The Council of Mortgage Lenders (CML) has updated the Disclosure of Incentives Form ("DIF") with the new changes due to come into effect on 1 October 2011.
The DIF was introduced back in September 2008 as a method of alerting valuers and lenders to any incentives being offered by developers to purchasers of newly built or renovated homes. It was hoped the DIF would help combat what lenders perceived at the time to be a lack of transparency in the new build market, particularly in city centre developments which were attracting large numbers of buy-to-let investors and where mortgage fraud was believed to be disproportionately high.
CML and developers alike were optimistic the DIF would restore faith in this particular section of the mortgage market, but unbeknown to them the credit crunch was about to bite the housing market and the DIF took a much more passive role in the years to follow.
However, amidst reports that the number of reservations of new homes is slowly on the rise, the DIF looks set to play a more predominant role going forward. It has now been updated and significantly expanded to reflect current market conditions, with particular emphasis being put on disclosure of schemes such as shared ownership, equity loans and part exchanges which most developers are promoting in an effort to boost sales. By virtue of the stringent obligations it imposes on developers, valuers and conveyancers, the DIF should provide lenders with the comfort and transparency they so desire and may still therefore prove crucial in re-establishing confidence in the new build housing market.
Whether you are a housebuilder, developer, Housing Association or Local Authority selling newly built or renovated properties, or a valuer or solicitor acting for a lender, you should familiarise yourself with the CML requirements and update your internal procedures accordingly.
For more information and a copy of the updated DIF, click here.