The specialist buy-to-let lender has reduced the amount of time a valuation can be relied on from six months to four months. The change came about following advice from its valuers and guidance from the Royal Institution of Chartered Surveyors (RICS).
After the vote, RICS issued a statement on its website which read: “As the process for exiting the EU is a long one, markets may remain uncertain for a protracted period of time, in which case valuers must continue to sound a cautionary note about the potential for longer-term outcome uncertainty.” It went on to suggest wording to be added to the valuation report and guidance on how to act.
Alongside shorter valuation validity periods, the lender is insisting all applications which exceed 50% loan-to-value (LTV) for any property valued at more than £2m be submitted with a detailed survey called a Long Form Valuation. This requires a full internal inspection and an assessment of factors such as sales evidence, market direction and market sentiment.
A spokesman for OneSavings Bank said: “In the main, these changes affect properties in London and the south east, where we specialise. This market, whilst stable, has been subject to significant discussion post-referendum, which followed Stamp Duty changes that impacted market activity and made it harder to get comparable evidence. The Long Form report provides a more comprehensive assessment of the security.”
The final change being introduced by the lender is an LTV cap of 75% for loans of less than £100,000. Kent Reliance said this reflected the potential for price volatility in the lower end of the market.
Richard Sexton, director of esurv, said Kent Reliance’s changes to its valuation criteria were not out of the ordinary and brought it more in line will the majority of lenders in the market. He said there had been much speculation that property prices would be affected by the Brexit decision but no evidence to suggest this was happening. He added that often when there was volatility in the economy the top and bottom ends of the market experienced the biggest shift in prices.
Andrew Montlake, director, Coreco, said: “In today’s environment, you can understand why lenders will want to take a little more care when valuing the more expensive properties which can be subject to more sudden price swings. It is important for brokers and clients that valuations are as accurate as possible and whilst I don’t actually think we will see any large price falls, caution seems to be the sensible way to go.
“We do need to avoid entering in to an overall negative view where properties and values are concerned as the reality is that supply and demand will continue to keep prices level.”