The CML stated that while it did not believe there was a large majority of developers actively engaged in fraudulent activity, it remained a worry. The move followed renewed concern that new build developers were offering gifted deposits or incentives to potential buyers, leading to lenders offering loans that did not reflect the true value of the property, which could make them a target for fraudsters.
The CML confirmed it was in talks with the Home Builders’ Federation over altering its voluntary code to require developers to be transparent about the true pricing of the property.
The issue has also lead to the Royal Institute of Chartered Surveyors updating its guidance to valuers and placing greater emphasis on how sales incentives affect property valuations.
Bernard Clarke, communications manager at the CML, said: “We believe that the changes made by valuers, solicitors and conveyancers will make a big difference and will help to combat fraud. But it is essential developers also take action. Signing up to the code would show that developers are taking this issue seriously and want to differentiate themselves. It would also help to rebuild confidence.”
Colin Snowdon, chief executive of Wave, said: “I fully endorse what the CML is saying, as it is an area of concern. As we begin to see house price inflation slow down, lenders will be looking more carefully.”
