Wednesday, 29 January 2014

CML Handbook P2 Changes 2013 - Review At-a-Glance

Lenders made 68% more changes to their requirements in 2013 compared to 2012

According to Lexsure’s review, 91% of CML lenders amended their Part II policies last year, with over 1,793 sections changed. This represents a 68% rise in policy change activity compared to 2012.

Some of the more frequent changes focused on the following:

  • Which documents the lender needed to be sent on completion  
  • Whether a lender accepts personal searches and if so, what their requirements are.
  • Disclosure obligations relating to properties where a Green Deal exists or where there are solar panels on the property

On average, a lender in England & Wales changed their Part 2 requirements 3.9 times in 2013, with 91% of all lenders changing requirements at least once in the year

Clearly, when it comes to complying with lender requirements, solicitors cannot assume that what was true in the last transaction is still true in the next. Changes, even once or twice a year, compound when one considers the myriad of lenders. The numbers show that vigilance is key.

Key government or regulatory initiatives result in a flurry of requirement changes

The introduction in July 2013 of new requirements as to whether the lender needs to be informed of a Green Deal on properties tripled the volume of Part 2 changes in just one month. A similar impact was seen a year earlier when requirements were introduced to report on energy technologies installed on residential properties

Requirement changes for mortgages on properties in England and Wales doubled last year

With the recovery of the property market, lenders are being hyper-cautious in their mortgage lending processes. Having been burned in the global financial crisis of 2008, they are acting to strengthen their positions with more cautious policies.

Lenders are wary of non-standard properties

The trend is for lenders to be more picky with premises they will lend on, avoiding anything remotely controversial. This continued with dozens of lenders restricting their policies relating to flying freehold, Houses in Multiple Occupation, properties with solar panels, freehold flats, and leasehold properties with short leases.

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