The initiative - supported by Homes for Scotland, the Law Society of Scotland and the firms providing warranties on new homes - will guarantee that new homes have been properly completed and undergone a satisfactory inspection before buyers can move in.
The initiative, first introduced in England and Wales in 2003 and extended to Scotland from 30 August 2004, means that lenders will not release mortgage funds until a satisfactory final inspection has been completed. It is designed to address the problems experienced by buyers of new homes who move into properties that have not been properly finished.
Mortgage lenders will not now release funds until the buyer's conveyancer has been assured that the property has passed inspection and that a warranty will be in place on settlement. The new arrangements apply to all transactions involving new properties built or converted in accordance with a new home warranty scheme where conclusion of missives occurs on or after 30 August. The CML has modified its Lenders' Handbook for Scotland (which sets out standard instructions for conveyancers) to incorporate the new arrangements.
Commenting on the new arrangements, the CML's policy adviser Andrew Hopkins said: "This initiative has worked very successfully for home-buyers in England and Wales and we are very pleased to be able to extend it to Scotland. It is clear that, in the past, a small number of borrowers have experienced problems with new houses that have not been completed satisfactorily. On the rare occasion that borrowers move into a house that has not been properly finished, it can cause distress so this is an important measure to make home-buying in Scotland less stressful."
