The lender announced that while it would honour all current applications it would only accept new applications on properties aged over one year. This comes after Mortgage Introducer exclusively revealed TMW’s parent company, Portman, is withdrawing from the intermediary market, leaving TMW with all broker business.
Matthew Wyles, group development director at TMW, said: “Owing to the current over-supply of newly-built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract. In these cases the lender may be unaware of the actual price being paid and end up relying on a valuation which may in turn be based on erroneous assumptions.”
“We will go back into new-build BTL when we believe the market forces of supply and demand have reached equilibrium,” he added.
Applauding the decision, managing director of Landlord Mortgages, Lee Grandin, said: “New-build properties are often sold on an off-plan basis where an investor purchases a property up to a year prior to it being built. This is a high risk, high reward strategy that we feel can prove particularly dangerous in the current competitive market.”
But Simon Chalk, mortgage planner at Mortgage Portfolio Services, said: “Wyles has a strong case about value versus actual price paid in the new-build sector but this sort of arrangement is commonplace. Developers have for many years subsidised the actual price paid with incentives such as deposit-paid schemes and selling allowances.
“However, the solicitor is obligated to declare the full price to the lender so the risk of the provider not being made aware is minimal. In this respect I do wonder what his concern actually is.”
