a PRC property or where a Structural

Engineer’s report is required.

Santander will accept retentions on Buy to Let cases in certain circumstances – see page 16.

When determining whether a retention is warranted refer to the specific sections below for each issue.

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Upgrading an External Inspection

Properties where the estimated value is £1,000,000 or more, flats and maisonettes and Joint

Ownership/Low cost Housing Schemes are all excluded from External Valuation Inspections – any cases

received that fall into these categories should be upgraded to a VMP and the panel manager informed.

Valuers must not complete the External Inspection Valuation (EIV) in the following circumstances:

• If the customer’s estimate of value is more than 10% above or below the valuation

• If the property cannot be clearly seen from a publicly accessible location.

• Where there are or likely to be any unusual features to the property, legal or structural related

issues

• Where the plot obviously exceeds 1 acre

• Buy to Let valuation instructions

If for any reason the valuer considers the property is not suitable for an External Inspection, and/or it

falls into one of the categories above the valuer should inform the panel manager and upgrade the

report type to a VMP.

In addition, it should be noted that properties cannot be declined based only on an External Inspection. If

the valuer is aware prior to the inspection that the property is unsuitable for mortgage the instruction

should be cancelled and the panel manager advised of the reason. If the valuer becomes aware during

the inspection that the property is unsuitable then the case should be upgraded to a full inspection.

It is the valuer’s responsibility to upgrade any EIV to a full inspection where an external inspection is

inappropriate. The EIV form must not be completed where an inspection is upgraded.

Additional Lending

When carrying out an inspection for additional lending the valuer should follow the guidance notes and

report accordingly if the property no longer meets the Bank’s lending criteria. In all such cases, valuers

should withhold a Market Value in Present Condition. However, where a Value after Improvements is

also not applicable, a brief explanation should be given of why the property is outside lending criteria

and a valuation figure provided in section 4 of the report. The valuation should represent the value of

the property as if it were to be sold for residential owner occupation in its current condition/format and

reflecting any restrictions that may be applicable due to the breach of lending criteria. This also applies

where the property is already in mortgage to Santander and the customer is looking to switch mortgage

products (identified as instructions from Retentions).

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Property Matters

Construction - Acceptable

Subject to valuer judgement both in terms of construction/repair and marketability the following types

of construction are acceptable to Santander.

Traditional: Main walls – not less than 225mm thickness in brick, block or stone, cavity, solid or post

1960 timber frame.

Roof – Pitched - slated, tiled , thatched.

Flat - felt, asphalt or metal sheeting.

Non Traditional: Pre 1960 (and post 1960 timber clad) timber framed dwellings.

In situ cast concrete eg Wimpey No Fines and Laing Easiform

Designated PRC houses and bungalows repaired under PRC Homes Ltd Repair

Scheme or Non Traditional Homes Appraisal Scheme Category 5 (as confirmed by a

NTHAS Structural Engineer) - providing all adjoining properties have also been

repaired. To be acceptable there must be either a PRC Homes Ltd Certificate or

confirmation by a civil or structural engineer that the repair scheme was licensed by

PRC Homes Ltd prior to its demise in September 1996. Recent repair schemes

completed to PRC or NTHAS specification may be acceptable if there is an insurance

backed warranty in place, subject to key requirements also being satisfied.

Non Designated PRC Houses and bungalows, but subject to a satisfactory Structural

Engineer’s report.

LPS houses and bungalows, but subject to a satisfactory Structural Engineer’s report.

Steel Frame subject to a satisfactory Structural Engineer’s report if necessary.

Modern Methods of Construction (MMC) subject to having BRE approval and an

NHBC or similar warranty (even though it may have expired) and buildings

insurance being readily available. Only recent systems (generally from the mid

1990’s onwards) are regarded as modern methods. The Key Requirements must be

capable of being met.

Modern Flats – New Build or Conversions of framed construction with NHBC or

similar warranty (even though it may have expired).

Cross Wall construction.

See Appendix 1 for lists of non traditional house types generally acceptable subject to the Key

Requirements being met.

See Appendix 2 for mandatory phrases for PRC, non designated PRC and LPS construction types.

Construction - Unacceptable

In general a property should not be declined solely on the grounds of its construction except in the case

of those types listed below.

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Unrepaired PRC houses and bungalows or repaired under schemes not listed above. If any adjoining

properties have not been repaired then the subject property should be declined whether repaired under

an acceptable scheme or not.

PRC flats and maisonettes (whether repaired or not)

LPS flats and maisonettes.

Single skin construction – Properties constructed entirely in single skin brick/blockwork are not

acceptable. Where part of the property is built in single skin construction the case should be treated on

its merits. Two or more storeys of single skin construction is potentially unstable and will not be

acceptable if it forms a large part of the property.

Mundic class B or C is unacceptable – see page 21 below.

Condition

A property should not be declined simply because it is in a poor state of repair. However, the property

must be in a habitable condition at the point of release of mortgage funds. If the property is capable of

economic repair but is not currently habitable a total retention should be imposed. For properties in

poor repair the Bank expects an appropriate retention to be recommended with the valuation in present

condition fully reflecting the impact on marketability due to the lack of amenities and/or disrepair. A

total retention should be recommended for such matters as dry rot, ongoing movement etc, until

specialist reports are received.

Incomplete projects such as barn conversions or self builds should not be declined but accepted subject

to a total retention until all works are complete and the property satisfies the key requirements.

Where the property is already in mortgage to the Bank and repairs are proposed/underway the property

should not be declined but an appropriate retention should be recommended – including a total

retention when deemed necessary.

Unacceptable property types

In addition to the unacceptable construction types listed above there are various other

scenarios/property categories which are not acceptable to the Bank for mortgage purposes:

• Live/work units

• Sheltered accommodation and retirement properties with age restrictions

• Properties which are not fully self-contained eg services on shared meters

• Properties being purchased under a shared equity scheme (excluding Help to Buy)

• Properties where there is planning consent to demolish and rebuild (regardless of the applicants’

intentions)

• Properties where there is planning consent for additional dwellings to be created within the

curtilage (either new build or conversion of existing outbuildings)

• Properties with Agricultural Restrictions

• Properties with onerous restrictions on the type of occupancy (eg where occupation is restricted

to part of the year only or there are restrictions on resale)

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• Properties with commercial use occupying more than 60% of the entire property(including

outbuildings) and/or where the property cannot be marketed readily for owner occupation due

to the nature of the use or adaptation of the premises

• Bed and Breakfast premises

• Farms or registered small holdings

• Premises where there is a caravan site within the boundaries

• House with cattery, kennels or livery/equestrian business

• Properties with more than one holiday cottage within the boundaries

• Office use in the main property or outbuildings where the staff employed do not ‘live in’

• Garage/yard used for commercial repair/renovations

• Freehold flats unless there are positive enforceable covenants for maintenance and repair

• Flats immediately above commercial premises where the use is likely to cause a nuisance

The following circumstances are also unacceptable to the Bank and the property should be declined:

• If a property investment club is involved in the transaction

• It is a hidden BTL/vacant property (on remortgage cases for owner occupation)

• The applicant is not in occupation (on remortgage cases for owner occupation)

• The applicant is in occupation and it is a BTL remortgage case

• BTL properties where major works are required to make the property lettable

• There is a restriction on the sale/resale price

• Onerous overage/clawback clauses

• Properties where the demand is limited to cash buyers or investors only (but see page 16)

• Properties with commonhold titles

• Properties with more than 10 acres of land or where the titles have been split to reduce the land

to less than 10 acres but the balance of land will remain in the ownership of the applicant or

close family member

• Unexpired lease term of less than 55 years

Marketability remains the overriding factor in recommending a property as suitable for Santander.

Simply because the property does not fall into one of the categories listed above does not make it

acceptable to the Bank. To be suitable the key requirements listed on page 5 above must be satisfied or

capable of being satisfied.

New Build

New build and new conversions must be finished before completion of the mortgage. An appropriate

building warranty or professional consultant’s certificate must be available.

A property is defined as new build if it has been built or converted within the last twelve months, not

occupied since build or conversion, is being sold by the builder or developer, or has not previously been

used for residential purposes.

When valuing new build properties, valuers should:

1. Value the property by reference to comparable sales of new and second hand properties in

accordance with the Red Book.

2. If the property can be valued within 5% of the sale price, then the valuation should be at the sale

price.

Only if there is strong evidence that the valuation figure should not be increased to the purchase price,

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will down valuations of less than 5% be accepted. This applies to new build purchases only.

Santander will only accept a newly built or newly converted property if it is provided with an approved

new build warranty, or it is built under the supervision of a suitably qualified professional (with

professional indemnity insurance).

A warranty/professional consultant’s certificate (PCC) is not required where a dwelling house has been

converted into flats/maisonettes (subject to the creation of a maximum of 4 units). Where the conversion

is from another type of property, a warranty/PCC will be required.

Acceptable Building Warranties

• NHBC- Buildmark

• Premier Guarantee (New Homes, Self Build and Completed Housing)

• BLP (Building Life Plans) residential housing warranty insurance (BLP Secure and Secure Plus)

• BOPAS (Build offsite Property Assurance Scheme)

• LABC Warranty (New Homes, Self Build, Completed Housing)

• Build Zone 10 year warranty (New Home, Self Build, Completed Housing)

• Checkmate New Home Warranty

• CRL Structural Defect Insurance

• Build Assure 10 Warranty

• Global Home Warranties 10 year Structural Defect Insurance

• Q Assure Build ( Q Policy for Residential and Bespoke Properties)

(This list is updated from time to time – any changes will be posted in the CML Lenders Handbook)

Professional Supervision – acceptable qualifications

Santander will only accept properties which have been supervised by professionals who hold one or

more of the following qualifications:-

• The Royal Institution of Chartered Surveyors (FRICS, MRICS)

• The Institute of Structural Engineers (FIStructE, MIStructE)

• The Chartered Institute of Building (FCIOB, MCIOB)

• The Association of Building Engineers (FB Eng, MB Eng)

• The Chartered Institute of Architectural Technologists (CIAT)

• The Institute of Civil Engineers (FICE, MICE)

• Architect Registered with the Architects Registration Board (ARB). An architect must

be registered with the Architects Registration Board even if also a member of another

institution e.g. the Royal Institute of British Architects (ARIBA)

Where the consultant has not supervised the entire build process, but merely carried out an inspection of

the property after completion, this is not acceptable and the property should be declined. The suitably

qualified person must have professional indemnity insurance cover appropriate for the build scheme

concerned.

New properties should only be recommended for mortgage if there is demand for the property in the

second hand market from owner occupiers (see exceptions for BTL cases). If the demand for the property

exists only because the developer is able to offer incentives, deposits etc, which are lost on purchase, the

property should not be recommended for mortgage.

Only property awaiting first occupation should be valued on the basis of ‘new build’ property. If a ‘new

build’ property has been occupied, it must be valued on a second hand basis.

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Outstanding construction work should not be classified as repairs. Retentions should only be

recommended where defects are identified in work already completed except in the case of incomplete

self build properties.

However, where the valuer inspects an incomplete self build property/partially complete converted

property for remortgage, then the valuer must specify in Section 11 that the property is to be completed

and require an appropriate warranty/certificate to be provided. A total retention should be imposed and

only a ‘when finished’ valuation provided. A present value must not be provided.

CML Forms and Incentives - For new build properties cash incentives, or their equivalent (eg vouchers) are

only acceptable if they are provided by the builder or developer and do not exceed 5% of the purchase

price. Reasonable legal fees and/or stamp duty paid by Builders/Developers are not included when

calculating the 5%. The property should be declined if the valuer is made aware that the incentives offered

are unacceptable.

Valuers are recommended to obtain a CML Disclosure of Incentives Form for all new build and new

conversion properties which are being occupied for the first time. Known incentives should be reported in

the VMP. However, the property must be valued on the basis of the comparable evidence and a straight

arithmetical deduction of any incentives from the asking price to achieve the valuation figure is not

acceptable.

If the CML form is not available the valuer is expected to provide a valuation in accordance with the Red

Book. Santander will rely on the conveyancer to confirm the details of the CML form and refer back to the

valuer if there are any apparent discrepancies.

The mandatory phrases must be used for all new build cases – see Appendix 2

If the valuer is aware of incentives being offered that do not appear on the CML form this should be

reported by emailing [email protected]

Where a property has been let by a developer, but not previously sold, a copy of the completed CML form

should be obtained. The property should be valued on a second hand basis and an acceptable

warranty/PCC must be in place.

Help to Buy – Equity Loan - Santander participates in the Government’s Help to Buy initiative in England.

If a property is being purchased under any Government initiatives this will be confirmed on the CML form

in Section 3 - ‘Other Scheme’. Cash incentives or their equivalent in vouchers (including payment of

removal costs) are not acceptable to Santander on purchases within the Help to Buy Scheme. Valuers

should follow the guidance above for new build properties and use the appropriate mandatory phrases to

confirm the property complies with the scheme and lender requirements.

Flats

Freehold flats are not normally acceptable securities unless the freehold is shared with other owner

occupiers of the block, there are enforceable positive covenants in place for maintenance and repair, and

there is proven demand in the local market for this type of property. A single freehold flat may be

acceptable where the freehold is in respect of the whole building and the remaining flats are held on

long leases.

Modern coach houses/flats where the ground floor access is included are acceptable.

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High rise flats (defined as above 6 storeys) will normally be acceptable where there is lift access, subject

to the level of service charge and the Bank’s key requirements. Ex Local Authority flats are acceptable

subject to proven demand for owner occupation.

LPS flats and maisonettes are not acceptable and should be declined using the mandatory paragraphs.

PRC flats and maisonettes are also unacceptable.

Flats and maisonettes above commercial premises may be acceptable and should be treated on a case

by case basis. Factors such as location, access, the type of commercial use etc must all be taken into

account in determining suitability. Flats immediately above premises such as restaurants, take aways,

launderettes or any use which generates unacceptable noise levels or involves anti social opening hours

are unacceptable as are uses such as workshops and trades involving the use of dangerous chemicals.

Retirement flats with occupancy restrictions are not acceptable.

Buy to Let

To be acceptable for a Buy to Let mortgage there must be demand for the property for owner

occupation. However, the property may be acceptable where demand is limited to the investor market if

it is considered sustainable based upon the valuer’s knowledge of the location and the local economy eg

commuter belt, university town etc.

Properties must meet the following criteria to be acceptable:

• The property must have a minimum value of £75,000

• The property must be capable of being let in normal market conditions within 3 months

• The property must not be let to or occupied by a previous owner

• The lease term must be for 12 months or less

• There must be a single tenancy agreement (AST or equivalent)

• Demand must not be limited to cash purchasers

• Properties must not be purchased under affordable housing schemes (eg shared ownership

scheme or Help to Buy)

Properties which do not meet the above requirements must be declined.

The RICS definition of Market Rent should be used as the basis for calculating the rental. The valuer

should assume a term of one year and the rent should be stated as an annual amount, based on

continuous occupation. Where it is known that rental demand for the property is seasonal the estimated

rental should reflect periods of fluctuating rental income in any one year but there is no need to make

any allowances for void periods. The rental figure provided should reflect the property’s current

condition unless repairs are necessary and a retention has been recommended. In such cases the market

rent should be provided on the assumption that the repairs have been completed.

It is acceptable to provide a rental figure based on a letting to unrelated persons (eg students) provided

the property is, or will be, let on a single Assured Shorthold Tenancy (or equivalent). If the property is let,

or likely to be let to 4 or more individuals the rental must be calculated on a maximum of 3 individuals

only and comment provided in section 14b.

No rental figure should be provided if the property is being declined.

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The valuer should assume the property will let within a period of three months from the date of

commencement of the mortgage (ie not the date of inspection). Where the valuer believes this is not

achievable an explanation should be provided in section 14b and the property declined.

The capital value should be provided on the basis of vacant possession irrespective of whether the

property is currently let or not. It should be assumed that the property will sell within a period of six

months in normal market conditions unless, in the valuer’s judgement there are overriding factors which

make this unlikely. In such cases an explanation should be provided in section 14b and the property

declined.

Where a property requires substantial repair or alterations which cannot be completed within three

months then it will not be acceptable and should be declined. Work that can be completed within 3

months and is required to make the property lettable must be reported as an essential repair with a

retention amount of not less than £2,000 to ensure that the works are carried out as a condition of

mortgage. As a guide, repairing or renewing electrics, replacing a boiler or installing basic amenities are

all works which can be completed and allow a tenancy to commence within 3 months.

Major structural repairs or works which require planning or building regulation consent would not be

consistent with a tenancy commencing within 3 months and such properties should therefore be

declined.

Houses in multiple occupation that are subject to mandatory licensing are not acceptable security and

should be declined. Such properties are typically three or more storeys high and occupied by five or

more persons forming more than one household. Careful consideration should be given to the nature of

other properties in the locality and the property should not be declined simply because it could in theory

become an HMO.

Properties subject to local authority selective licensing may be considered on their individual merits.

Valuers should be aware of the different regulations applicable across Scotland, Wales, Northern Ireland

and England as well as individual local authority requirements.

The definition of a HMO in Scotland can apply to all properties with 3 or more bedrooms. However, the

property should only be declined where it fits the profile outlined above or where the majority of the

properties in the area are likely to be classified as HMO’s and demand for owner occupation is limited.

The mandatory paragraph must be used for all Scottish BTL properties with 3 or more bedrooms.

Annexes

Santander will consider lending on property with annexe accommodation if it is appropriate to the type

of property and its locality. In determining whether the annexe is acceptable or not the valuer should

have regard to the relative size of the two areas of accommodation and the current configuration but the

prime consideration should be whether or not the property as a whole is readily marketable/saleable as

a single residential unit for owner occupation. In general, if this is answered yes and providing there are

no other factors that take the property outside lending criteria, the property can be recommended as

acceptable to Santander.

A single holiday cottage in the grounds may be acceptable provided the income generated is not the

source of funding for the mortgage and all other criteria are met.

The definition of annexe is ‘a subsidiary building or an addition to a building, or something used in

addition to’.

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Legal Matters

Tenure

Freehold and long leasehold tenure are acceptable. In Scotland absolute title (ex Feudal) is acceptable.

Commonhold is unacceptable. Possessory and qualified titles may be acceptable subject to a suitable

indemnity policy and valuer comments on marketability/saleability.

Lease Term

Where the remaining lease term is less than 55 years the property must be declined.

Santander require the market value at the time of inspection to be based on the unexpired lease term as

shown on the land registry entry for the property.

Where a property is identified as leasehold on the instruction, or where it subsequently becomes known

that the tenure is leasehold, the valuer is expected to request details of the lease term from the panel

manager. The process to be followed is set out in the panel manager’s guidance note entitled Santander

Title Plans and Unexpired Lease Process. Adherence to these procedures is mandatory and is subject to

audit.

Where the valuer is advised that the remaining lease term is 65 years or less but more than 55 years the

case must be referred back to the panel manager for further review by emailing

[email protected] before providing the valuation.

In the rare instances where the title register is not available and the valuer is unable to verify the

unexpired lease term, for valuation purposes the unexpired term should be assumed in accordance with

the RICS Red Book – currently 85 years. Valuers must not make an assumption of 85 years where the

actual lease term can be determined.

The valuation of leasehold tenure is affected by the outstanding term and the market demand for the

type of property in its locality. When recommending a property where the lease has less than 85 years

remaining as suitable for mortgage purposes the valuer is confirming the property meet’s the Bank’s key

requirements at the valuation figure provided. The locality may well be the determining factor for many

of these cases.

Where the instruction indicates the lease is being extended simultaneously with or prior to

commencement of the mortgage term, a total retention should be recommended. A valuation on

completion of repairs, based on a minimum term of 99 years (or the new term if advised) should be

provided.

The mandatory phrases must be used for all leasehold cases – see Appendix 2

Title Plans

It is crucial that the title(s) registered by the conveyancer relates to the property valued for security

purposes. The Bank requires the valuer to request and check the title plans in specific circumstances:

• Where the security has or appears to have 5 acres of land or more

• Where the security is a combination of two or more properties now converted into one

• Where there is a self contained annexe or outbuildings

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• Where access to the property appears to be across a neighbouring property

• Where the applicant or any connected party owns adjoining land (contiguous – shared

boundary) which is not included in the valuation

• Where the valuer is aware that the property being valued is on more than one title deed

• Where the security has been newly created by separating land from an adjacent

property/title (eg barn conversion being sold off from a farm or a house being built on land

previously part of an adjacent garden)

This list should not be considered exhaustive and Santander rely on the valuer to request sight of the

title plans in any circumstances where they believe it to be necessary to validate the security being

valued.

The process to be followed in requesting and reporting on title plans is set out in the panel manager’s

guidance note entitled Santander Title Plans and Unexpired Lease Process. Adherence to these

procedures is mandatory and is subject to audit.

Where the title plan has been seen prior to report sign off there is no requirement to answer question 8b

Yes unless further information is requested in section 14b.

It is the responsibility of the valuer to ensure the Title Plan is correct for the subject property. Only

when the entire property inspected and valued is covered by the plans submitted should the valuer

confirm that the title documents correspond to the valuation report.

The mandatory phrases must be used where Title Plans have been requested – see Appendix 2.

Purchase Schemes

Right to Buy – properties being purchased under the Right to Buy scheme should be valued on the basis

of open market value ignoring any discount provisions and pre-emption clauses. The mandatory clause

must be included in section 14b of the report. Where the tenant/purchaser is in occupation the question

‘Was the property tenanted at the time of inspection?’ should be answered Yes.

Shared Equity Housing Schemes – Santander will not lend where the property is being purchased under

a Shared Equity Scheme such as those where the developer retains a share of the property. (Excluding

Help to Buy in England only)

Shared Ownership – Shared Ownership schemes where the retained share is owned by a housing

association will be considered on their merits. The valuation should be provided on the basis of 100%

share with full vacant possession, disregarding any premium associated with the shared tenure or shared

ownership arrangements. Details of the percentage split should be provided in section 14b.

Help to Buy – Santander participates in the Government’s Help to Buy Equity Loan scheme in England only.

See the New Build section above for Help to Buy procedures.

Back to Back Sales

Where the valuer is advised or becomes aware that the property is the subject of a back to back

transaction (within the last 6 months) this should be reported in section 14b and no Present Condition

Value provided– the Bank requires the legal advisors to make further enquiries. Consideration should be

given to completing a SAR – particularly on new build properties. A value on completion should be

provided.

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Occupancy Restrictions

Santander will consider properties with local occupancy restrictions (eg. s.106 agreements) so long as the

restriction is not onerous and does not significantly affect the property’s marketability. For examples of

unacceptable occupancy restrictions refer to the Unacceptable Property Types listed above.

Land Issues

Provided there is no commercial use Santander will accept properties with up to 10 acres of land unless

there are restrictions/planning requirements which are not in line with residential occupation. Where

the land is in excess of 10 acres but in keeping with the size and type of property valuers are expected to

take a common sense approach in line with the Key Requirements and the Guidance provided

throughout these notes. Properties with land considerably in excess of 10 acres can be referred to the

Bank for consideration where all other criteria are met.

It is not acceptable for titles to be split simply in order to meet the 10 acre requirement

Where contiguous land is owned either by the applicant or a related party the valuer should consider

whether:

• It is practical for the property being valued to be separated from the remainder eg access

arrangements, quiet enjoyment

• The marketability of the property being valued is adversely affected by the use of the remaining

land

If the property could not readily be sold as a separate entity on the open market it should be declined.

This guidance also applies where valuers are asked to provide a valuation for release of land. A valuation

figure should be provided for the property after the land has been released but only if the remaining

security is capable of being readily sold as a separate entity.

Commercial Use

Properties with an element of commercial use will be acceptable provided

• There is no planning restriction preventing the property being used for residential purposes

• The property retains the character of a residential dwelling and can be marketed/will appeal as

such without significant alteration.

• Less than 60% of the property (including any outbuildings) is used for commercial purposes

• The use doesn’t fall into one of the categories listed above on pages 12/13.

However, if any security of tenure is conferred by the commercial (or agricultural) use the property will

be unacceptable and should be declined. This does not apply to any informal arrangements where no

security of tenure can be claimed.

Where a commercial use exists but it is intended to convert the property back to a single residential

dwelling the property will be acceptable on completion of the works provided it satisfies the criteria

above and the key requirements. A total retention must be imposed until all works are complete.

Where a commercial use exists any additional value attributable to such use must be disregarded and

the property valued on the basis of residential use only.

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Environmental Issues

In general, environmental factors are subject to valuer judgement in terms of their impact on value and

marketability. Valuers should be aware of and follow the latest guidance from the RICS and/or the

Government in all instances. Comments should be made in section 14b as appropriate including

confirmation that the valuation figure has taken account of the relevant issues.

Mundic

Properties affected by Mundic can be found mainly in Cornwall and parts of West Devon, usually

constructed between 1900 and 1960. (Post Codes affected include: All TR, PL10-20, 22-35, EX 20, 22, 23)

Where the presence of mundic is suspected the valuer must request a concrete screening test to be

prepared in accordance with the latest RICS Guidance. Properties classed A or A/B are acceptable unless

the valuer has any other concerns. Properties classed as B or C are unacceptable and should be declined.

Where the test has been prepared for the vendor or other third party it must be assigned to and

responsibility extended in favour of the applicant/customer and Santander before completion in order

for it to be acceptable. Tests generally remain valid for a period of 6 years.

Suspect concrete purpose built and converted flats are not acceptable unless the entire block has been

tested.

When reporting on mundic cases the Mandatory phrases must be used in sections 10 and 11 of the

Mortgage Valuation (sections 3 and 4 for a revaluation) and a total retention imposed until a satisfactory

concrete screening test report has been provided. A Market Value on Completion should be given on the

assumption that a satisfactory report will be forthcoming.

Solar Panels

Where solar panels or photovoltaic cells have been installed on the roof of the subject property,

Santander rely on their legal advisers to confirm that the provider is on the Lender’s approved list of

installers and that any lease arrangements comply with the Bank’s requirements. The valuer should state

any assumptions made with regard to Planning/Building Regulation consents and that the roof is capable

of bearing the increased load.

Coal Mining

There is no standard requirement to request coal mining reports in areas of current or past mining

activity as this is the responsibility of the Lender’s legal advisers. Valuers should use their judgement and

only request reports where they have concerns based on local knowledge. Actual or suspected structural

damage should be reported in the same way as any other structural defect.

Other forms of mining or extraction such as Potash Mining and Fracking should be considered and

reported on in the same way.

Japanese Knotweed

Valuers should refer to the RICS Guidance when reporting the presence of Japanese Knotweed and

follow the classification guide for categories 1-4. No action is required for categories 1 and 2 and no

comment is necessary in section 11. Any concerns can be reported in section 10 .

Where an outbreak is identified as falling within category 3 or 4 the table below should be followed

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1.

Current

Situation

2.

Descriptors

*

3.

RICS

Category

*

4.

Reporting for Santander

Scenario A

Japanese

Knotweed is

currently

undergoing a

treatment

plan

Japanese Knotweed is

within 7 metres of a

habitable space,

conservatory and/or

garage, either within the

boundaries of this

property or in a

neighbouring property or

space

and/or


causing serious damage to

outbuildings, associated

structures, drains, paths,

boundary walls and

fences and so on.

4

The following phrase should be included in

Section 11 of the VMP (or other report).

A total retention must be imposed.

Japanese Knotweed was noted growing close to

the property. It is understood a treatment plan is

in place. This plant grows vigorously, is extremely

difficult to eradicate and can cause damage to

drains, patios, drives etc. The valuation assumes

that treatment is being undertaken by a

competent specialist, licensed to handle

controlled waste and with a 5 year insurance

backed guarantee. Where the treatment is

programmed to continue for several years the full

cost of the treatment must be held in escrow or a

Bondpay scheme.

Although Japanese

Knotweed is present

within the boundaries of

the property, it is more

than 7 metres from a

habitable space,

conservatory and/or

garage. If there is damage

to outbuildings,

associated structures,

paths and boundary walls

and fences, it is minor.

3

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Scenario B

Japanese

Knotweed is

not currently

being treated


within 7 metres of a

habitable space,

conservatory and/or

garage, either within the

boundaries of this

property or in a

neighbouring property or

space

and/or


causing serious damage to

outbuildings, associated

structures, drains, paths,

boundary walls and

fences and so on.

4

The following phrase should be included in

Section 11 of the VMP (or other report).

Japanese Knotweed was noted growing close to

the property. This plant grows vigorously, is

extremely difficult to eradicate and can cause

damage to drains, patios, drives etc. Further

investigation is required by a competent

specialist, licensed to handle controlled waste and

able to provide a 5 year insurance backed

guarantee on completion of any work. Where the

treatment requires a programme of eradication

over several years the full cost of the treatment

must be held in escrow or a Bondpay scheme to

release to the specialist as required.

A total retention must be imposed.

Although Japanese

Knotweed is present

within the boundaries of

the property, it is more

than 7 metres from a

habitable space,

conservatory and/or

garage. If there is damage

to outbuildings,

associated structures,

paths and boundary walls

and fences, it is minor.

3

* [RICS information paper IP27/2012] “Japanese Knotweed and Residential Property]

If a treatment programme is required the total retention can be reduced once actual costings are

provided to the valuer together with confirmation that a transferable 5 year bonded warranty will be put

in place. The retention can only be released on confirmation that the monies have been paid into the

Bondpay/escrow account and commencement of the treatment programme has been evidenced.

Use of the paragraphs above is mandatory.

In areas where Japanese Knotweed is known to be prevalent but there is no evidence at the time of

inspection valuers can report any concerns in section 10.

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Contaminated Land

Valuers should be aware of current legislation in respect of contaminated land and using local knowledge

report accordingly, reflecting any concerns in the valuation figure.

Asbestos

Asbestos materials were widely used in the construction industry for many years before the health risks

were fully understood. Consequently many properties will contain asbestos products in one form or

another. It is only when asbestos is damaged or disturbed and fibres are released into the air that any

risk occurs.

Valuers should be aware of the latest RICS Guidance. The reporting of asbestos should reflect the degree

of severity of the problem and the valuation take into consideration that the safe removal and disposal

of asbestos products can be costly.

Flooding

Flooding has many causes including tidal, fluvial and surface water drainage. Valuers should be aware of

the latest information paper published by the RICS, the insurance position (Flood Re) and refer to the

maps provided on the Environment Agency website. Valuers should advise that the valuation figure is

based on the assumption that insurance is available on usual terms in areas of known flooding.

Radon

Valuers should be aware of the Radon Atlas produced by the Health Protection Agency (HPA) (now Public

Health England) and report accordingly.

HS2

Valuers are expected to have good local knowledge in areas affected by the HS2 route and not blight

properties unnecessarily. Valuers should refer to the government website www.hs2.org.uk for details. A

comment should be made in section 14a if the valuer is aware that the property is situated within an

influencing zone and this has been reflected in the valuation figure. Further information on post codes

affected can be obtained by emailing [email protected]

Private Water Supply and Drainage

Santander will lend on properties with a private water supply provided there is a right to receive an

uninterrupted supply and that it has been tested and complies with the latest statutory standards for

drinking water.

There is no requirement to inspect the title plans where there is private drainage but the valuer must

request the conveyancer to confirm that there are adequate rights of useage and access for maintenance

and repair using the mandatory clause in section 14b of the report.

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Appendices

Appendix 1 Construction Types

The following lists of construction types should not be considered exhaustive.

Timber Frame

Timber frame/system properties should be considered on the construction/marketability merits of the

individual unit.

Aberdeen Corp. Heath Scottwood

Blackburn Lanark CC Solid Clear

Carmule London CC Spooners

Caspon McAlpine Swedish Timber

Colt Newcastle Corp Thorwall

Cowieson Perren Weir

Guildway Scottish Special HA

LPS

LPS houses and bungalows should be considered on their individual merits subject to a Structural

Engineer’s report.

Anglia Gerrard ‘Incon’ PAC

Barvis GLE Reema Conclad + Contrad

Balency Gregory Ridgeway

Basingstoke Dev Group Harley Haddow SB2

Beale & Son HDC Skarne (Crudens)

Belfry (Belcon) HSSB (Lindsay Parkinson) Southend 3M

Bison (1) Incon Spacemaker (Shepherd)

BRS Battery Cast Laing/BRS (1) Stubbing Ind. Low Rise

Bryant (1) Larsen & Neilson (TWA) Sundh

Camus Lecaplan Tracoba

Carlton Metracon Trentrox

Cebus MFC (Moss & Son) TWA (Taylor Woodrow Anglian)

Dare Mitchell Camus Wates (3)

Dudley BC Modus Weedon

Edlo Natcon XW (Selleck Nicholls)

Fram NCB (2) YDG mk 1

Fram/BRS Oakridge 12M Jesperson

Notes – 1 Only LPS dwellings built by these builders are affected

2 Only LPS dwellings owned or formerly owned by NCB are affected

3 Not to be confused with designated PRC type.

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PRC

The following PRC types are designated defective under the Housing Acts

Airey Myton Stour

Boot Beaucrete Newland Tarran

Boot Pier & Panel Orlit (types 1 & 2) Ulster Cottage

Boswell Parkinson-Frame Underdown

Cornish Unit (types 1 & 2) Reema Hollow Panel Unity (Butterly)

Dorran Schindler (Hawkesley SGS) Waller

Dyke Smith Wates

Gregory Stent Wessex

Morrell K Stonecrete Winget

Woolaway (Houses)

Scotland – Blackburn – Orlit Tarran

Boot Tarranclyde

Dorran Tee Beam

Lindsay (Ayrshire CC) Unitroy

Myton-Clyde Whitson- Fairhurst

Orlit (types 1 & 2) Winget

Steel Frame

The following systems are known to be steel framed and should be considered on their individual merits.

Arcal Dorlonco Norwest

Arrowhead Falkner Nutall Open System Building

Athol Fincast Presweld

Birmingham Corp Gateshead Pyrcol

BISF Gee Walker & Slater Riley

Blackburn Hawthorn Leslie Rubery Owen

Braithwaite Hilcon SFI (Inclutex)

British Housing Hitchen Spaceway

Cornes Homeville Steane

Coventry Corp Howard Stewart & Lloyd

Craig Kehouse Unibuilt Telford

Crane Leeds Corp TRN

Cryden Cussins Livett Cartwright Trusteel

Dennis Lowton Cubitt Universal Type 1

Dennis Pulton Modular Unitroy

Dennis Wild New Georgian Weir

Discus Nissen Petren 5M

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Appendix 2 Mandatory Phrases

The following phrases must be used, without alteration, for the circumstances described.

Movement

The following phrases must be used where a Structural Engineer’s report is required

Section 10

Para 1 – Evidence of movement was noted in the form of (brief description). This appears

significant and likely to be progressive.

Section 11

Para 2 - Obtain a report from a qualified structural engineer or chartered building surveyor

advising on the structural stability of the property as a whole. Any recommendations

must be carried out under professional supervision.

Trees

The following phrases must be used where there is evidence of movement associated with trees

Section 10

Para 3 – There is a/are tree(s) growing approximately (text) metres from the property. This

tree/These trees constitute a risk to the structural integrity of the property.

Specialist advice from an arboriculturist or specialist engineer is recommended.

Section 11

Para 4 – Obtain a specialist report and carry out any recommendations in respect of the

tree(s) noted in section 10 above.

Mundic

Where the presence of Mundic is suspected the following phrases must be used

Section 10

Para 5 – Due to the property’s construction, age and location the concrete elements of the

structure may contain deleterious aggregate commonly known as Mundic. A

concrete screening test is required to determine the property’s suitability as a

mortgage security. The valuation figure in section 15 assumes a classification A or

A/B.

Section 11

Para 6 – Obtain a concrete screening test report for the presence of Mundic, prepared in

accordance with RICS guidelines.

PRC Properties designated defective

For repaired PRC houses the following phrases must be used

Section 10

Para 7 - The property is of a type designated defective under the Housing Act 1985/Housing

(Scotland) Act 1987.

Section 11

Para 8 – Evidence must be provided that the property has been repaired under a recognised repair

scheme licensed by PRC Homes Ltd or to NTHAS Category 5.

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For unrepaired PRC houses the following phrase must be used

Section 14b

Para 9 – The property is of a type designated defective under the Housing Act

1985/Housing (Scotland) Act 1987. This type of property is not considered

acceptable for mortgage purposes.

For all PRC flats/maisonettes whether repaired or not the following phrase must be used

Section 14b

Para 10 - The property is a flat/maisonette of a type designated defective under the

Housing Act 1985/Housing (Scotland) Act 1987. This type of property is not

considered acceptable for mortgage purposes.

Non designated PRC properties

For non designated PRC houses and bungalows the following phrase must be used

Section 11

Para 11 – The property is of PRC construction but has not been designated defective under

the Housing Acts. A Structural Engineer’s report is required to confirm that the

property is in satisfactory structural condition.

For non designated flats/maisonettes the following phrase must be used

Section 11

Para 12 – The property is a flat/maisonette of PRC construction. This type of property is not

considered acceptable for mortgage purposes.

Large Panel Systems

For LPS houses the following phrases must be used

Section 10

Para 13 – The property is constructed with concrete panels and is classified as a Large Panel

System. A Structural Engineer’s report is required confirming that the property has

been inspected and is considered to be in a satisfactory structural condition .

Section 11

Para 14 – Obtain a report from a structural engineer or chartered building surveyor advising

on the structural stability of the property as a whole. Any recommendations must

be carried out under professional supervision.

For LPS flats/maisonettes the following phrase must be used

Section 14b

Para 15 - The flat/maisonette is in a block constructed with concrete panels and is classified

as a Large Panel System. Flats of this form of construction are not considered

acceptable for mortgage purposes.

New Build

For all new build properties the following phrases must be used, as appropriate

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Section 14b

Para 16– Sales incentives of (text) have been disclosed on this sale and this should be

confirmed by the lender’s legal adviser in accordance with the CML Handbook.

The effect of these on the selling price has been reflected in the valuation.

or

Para 17 No sales incentives have been disclosed on this sale. This should be confirmed by

the lender’s legal adviser in accordance with the CML Handbook.

or

Para 18 No information regarding sales incentives was available at the time of inspection.

The valuation assumes no sales incentives are offered and this should be

confirmed by the lender’s legal adviser in accordance with the CML Handbook.

Para 19 The property is being constructed/ is newly built/has been converted by (insert

Developer) and the lender’s legal adviser should confirm that an acceptable

warranty/Professional Consultant’s Certificate is available.

Para 20 It was not possible to inspect the property as no access was available on site. The

valuation is therefore based on information provided by the developer. The

lender’s legal adviser should refer any discrepancies to the valuer.

Private Drainage

Where the valuer has reason to believe the property is connected to private drainage such as a septic

tank or cess pit the following phrase must be used

Section 14b

Para 21 – The property is believed to be connected to a private drainage system. The

valuation assumes that the appropriate Certification is in place and that rights of

access for use, maintenance etc are enforceable where the drainage is not

located within the property’s boundaries. The system has not been inspected.

Japanese Knotweed

Where Japanese Knotweed Category 3 or 4 is found and a treatment plan is in place the following phrase

should be used

Section 11

Para 22 – Japanese Knotweed was noted growing close to the property. It is understood a

treatment plan is in place. This plant grows vigorously, is extremely difficult to

eradicate and can cause damage to drains, patios, drives etc. The valuation

assumes that treatment is being undertaken by a competent specialist, licensed to

handle controlled waste and with a 5 year insurance backed guarantee. Where the

treatment is programmed to continue for several years the full cost of the

treatment must be held in escrow or a Bondpay scheme.

Where Japanese Knotweed Category 3 or 4 is found but no treatment plan is in place the following

phrase should be used

Section 11

Para 23 - Japanese Knotweed was noted growing close to the property. This plant grows

vigorously, is extremely difficult to eradicate and can cause damage to drains,

patios, drives etc. Further investigation is required by a competent specialist,

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licensed to handle controlled waste and able to provide a 5 year insurance backed

guarantee on completion of any work. Where the treatment requires a programme

of eradication over several years the full cost of the treatment must be held in

escrow or a Bondpay scheme for release to the specialist as required.

Where no evidence of Japanese Knotweed is found but it is known that a treatment plan has been

carried out previously the following phrase should be used

Section 14b

Para 24 – It is understood that Japanese Knotweed has been eradicated from the property.

The lender’s legal adviser should confirm whether an outstanding warranty exists

which will be required to be transferred into the name(s) of the new owner(s).

Right to Buy

Where the applicant is purchasing under the RTB provisions the following phrase should be used

Section14b

Para 25 – It is understood that the applicant is purchasing the property from the Local

Authority/Housing Association as a sitting tenant at a concessionary price. The

valuation ignores any discount applicable.

Leasehold

For properties where the remaining lease term is known the following phrase should be used

Section 14b

Para 26 – The market value at the time of inspection is based on a remaining lease term of

(figures). If the actual term remaining is less than this, it may be considered unacceptably

short as security for the lender.

For properties where the remaining lease term has not been confirmed the following phrase should be

used

Section 14b

Para 27 – The valuation assumes a remaining lease term of (xx-not less than 85 years). If

the actual term remaining is less than this, it may be considered unacceptably short as

security for the lender.

Where it is known that the lease term is to be extended simultaneously with or prior to commencement

of the mortgage term the following phrase should be used

Section 14b

Para 28 – The valuation on completion of repairs assumes the lease will be extended at the point of

completion of the mortgage with a remaining lease term of not less than 99 years.

Title Plans

Where the title plans have been provided by the lender’s panel manager the following phrases

should be used as appropriate

Section 14b

Para 29 – The title plan for the property has been provided by the bank’s panel manager.

The plan, reference (insert title reference), appears to represent the property

inspected for this report.

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or

Para 30 - The title plan for the property has been provided by the bank’s panel manager.

The plan, reference (insert title reference), does not appear to represent the

property inspected for this report for the following reason. (Insert text). The

conveyancer should investigate the situation and the findings should be referred

back to the valuer

Purchase Price/Estimated Value differing from Valuation

Where the purchase price or estimated value differs from the valuation (above or below) the following

phrase must be used

Section 14b

Para 31 - The purchase price/estimated value provided on the instruction is not

supported by evidence of sales of comparable properties.

Amended Reports

Where any report is amended for whatever reason the following phrase must be used

Section 14b

Para 32 – This report has been amended following receipt of (insert text).

Scottish HMO’s

Where the property has 3 bedrooms or more and is a Scottish BTL case the following phrase must be

used if it is being recommended as suitable for mortgage security

Section 14b

Para 33 - The property falls within the definition of a HMO under the Housing (Scotland) Act

2006. However, it is considered suitable security for mortgage purposes as it meets

the Lender’s criteria of being readily saleable for owner occupation. The valuation

assumes the property meets the requirements of the Act and that the applicant

has/will have the necessary licence.

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Appendix 3 Standard Phrases

The following phrases are suggestions covering common issues on which Santander expect comment to

be made. They are not mandatory and should be amended where necessary to fit particular

circumstances. Valuers are free to use their own phrases but should remember at all times they are

providing a mortgage report to the lender and not a survey.

Section 10 – Condition

Para 40 - The general condition of the property appears consistent with its age and type of

construction. Ongoing maintenance and repairs will be required.

Para 41 - The property is in a basic condition with works of repair and maintenance required.

This has been reflected in the mortgage valuation.

Para 42 - The property is in a poor condition having regard to its age and type of construction. It

should be noted that the repairs listed in section 11 are not intended to be an

exhaustive list merely those considered necessary for mortgage purposes. It is likely

that additional expenditure will be required.

Para 43 - The property is being/has been constructed to a satisfactory specification.

Para 44 - It is possible that elements of the property may contain asbestos products. It is only

when asbestos is damaged or disturbed and fibres are released into the air that any

risk occurs. However, as repairs/removal can be costly you may wish to seek specialist

advice now. This risk has been reflected in the mortgage valuation.

Para 45 - Flat roofs have a limited life span and are prone to sudden failure. This has been

reflected in the mortgage valuation.

Para 46 - The evidence of structural movement may deter future purchasers. This has been


Section 11 – Repairs/Reports

Para 47 - Instruct a specialist contractor to inspect the whole property and report on internal

dampness and the condition of all timbers including the sub floor/roof void(s)/other.

All necessary works to be carried out and covered by an insurance backed guarantee.

This report is required regardless of any existing guarantees.

Para 48 - Instruct a specialist contractor to inspect the whole property and report on the

condition of all timbers including the sub floor/roof void(s)/other. All necessary works

to be carried out and covered by an insurance backed guarantee. This report is

required regardless of any existing guarantees.

Para 49 - Instruct a qualified electrician to inspect the electrical installation and carry out

recommended works in accordance with electrical and building regulations.

Para 50 - Instruct a ‘GAS SAFE’ approved contractor to inspect all gas pipework, flues and fixed

appliances and carry out any recommended works.

Para 51 - Instruct a roofing contractor to inspect the roof including chimney stacks, flashings,

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barge boards etc. and carry out any necessary repairs/renewal.

Para 52 - (Text) is thought to contain asbestos which is damaged/deteriating with the risk that

fibres will be released into the air causing a health hazard. Asbestos may also be found

in other elements and the whole property should therefore be inspected by a licensed

contractor and all recommended works carried out.

Para 53 - The property has a private water supply. A specialist report should be obtained to

confirm that it complies with statutory regulations for safe drinking water and also

comment on the reliability of the supply.

Section 14a – Marketability

Para 54 - The property’s non traditional construction may deter some purchasers and affect

marketability. This is reflected in the mortgage valuation.

Para 55 - The proximity of (text) may deter some purchasers and affect marketability. This is


Para 56 - Some lenders do not accept this type of construction. This will affect future value and

marketability and is reflected in the mortgage valuation.

Para 57 - Future demand is likely to be adversely affected by (text). This has been reflected in

the mortgage valuation.

Para 58 - The property’s non standard construction may lead to higher than average

maintenance/repair costs which may deter future purchasers. This has been reflected

in the mortgage valuation.

Para 59 - Future marketability may be affected by health uncertainties relating to the proximity

of high voltage supply equipment. This is reflected in the mortgage valuation. Further

information can be obtained from the Health Protection Agency.

Para 60 - It is understood the property is subject to occupancy restrictions comprising (text).

This may restrict marketability and has been reflected in the valuation. The lender’s

legal adviser should refer any discrepancies back to the valuer as the valuation figure

may need to be reviewed.

Para 61 - The short length of lease remaining will deter future purchasers and affect

marketability. This has been reflected in the ‘Market Value at the time of inspection’.

Para 62 - The property is situated in an area where flooding has been identified as a potential

risk. This may deter future purchasers. The valuation assumes insurance is obtainable

on usual terms. Any history of flooding should be referred back to the valuer as the

valuation figure may be need to be reviewed.

Section 14b – Other Important Factors

Para 64 - It is not possible to recommend the property as a suitable security for mortgage

purposes because (text)

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Para 65 - It is understood the property is being purchased under a shared ownership scheme

with the applicant purchasing a (text)% share. The valuation represents the 100%

interest assuming vacant possession and no onerous restrictions on resale.

Para 66 - The valuation provided is for the property as new. This figure may not be attainable on

resale.

Para 67 - The property has been altered/extended and the valuation assumes all necessary

statutory and local authority consents have been obtained.

Para 68- The lease has not been inspected and it is assumed it contains no onerous conditions.

The lender’s legal adviser should make enquiries as to any proposed expenditure

planned for the block as a whole which could affect the level of service charge.

Para 69 - The inspection was limited to the interior of the subject flat, adjacent common parts

and such elements of the exterior of the building as visible from ground level only.

Para 70 – It is assumed that all statutory requirements for letting have been met. Checks have not been

carried out as this is outside the scope of a mortgage valuation.

Para 71 – The property was tenanted at the time of inspection. The valuation assumes vacant possession

will be available on completion.

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Valuation for Mortgage Purposes

Form Completion Guide

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Introduction

Valuers must complete the Valuation for Mortgage Purposes in accordance with the Guidance Notes

above and the following guide. Failure to follow reporting requirements will adversely affect processing

procedures and can lead to suspension from the panel.

Reporting Style

Avoid the use of "I" or "We" in the report.

The content of the report should be as concise as possible avoiding long narrative descriptions in the free

text sections, and using mandatory phrases where applicable. Standard phrases can be amended to fit the

circumstances but are indicative of the style of reporting expected.

The use of technical terms, abbreviations and initials should be avoided.

Reports should be checked thoroughly for typing, spelling and technical errors before signing.

Assumptions and Third Party Information

If information provided in the report is based on an assumption, e.g. the length of the lease, the fact that

this is an assumption should be clearly indicated in the text of the report if it is not already explained in

the section wording.

Similarly, information gained from third parties should be explained in the report e.g. "It is understood

from the vendor that ....."

Do not rely on specialist reports, estimates or guarantees available at the time of the inspection. It is

appropriate to acknowledge the existence of such documents but valuers should be non-committal as to

their adequacy.

Disclaimers and Limitations

Santander does not accept the introduction of general disclaimers or exclusion clauses into its reports.

However, where the inspection of a property is specifically limited, eg a room may be locked, this should

be reported in Section 14b. Valuers must use their judgement to determine if an inspection should be

abandoned until further access is made available. Valuers should only report unusual limitations to

inspection. Contact with Third Parties

The contractual duty when completing a VMP is to Santander rather than the applicant/customer or to

any other third party. If an applicant/customer or other interested party, e.g. vendor or selling agent,

approaches the valuer about the report, the valuer should remain non-committal and refer the enquirer

to Santander.

The following notes apply to the form on a “section by section” basis.

It is important that all sections are completed with a single box checked for each option except in

section 8a where all options that apply should be checked.

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Surveyor's Reference

This provides space for the valuer to use their own office reference.

Instructing Branch/BDU

The name of the instructing branch, business development unit or mortgage processing location can be

found under ‘source’ on the Quest Client page. If this information is not provided, state, "Not known".

Application Reference

The reference should automatically map across from the instructions to the report. If not the reference

should be entered in the appropriate space – it will start with either AA, AF or ZO.

Processing Location/Mortgage Centre

This should be completed as Teesside in all cases.

Property Address

The address on the instruction will be as provided by the applicant at the branch or broker. Experience has

shown that this information cannot always be relied upon. Valuers must check the address during the

inspection and make sure it is correctly shown on the report, correcting any errors and advising any

amendments in Section 14b.

The postcode is important as it is used for insurance purposes, please ensure that this is correct. If a

postcode is not provided in the valuation instructions please find this out and provide on the report.

Applicant's Name

This information will be provided in the valuation instruction. Include the titles and initials of the mortgage

applicants if known, e.g. "Mr A and Mrs B Smith".

Please ensure that the applicant(s) name is correct on the valuation form and typed in upper and lower

case.

Date of Inspection

This is the date on which the property was inspected.

Purchase Price or Estimated Value (as stated in the instructions)

The figure entered in this field, must be the figure provided in the valuation instructions. If the valuer is

aware that purchase price given is incorrect, an explanation along with the correct figure should be given

in Section 14b. If the instructions do not provide a purchase price or estimated value and this information cannot be

ascertained from a third party, e.g. the vendor or the estate agent, state, "Not Known".

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Is this a transcription?

Before preparing a transcription report, valuers must ensure that the case meets Santander’s

requirements for permitting transcription reports – see page 8 above.

If the report is a transcription report, select “Yes” otherwise select “No”. Was the property tenanted at the time of inspection?

Please answer ‘Yes’ if property was tenanted at the time of inspection (this includes tenants who are also

applicants purchasing under the RTB scheme or from their landlord).

Does this mortgage valuation relate to the purchase of a property?

Answer ‘Yes’ or ‘No’ as appropriate. Valuer must establish whether the property is being purchased

(including RTB purchase) or remortgaged.

Section 1: Tenure

This information should be taken from the valuation instructions, unless the valuer has information to

the contrary.

Select the appropriate option – Freehold, Scottish (ex Feudal), Long Leasehold or Other.

Where the property is leasehold, valuers must state the actual term of the lease as stated on the title

deed extract in the field provided (unless unavailable) and use either paragraph 26 or 27 (mandatory) in

section 14b.

Valuers are not expected to find out details of service charges but if they know that charges are abnormally

high, they should make comment in section 14a if they are likely to affect marketability. In the absence of

information to the contrary, reasonable service charges should be assumed having regard to the age and

character of the security and in accordance with current RICS Guidance.

If “Other” is chosen, valuers should provide an explanation of their assumption and the source of their

information in section 14b as appropriate.

For shared ownership property, tick ‘Leasehold’ option and make appropriate comment in Section 14b.

Section 2a: Property Type The options are mutually exclusive; valuers should select the most appropriate. 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 concerned.

When “Other” is chosen, please provide an explanation in section 14b. For modern coach houses where

the property is freehold subject to the long leases of various garages/car ports, report as a freehold

house and provide further information clarifying the situation in Section 14b. Do not report them as

freehold flats as they will be declined. Section 2b: Property Style The options are mutually exclusive; for houses/bungalows, valuers should select the most appropriate.

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Where the property is a flat/maisonette, High-rise or Low- rise block should be selected. Flats must not be reported as being semi-detached, mid or end terrace. 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 concerned.

When “Other” is chosen, please provide an explanation in section 14b as appropriate.

Section 2c: Public Sector

Valuers should use their judgement based on the appearance of the property and their knowledge of the

history of the area to answer this question. Where this question is answered “Yes”, a brief explanation

should be provided in Section 14a or 14b as appropriate. Section 2d: Approximate Year of Construction

State the actual year of construction where known, otherwise an approximate year of construction should

be entered. The format must be four numbers, e.g. 1960. Do not enter text such as “late 1800’s”, “18th

Century” or “1930’s”. For converted properties, the year of conversion should be stated in Section 14b.

It is appreciated that it is difficult to be precise when dealing with period properties and in such

circumstances an “educated guess” will suffice. Section 3: Flats and Maisonettes

State the floors 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 the

number of floors in the block e.g. "4". State whether a lift is provided by selecting "Yes" or "No" Section 4a: Construction

State the most appropriate generic construction type by selecting one of the options. Large panel system

must not to be used for properties constructed since 2000.

Even if a former PRC property has been repaired, valuers must still tick “PRC designated”. There are

Mandatory phrases for use when PRC (designated and non designated) or LPS construction is identified –

see pages 27/28 above.

Where “Other” is selected, please ensure that an explanation is provided in Section 14b as appropriate.

For non-conventional construction, valuers should make appropriate enquiries of the vendor, estate agent

or local authority to establish the name of the system which should then be inserted in this section of the

report; e.g. “Wimpey No-Fines”. If enquiries are unsuccessful, state “Not Known”. Section 4b: External Finish

Main Walls – A one word answer is all that is required e.g. stone, brick, rendered etc. It is not necessary to

state whether the walls are of cavity or solid construction. In the case of a property with a number of

different wall finishes, state the predominant finish.

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Main Roof - State whether the main roof cover is pitched or flat and briefly describe the covering e.g.

"pitched and slated". In the case of a property with a number of different types of roof cover, describe the

main roof cover. Substandard methods of construction, which are likely to affect marketability, should be reported in

Section 14a.

The inability to inspect significant sections of the external walls or roof covers due to access problems or

sight lines should be reported in Section 14b (and Section 10, if appropriate). Section 4c: Building Insurance Code

This is a code used for building insurance rating purposes. The most appropriate code should be stated

having regard to the following table:

Code Walls Roof

01 Class 1 Class 1

02 Class 1 Class 2

02 Class 2 Class 1

03 Class 2 Class 2

51 Class 1 Thatch

52 Class 2 (some brickwork) Thatch

53 Class 2 (no brickwork) Thatch

59 Special Thatch

99 Special Special

Walls - Class 1 walls means 50% or more of the external walls (including party walls) are built of brick,

stone, concrete, metal or tile. Also included are modern (post 1960) timber framed houses unless clad with

a combustible material. Other walls are to be categorised as Class 2.

Roofs - Class 1 means 70% or more of all roof surfaces are of slate, tile, metal, concrete, asphalt or felt on

timber. Other roof coverings are to be categorised as Class 2, or Thatch.

Special - Unusual types of construction, e.g. windmills, oast-houses etc are classed as special. Section 4d: Mundic

If this section is answered “Yes”, the mandatory phrases should be used in Sections 10 and 11 requiring

the applicant to obtain a Mundic screening report – see page 27. Section 5a: Accommodation

Use numbers, not text to 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 should use

their judgement to include such rooms in the most appropriate category.

Number of floors - state the number of floors on which habitable accommodation is provided i.e. ignore

cellars and non-habitable attics for the purposes of this Section.

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

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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. Explanatory comment

should then be made in Section 14b.

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.

It is not necessary to record room sizes or room fittings. Any abnormal or significant factors that affect

marketability should be reported in Section 14a or 14b as appropriate.

Section 5b: Gross External Floor Area of Dwelling

Round to the nearest square metre. 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 should exercise their

own judgement in each case as to whether extensions such as conservatories should be included in the

floor area or recorded as outbuildings in Section 6b. Section 5c: Estimated Rebuilding Costs

Valuers should use BCIS on line or the current BCIS tables including allowances for garages, domestic

outbuildings, greenhouses, swimming pools, service tanks, drains, septic tanks, garden walls, gates, etc.

Any anomalies, or parts of the property that the valuer believes should be excluded from the sum insured,

should be clarified in Section 14b of the report.

If the valuer considers that it is not appropriate to provide a recommended reinstatement cost by applying

the BCIS tables, a provisional figure should be provided and an explanation of the difficulty should be

reported in Section 14b e.g. listed buildings with extensive period features which would require specialist

rebuilding.

For flats and maisonettes calculate the reinstatement cost for the subject flat only, not the cost of

rebuilding the whole block. A statement stating this has been done is not required. Section 5d: Residential Element greater than 40%

The percentage figure should be calculated using the total floor area including both habitable and non-

habitable accommodation, plus outbuildings and land. The valuer is not stating that the property is

acceptable because the residential element is more than 40% of the total area so the question should

simply be answered factually.

Section 6a: Garage/Parking

Valuers should use their judgement and choose the most appropriate generic garage/parking facility by

selecting one of the options.

Valuers should give a brief description to clarify the garaging and parking facilities, e.g. “The garage actually

has space for three or more vehicles” or “There is a double garage and a single garage”.

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Pertinent information on the garage should be included in this Section. Significant defects should be

reported in the normal way. Section 6b: Outbuildings / Common Facilities

Briefly describe outbuildings that are permanent and which contribute to the value of the property, eg

conservatories which are not considered to be part of the main accommodation should be included here.

In particular, include any outbuildings that have been included in the recommended rebuilding cost.

Do not comment about the condition of outbuildings in this section. Significant defects should be

considered for comment in section 10 or 11.

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. Section 7a: Service Connections

There is a separate question for each of the services.

Where any of the services appear to be non-mains, valuers should comment on the type and location in

section 14a or 14b as appropriate. Where non mains drainage is selected the mandatory phrase must be

included in section 14b – see page 29.

If it is not possible to determine whether a particular service is provided, state “No” and comment in

Section 14b. Section 8a: Site

The options in this section of the report are not mutually exclusive. Valuers should select all boxes which

apply to highlight irregularities that require investigation by the conveyancer. A brief explanation of each

issue should be provided in Section 14a or 14b as appropriate.

Where a property has a significant amount of land (in excess of an acre), the approximate extent of the

land should be stated in Section 14b.

If it is known that the applicant or close family member owns adjoining land/property which is not included

in the mortgage valuation please provide details to [email protected] Section 8b: Does the surveyor need to inspect the title plans prior to confirming the valuation

Select from either "Yes" or "No", but remember to change to NO once the plans have been seen.

Valuers must request the title deed plan in the specific circumstances set out earlier in this document. In

addition, valuers may request the title plans if there are concerns regarding issues that might be significant

to the valuation, e.g. non contiguous land, access across neighbouring land, ill defined boundaries or land

included with the property etc.

When this section is answered "Yes" initially, please follow the process set out on pages 18/19 and use the

mandatory paragraphs in section 14b (see page 31). It is recommended that a sketch plan is prepared on

site in such cases sufficiently detailed for the purposes of comparison when the title plan is obtained.

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Section 9: Location

Valuers should use their judgement and select the most appropriate option. Where “Other” is selected,

please provide an explanation in Section 14b.

Any issues concerning the property's location, which significantly affect marketability, should be

reported in Section 14a. Section 10: Condition (to include movement and tree mandatory phrases)

Comments about the condition of the property should be concise and of a general nature. There are

several standard phrases on page 32 which indicate the style of reporting expected in this section.

Valuers should avoid making specific reference to minor defects that are unlikely to affect market value.

To do so implies that a detailed inspection of the property's condition has been undertaken. Minor defects

should not be included in a valuation report.

Defects that detract significantly from marketability/ value should be included in Section 11

recommended repairs rather than listed in this section.

Structural Movement and Trees

There are a number of mandatory phrases for reporting structural movement and the potential problems

from trees. The use of these phrases triggers different actions by mortgage processors.

It is important that valuers report ALL evidence of movement even though this may be slight. There is a

standard phrase for use where non progressive or non serious movement is noted (page 31). Mandatory Phrases for Movement

These must be used where a structural engineer’s report is required and can be found on page 27 above,

for use in sections 10 and 11.

Mandatory Phrases for Trees

These phrases warn of the potential risk to structures from tree growth rather than dealing with evidence

of structural problems that are already apparent. If ongoing movement is apparent, or suspected, the

mandatory phrase for movement must also be used in section 10.

If trees within the curtilage of the property are a potential threat to neighbouring properties, for example

there may be a public liability risk, appropriate comment should be made in Section 14b.

When reporting the presence of trees, valuers should not recommend specific remedial actions, e.g.

lopping or removal, without specialist advice. The possibility of Tree Preservation Orders should also be

reported.

There are other Mandatory phrases for use in section 10 which are referred to elsewhere in this guide –

see pages 27 -31.

Section 11: Repairs/reports/information recommended as a condition of the mortgage

If specialist reports, further information or repairs are required as a condition of the mortgage, select ‘Yes’.

If ‘No’ is selected, the text field should be left blank.

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Only defects which affect the value and/or marketability of the property (and can be remedied), should be

included in this section. The only minor defects permitted in Section 11 are those of a progressive nature

which are likely to become a major defect if not remedied and health and safety issues.

Cosmetic repairs or improvements should not normally be included in Section 11. Works of improvement

should only be included when the valuation instructions specifically state that it is the applicant’s intention

to undertake improvements as part of the mortgage application, ie the mortgage offer is to be based on a

‘when improved’ valuation.

All Section 11 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.

Both standard and mandatory phrases are set out in Appendices 2 and 3 above for use in section 11.

Valuer’s must ensure the mandatory phrases are used where available.

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

maximum LTVs etc. Specialist Reports

The recommendation for specialist inspections should normally require the whole property to be

inspected and reflect the inter-related nature of defects, eg where there is evidence of rising damp, there

is always the risk of associated timber decay. Retentions

If any works are listed in Section 11, a suggested retention must always be provided. This must be the

valuer’s estimate of the cost of the recommended repairs (unless a total retention is required). Retentions

must always be a numerical figure. The estimate of cost helps the underwriters with their lending decision.

Valuer’s should note that retentions of less than £2,000 are rarely imposed.

Where a retention is recommended for a BTL property in accordance with the Guidance Notes above this

must be for not less than £2,000.

Retentions are not required for the completion of a new build property. Total retentions

Total retentions are required when either the property is not suitable for lending without certain works

being completed or the valuer is unable to confirm the property is suitable for lending without being

provided with additional information. Provision of the additional information will enable to the valuer to

confirm whether the property meets Santander’s lending policy. An example of this is the provision of

documentation to confirm details of the repair scheme carried out to a PRC property or where a Structural

Engineer’s report is required.

Specialist reports may be forwarded to valuers for consideration via the PVQ process. In addition to

responding to the PVQ any changes to valuation or retentions must be followed up with a revised

valuation report with a comment to clarify what information/documents have been provided in section

14b.

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What valuations are required when there is a ‘Total retention’?

Where there is a ‘total retention’, a ‘Market Value on completion of repairs in Section 11’ should be

provided. A ‘Present Value’ should never be provided when there is a total retention. A figure equal to

the whole advance (as shown on the instruction) must be used whenever a total retention is required.

If the property is to be declined section 11 must be left blank. Section 12a and 12b: New Build (to include new conversions)

Valuers should tick ‘Yes’ for all new build and new conversions as well as new build/new conversions which

have been recently occupied for the first time. If the property is capable of being completed within a

working week, the valuer should select ‘Yes’ to 12b.

Mandatory paragraphs must be used in section 14b (see page 29). Section 12c-i: Buy to Let applications

The guidance on page 16 above should be followed for all BTL cases. Standard phrases are available for

use in section 14b if appropriate (see page 34).

When providing annual figures, do not deduct for voids. The valuer’s opinion of rental value must reflect

the condition of the property at time of inspection unless a retention has been recommended. Where

repairs have been recommended the rental value should assume these have been completed. For new

builds the rental should be provided on the assumption that construction has been completed. The

estimated current annual rental value is on the basis of an unfurnished let.

Section 12c: The valuation instruction will indicate if the case is a BTL application.

Section 12d: If it is unclear that the property is currently let an assumption should be made and an

explanation provided in section 14b.

Section 12e: Valuers should advise if the property is likely to let within 3 months from the

commencement of the mortgage, in ‘normal market conditions’. If the answer to this

question is no the property should be declined for mortgage with an explanation provided

in section 14b.

Section 12f: Valuers should advise if the property is likely to sell within a 6 month period, in ‘normal

market conditions’. If the answer to this question is no the property should be declined for

mortgage with an explanation provided in section 14b.

Section 12g: Valuers should advise if the property is, or likely to become an HMO due to location,

character and layout. If the answer to this question is Yes the property should be declined

for mortgage with an explanation provided in section 14b. This question should not be

answered Yes simply because the property could in theory become and HMO.

(For Scottish properties see separate guidance on HMO’s and use the Mandatory phrase in

section 14b if appropriate.)

Section 12h: Valuers should complete the passing rent or estimated rent as advised on the instruction

(annual rent).

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Section 12i : Valuers should provide an opinion of the rental value of the property on an annual basis,

taking into account the condition of the property at time of inspection. If the property is

being declined this should be £0. Where a retention has been made the full rental value

should be provided assuming the works have been completed.

Section 13: Roads

Select the option that best describes the circumstances. If “Other” is chosen, please ensure that an

explanation is provided in Section 14b.

In cases where it is likely that expenditure will be incurred on the road in the foreseeable future, valuers

are not expected to quantify the cost. It is recommended that where incomplete the valuer should use the

words ‘Nil if road bond’. It will be the subject of a post valuation query if no such bond exists.

If the condition of the road is such that it affects the property's value and/or marketability, comment

should be made in Section 14a. Section 14a: Marketability

Where the question has been answered “Yes”, valuers should describe in concise terms the nature of any

adverse factors that affect the marketability of the property, e.g. proximity to an obnoxious use, busy

roads, unusual design features, high maintenance liabilities, poor structural condition.

This section should also be used to report concerns with regard to the risk of flooding, damage caused by

mining subsidence and any other environmental risk. Valuers should indicate where such matters have

been taken into account in their valuation figure.

If there are factors that adversely affect the marketability of the property such that an extended marketing

period (normal market conditions) in excess of 3 months to let, (if BTL application) or in excess of 6 months

to sell will be required, then these should be reported in Section 14a and the property declined for

mortgage.

There are standard paragraphs available for use in section 14a – see page 33. Section 14b: Other Important Factors

This section should be used to report matters that require further clarification and to record assumptions

made in other parts of the report e.g. matters to do with tenure, town planning, use of the property.

Valuers should indicate where such matters have been taken into account in their valuation figure.

This section should be used if there is a requirement for the conveyancer to investigate matters – see

suggested standard phrases above on pages 33/34.

Any assumptions on which the valuation is based should be stated in this section.

Unusual limitations to the inspection due to lack of access should be mentioned in this section.

Where the valuation differs from the purchase price/estimated value provided by the Bank (either higher

or lower), the mandatory paragraph must be used in Section 14b (page 31). Valuers should also advise the

Bank if the price agreed varies from the figure provided by the Bank.

If the property is to be declined all reasons for the decline must be provided in this section.

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The mandatory paragraphs set out in Appendix 2 above must be used as appropriate. Section 14c: Acceptability for mortgage purposes

This section should be answered "No" if the property is being declined. In this case, the valuation sections

should be completed as "Not Applicable" and an explanation of why the property is not considered to be

acceptable security should be provided in Section 14b. There is also no need to provide an estimated

rebuilding cost or to recommend repairs in Section 11. Section 14d: Occupation Restrictions

Where valuers have reason to believe that properties are or could be subject to occupancy restrictions

(e.g. local occupancy) they should select “Yes” and provide an explanation in Section 14a. Section 15: Valuation for Mortgage Purposes

Valuers should indicate that the valuation is provided on the assumption of vacant possession by selecting

“Yes”. BTL cases should be valued on a vacant possession basis even though the property is or will be let.

If “No” is selected provide an explanation in Section 14a.

N.B. It is very important to the lending process that regard should be had to properly checking the entering

of valuation figures before sign off. Please ensure that full stops are not used in the valuation figure and

that the words match the valuation. Valuers should never complete a valuation field with ‘0’, ‘nil’ or

‘zero’. If a valuation is not being provided, complete the field with the words ‘Not applicable’. Market Value at the time of inspection

If the valuer provides a ‘Market Value at time of inspection’ this is taken as confirmation that the Property

is mortgageable in its condition/use at the time of inspection.

This valuation should always be given except when:

• The property is not acceptable for mortgage

• A new build property is not close to completion

• A total retention is made

In these cases, as above, complete ‘not applicable’ in the valuation fields. Where the property is not

acceptable for mortgage an explanation should be provided in Section 14b. New Build

When a new build property (being purchased) is close to completion (completion of the property within a

week) a Market Value at time of inspection’ should be given as the property is almost finished, this should

be the valuation of the completed unit. Where the property being purchased is incomplete or an

incomplete/unfinished property is being remortgaged, the valuer should refer to the guidance above.

Market Value on completion of repairs in section 11, or, if new build when the property is finished

A figure is required in this section when:

• Repairs are recommended in Section 11

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• A total retention has been made – it is the value assuming Section 11 conditions are met/works

are complete

• A new build property is not close to completion – the valuation should assume completion of the

property

If the property is being declined all valuation fields should be completed as “Not Applicable”

It is recognised that the difference between "before" and "after" valuations is not a simple mathematical

deduction of the cost of repair and in some circumstances the two valuations may be the same.

Signature

This section of the form should be completed in full. The name and qualification of the inspecting valuer

should be typed, in addition to the valuer’s firm details, RICS number, and panel appointment number and

company surcode (first 3 letters of company name) – eg 2456 SAR

The name, address and telephone number of the valuer will be visible to the customer and the

conveyancer.

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Revaluation Reports (Additional Loans)


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A revaluation is instructed when the customer is seeking an additional loan. Revaluations require all

properties to be inspected internally. When carrying out an inspection for additional lending the valuer

should follow the guidance notes and report accordingly if the property no longer meets the Bank’s lending

criteria. The address and references should be completed from the information provided on the instruction. The

Surveyor’s Reference is for the valuer’s office use and not Santander. The instructing branch is shown as

‘source’ on the Quest client page – state ‘not known’ if it is missing. The application number is also on the

client page and will begin with either AA, AF or ZO. If the Mortgage Account number is not provided state

‘not known’. The Processing Location/Mortgage Centre is Teesside. Provide as full an address as possible. The postcode is important and is used for insurance purposes. If a

postcode is not provided in the valuation instructions, valuers should find this out and complete it on the

report form. Any changes should then also be advised in section 4. Section 1: Tenure - Valuation assumption This information should be taken from the valuation instructions unless the valuer has information to the

contrary. If “Other” is chosen, valuers should provide an explanation of their assumption and the source of their

information in section 4. Valuers must state the unexpired lease term. The appropriate mandatory phrase for leasehold property

should be used in section 4. Section 2: Purpose of the Additional Loan Information regarding the purpose of the additional loan is generally included in the instruction. Valuers

should select one of the options based on their understanding of the purpose of the loan and only depart

from the purpose indicated in the instruction if contrary information is indicated by the occupier. If “Other”

is chosen, valuers should provide a brief explanation in section 4. Where the purpose of the loan is for improvements or alterations, valuers should list the works of

improvement that the applicant is known to be making, e.g. extension, new kitchen, fitting central heating.

For ‘Release of land/buildings’, the valuer should be made aware of the element of land to be released

and the intention for adjoining land so they can confirm not only the reduced value of the decreasing

security but whether the proposal would impact on marketability/access etc. The only valuation required

is for the property once the land has been released. This should be provided in the ‘when finished’

valuation field.

Valuers should include the approximate cost of the improvements/alterations in the space provided. Section 3: Repairs/reports recommended as a condition of the Additional Loan

Recommended repairs should be restricted to those that, if not attended to, will materially affect the value

and/or marketability of the property. For more details, refer to the guidance notes for the Valuation for

Mortgage Purposes. Wherever possible include a (realistic) suggested retention figure.

Special Instructions for properties at risk of Mundic

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When there are reasons to suspect that the property may be affected by Mundic, Santander requires

valuers to recommend a Mundic screening report be obtained prior to releasing the funds and a total

retention should be imposed with only a ‘when finished’ valuation provided.

Section 4: Comments

This section should be used where it is necessary to provide clarification of replies given in other sections

of the report or to identify other important factors to be brought to Santander’s attention.

If both Market Value in Present Condition and Value after Improvements are not applicable, a brief

explanation should be given of why the property is outside lending criteria and a valuation

figure provided in section 4. The valuation should represent the value of the property as if it were to be

sold for residential owner occupation in its current condition/format and reflecting any restrictions that

may be applicable due to the breach of lending criteria.

Section 5: Valuation for Mortgage Purposes

Valuers should indicate that the valuation is provided on the assumption of vacant possession by selecting

“Yes”. Otherwise select “No” and provide an explanation in Section 4.

Do not complete any of the valuation fields with ‘0’, ‘nil’ or ‘zero’, if a valuation is not being provided,

complete the field with the words ‘Not applicable’. Market Value in present condition

A ‘Market Value in present condition’ should be provided except when a “total retention” is being

suggested in Section 3, when the property is being valued for ‘release of land’ or if the property no longer

meets lending criteria.

Where a total retention is recommended, “Not Applicable” should be typed in the ‘Market Value in present

condition’ field. Market Value when finished

A ‘Market Value when finished’ is required when works of improvement/ repairs are listed and costed in

Section 2, or when a retention is recommended in Section 3 for repairs. When the property is being valued

for release of land, only the ‘Market Value When Finished’ should be provided, to reflect the value of the

property once the land has been released/sold off. Section 6: Buy to Let

If the instruction is for a BTL mortgage this will be stated on the instruction. These questions should be

answered in the same way as if for a VMP. Signature

This section of the form should be completed in full. The name and qualification of the inspecting valuer

should be typed, in addition to the valuer’s name, RICS number, and panel appointment number and firm’s

surcode eg 8905 CWS.

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Re-inspection Report


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The property is to be inspected internally. Form Completion The address and references should be completed from the information provided on the instruction. The


‘source’ on the Quest client page – state ‘not known’ if it is missing. If the Mortgage Account number is

not provided state ‘not known’. The Processing Location/Mortgage Centre is Teesside.

Provide as full an address as possible. The postcode is important and is used for insurance purposes. If a

postcode is not provided in the valuation instructions, valuers should find this out and complete it on the

report form. Section 1 : Purpose of Reinspection – Valuers should check the purpose of the re-inspection prior to

inspecting the property and completing the form. If there are any queries regarding the reason for the re-

inspection, please check with the relevant mortgage centre. Reinspections may be instructed where the original report is over 6 months old and an up to date valuation

is required to progress the case. If this is the case OOD will appear in the instruction notes and valuers

should select ‘Other’ and put ‘Out of date report’ in the text reason field. Section 2 : Details of Outstanding Work - If there are any significant items of work outstanding, briefly

indicate these in a clear and precise manner, using terminology that can be readily understood by the

applicant/customer. If relatively minor items are outstanding a general comment is sufficient. Only works detailed in the original valuation report should be inspected and commented upon. Section 3 : Recommendations - Where not all of the essential repair items listed in the original report have

been undertaken the valuer must use his/her judgement as to whether or not this may affect the value of

the mortgage security. If the outstanding items are significant, then it may be appropriate to recommend

a further retention and/or re-inspection. Section 4 : Current Value - The Company requires an updated valuation if at the time of re-inspection it is

materially different from the original valuation. The Company regards a 10% increase or decrease in the

value as being materially different. Justification for the revaluation should be stated on the re-inspection

forms. If a valuation is not being provided for whatever reason, complete the field using ‘Not applicable’.

Do not use ‘0’, ‘nil’ or ‘zero’. Section 5 : Other Important Factors/Remarks - Use this section to comment on any other factors that may

be pertinent to the re-inspection of the property, e.g. the property’s general condition may have

deteriorated since previous inspection, or it may be necessary to clarify the reasoning behind the request

for a further re-inspection. Signature - This section of the form should be completed in full. The name, qualification, valuer’s number

and surcode of the inspecting valuer should entered. Applicants do not receive copies of re-inspection

reports.

When completing a Reinspection Report for a new bui ld property (with warranty and being sold completed) ensure that the report is completed in l ine with the original VMP in respect of the retention and works recommended. If there were no works in Section 11 of the VMP and no retention was recommended then there should be no works or re tention in the Reinspection Report, unless defects have been noted.

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External Inspection


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External Inspection Valuations are carried out on behalf of Santander to assess the value of a property and

assist underwriters in making lending decisions. The contents of these reports should not be disclosed to

the customer or to their conveyancer.

The circumstances in which an External Inspection is not appropriate and/or should be upgraded to a VMP

are outlined on pages 9/10 above.

Valuers are expected to get out of their vehicles to carry out an external inspection. The property should

be viewed from the nearest publicly accessible point and from as many angles as possible. Valuers should

not go onto private land, including shared driveways and private alleyways

Upgrading the EIV to a VMP Where valuers need to upgrade the EIV to a full inspection and VMP they should contact the panel

manager to inform them that this has been done and advise the reason for the upgrade. The reason for

the upgrade will be recorded by the panel manager and should also be recorded in the valuer’s site notes.

Where an inspection is upgraded the EIV form must not be completed. The valuer is responsible for

arranging and carrying out the internal inspection and completing the VMP. Only the VMP report should

be completed and the VMP fee will be paid.

It is valuer’s responsibility to upgrade any EIV to a full inspection where an external inspection is

inappropriate. The case will not be reinstructed as a VMP.

Form Completion

The address and references should be completed from the information provided on the instruction. The


‘source’ on the Quest client page – state ‘not known’ if it is missing. The application number is also on the

client page and will begin with either AA, AF or ZO. The Processing Location/Mortgage Centre is Teesside. The estimated value and advance required should also be found on the instruction. The External Inspection

Valuation report is a short form requiring minimal input. The boxes are all self-explanatory and no

comments are required.

Documents

Santander Residential Lending Policy – Guidance for … Panel... · Santander Residential Lending Policy – Guidance for ... These Guidance Notes set out ... relevant practice