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Nationwide to allow new-build premium to be included in mortgage valuations 03 November 2011

Nationwide Building Society has said it will now allow for a new-build premium to be included in valuations of new property.

Before, it previously valued new-builds on their resale value, leaving many buyers of new homes short on finance.

However, Nationwide is also capping its maximum LTV for new-build houses at 85%, down from its previous LTV of 90%.

It remains cautious about new-build flats, with an LTV unchanged at 75%.

Nationwide says it is allowing the inclusion of a new-build premium – the additional value that diminishes once a property is occupied, in just the same way that a new car’s value dips the moment it leaves the forecourt – to bring it in line with other lenders.

It says the move also reflects changes in the new-build market such as the greater disclosure of incentives.

Andrew Baddeley-Chappell, head of mortgage strategy and policy at Nationwide, said: “These changes are about reaching the right balance between prudence and market support.

“We are aware from feedback from mortgage intermediaries and builders that our previous valuation approach presented some additional complexity. We hope that this change will improve the customer and intermediary experience and make Nationwide and TMW an even better choice of mortgage provider.”

Stewart Baseley, executive chairman at the Home Builders Federation, said: “This is a very welcome move. By harmonising its approach to new-home valuation, Nationwide’s move should help increase the availability of mortgages for new-home buyers.”

Premiums paid by the first buyers of new homes vary, but according to Smartnewhomes, the average price of a new home now stands at £221,276, considerably above the £165,650 currently quoted by Nationwide as the average UK house price.

 

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