Post on 27-May-2018
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Santander Residential Lending Policy – Guidance for Valuers Version: 1 Owner: D avid House
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Contents Page
Introduction 4 Key Requirements 5 Mortgage fraud 6 General Requirements 7 Reporting requirements 8 Mandatory Phrases Transcriptions Declining a Property Retentions
Upgrading an External Inspection Additional Lending Property Matters 11 Construction – Acceptable Construction – Unacceptable Condition Unacceptable Property Types New Build Flats Buy to Let Annexes Legal Matters 18 Tenure Lease Term Title Deeds Purchase Schemes Back to Back Sales Occupancy Restrictions Land Issues Commercial Use Environmental Issues 21 Mundic Solar Panels Coal Mining Japanese Knotweed Contaminated Land Asbestos Flooding Radon HS2 Private Water Supply
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Appendices 25 Appendix 1 – Construction Ty pes Appendix 2 – Mandatory Phras es Appendix 3 – Standard Phrase s Appendix 4 – Form Completion Guides
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Introduction These Guidance Notes set out the main policies, procedures and requirements that valuers are expected
to follow when completing residential mortgage valuations on behalf of Santander.
Valuers must recommend or decline all properties for mortgage in accordance with these Guidance
Notes.
Santander reports are processed automatically and may not be read by staff before a mortgage offer is
made. It is therefore essential that the reports are completed correctly. It is the valuer’s responsibility to
insert crosses in the appropriate boxes within the report and use the mandatory phrases in the correct
sections to ensure specialist report requests or retention recommendations are acted upon.
Form completion guides can be found in Appendix 4.
These Guidance Notes have been completely rewritten and all previous versions are superseded as from
18 January 2016.
LGSS act as panel managers for Santander and all queries should be directed as follows-
Technical Queries: Santander@lgsurvey.co.uk Telephone: 01226 230513
PVQ Queries: PVQ@lgsurvey.co.uk
Santander Property Risk LGSS
Santander House (AHM147) 1-3 Churchfield Court
Grafton Gate East Barnsley
Milton Keynes South Yorkshire
MK9 1AN S70 2JT
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Key Requirements
To be acceptable Santander require that at the point of release of mortgage funds the property is
• Habitable
• Insurable
• Self contained
• A single dwelling
• A permanent fixed structure
• Within a curtilage of no more than 10 acres of land
Valuers must only recommend property as suitable security if it is readily saleable for owner occupation
across the entire market. If demand for the property is limited to cash purchasers or investors then it is
unacceptable. (Some limited exceptions to this rule may be made in certain Buy to Let cases – see page
16.)
A single dwelling in this context can include properties with annexes, outbuildings etc, proportionate to
the main house, the defining feature being that the property must be readily saleable as a single entity
for owner occupation.
If a ‘Market Value at the time of inspection’ is provided the valuer is confirming the property meets
the Bank’s lending policy and is in a mortgageable condition at the time of inspection.
However, a property should not be declined if it can be made to meet these key requirements by actions
that can reasonably be undertaken by the applicant.
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Mortgage Fraud
Valuers are in a unique position to assist the Bank in the prevention of fraud as they not only inspect the
property but often meet the applicant/vendor or estate agent who provides additional information
about the transaction.
Possible fraud scenarios can include any one or more of the following:
• Inflated purchase prices/estimated values
• Applicants or brokers arranging access on sales
• Several applications on the same property in succession
• Houses in multiple occupation being purchased for owner occupation
• Multiple applications on one block of flats/development site , particularly where no previous
transactions are recorded
• Applications by builders or property developers
• Name of vendor/applicant recurring frequently in a single location
• Inconsistencies between agreed price/loan/valuation
• Unknown estate agent from out of area
• Back to back sales
• Involvement of a property Investment Club
• Applicant remortgaging but appears to know little about the property
• Applicant not living at the property but remortgaging/seeking additional loan and not BTL
This is not an exhaustive list and if the valuer has any concerns at all they should inform the Bank by
emailing intel@lgsurvey.co.uk
The valuer must not make any reference in the Valuation for Mortgage Purposes (VMP) but should
complete the form in accordance with these guidance notes. Once the Bank has received the email
further investigations will take place. The applicant/broker/vendor will not be informed that the valuer
has raised any suspicions to the Bank.
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General Requirements
In the absence of anything in these Guidance Notes to the contrary valuers should comply with the
relevant practice statements of the latest edition of the RICS Valuation-Professional Standards UK (The
Red Book). Where there is any conflict, the Banks’ Guidance Notes will take precedence.
When carrying out a valuation for mortgage purposes a head and shoulders inspection of the roof space
should be undertaken where it is safe to do so (record in site notes). Reinstatement cost figures should
also continue to be provided.
Santander accepts reports completed and signed off by FRICS, MRICS or AssocRICS qualified surveyors
who are RICS Registered Valuers and who are listed on the approved panel.
Valuers must only complete cases located within their approved areas of operations.
Valuers must make available their site notes, comparables and valuation rationales for audit purposes
when requested to do so either by the Bank or the panel manager.
If there is, or might be, any conflict of interest as defined by RICS Guidance valuers must inform LGSS
panel managers immediately and return the instruction.
Only PVQ’s received from LGSS panel managers should be responded to. The response time for PVQ’s is
48 hours. In the absence of the inspecting valuer Santander expect the Area Manager or equivalent to
ensure the query is answered within turnaround time.
Santander may refer specialist reports to the valuer even where they are not in the applicant’s name. For
Structural Engineer Reports the valuer is asked to advise the Bank whether on the basis of the report
submitted the case is likely to proceed or not. This is to save the customer the added expense and time
of obtaining reports needlessly. If the case is to proceed the valuer should only amend the mortgage
valuation on receipt of a report in the applicant’s name.
For all other specialist reports and estimates, the valuer should respond to the PVQ as appropriate but
additionally request that the report (if no work required) or the guarantee (where work is required or
has been completed) be transferred into the name of the customer. The mortgage valuation report
should be amended in conjunction with the PVQ response as the PVQ will not be closed until this has
been completed.
Where a PVQ results in any change to the original valuation or retention, valuers must sign off an
amended report on Quest, providing an explanation for the amendment in section 14b and changing
the date of the report. The PVQ will not be closed until the amended report has been completed. There
is no requirement for an amended report where the figures remain unaltered except in the
circumstances described above or where this is requested by the Bank/Panel Managers.
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Reporting Requirements
Mandatory Phrases
Santander requires the use of Mandatory phrases for New Build cases (including the CML form), Mundic,
LPS and PRC construction, Movement, Private Drainage, Trees, Japanese Knotweed, Title Plans, Lease
Term, Scottish HMO’s and Right to Buy cases. There are also Mandatory phrases to be used when the
Purchase Price/Estimated Value differs in any way from the Valuation and for amended reports. These
mandatory phrases can be found in Appendix 2.
Appendix 3 provides example standard phrases. These are not mandatory and should only be used
where appropriate. Free text or amended standard phrases should be used to reflect the individual
circumstances.
Transcriptions
Transcription reports will not be accepted where a valuer has previously completed a valuation report
commissioned by another lender.
Scotland – Where the valuer has carried out the Single Survey a transcription will be accepted by
Santander provided
• The transcription report is completed within 3 months of the date of the current report
• The office of the firm is on Santander’s panel for that postcode
No fee is payable by Santander where a transcription report is produced.
The information provided in the VMP should not differ from that provided in directly instructed cases.
The valuer should provide any additional information necessary to complete the form even if this had
not been provided previously in the Home Report.
Transcriptions are not permitted in the following circumstances:
• Where the valuation varies from the agreed purchase price by more than 10%
• Remortgage applications
• Right to Buy applications
• Private sales ( where the sale has not been negotiated through a recognised selling agent eg
estate agent or solicitor)
• Where the inspection was more than 3 months prior to the date of valuation request from
Santander
• Where a ‘refresh’ of the Home Report is instigated by the mortgage instruction
• Where the Home Report valuation figure differs from the valuer’s current valuation assessment
• BTL applications
• Where the transcription report cannot be completed by the inspecting valuer
• Where the original valuation was only of a portion of the shared ownership property being
purchased and not the whole (100%) property
• Where an inspection is required to update the valuation figure
• Where prior to producing the valuation either the valuer or an employee or partner of the same
surveying firm provided an estimated valuation of the property, whether verbally or in writing, to
the vendor or representatives of the vendor
Where a transcription valuation has been instructed but is not permitted, valuers must return the
instructions to the Bank’s panel manager.
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Declining a Property
Properties should only be declined where they do not meet the Bank’s lending criteria and they cannot
be made acceptable by any reasonable action undertaken by the customer.
In all other instances, a total retention should be imposed, with the actions required for the property to
meet the key requirements clearly stated in sections 11 and/or 14 as appropriate.
A property may be unacceptable because it fails on a specific policy such as LPS and PRC flats and
maisonettes or land in excess of 10 acres or because, in the valuer’s opinion, it fails to meet the Bank’s
Key Requirements.
When completing a VMP for a property that is being declined
• Do not request any reports, plans or Title Plans
• Do not suggest any repairs
• Do not provide any reinstatement figure
• Do not provide any Valuation figures
• Do not provide any rental figure (BTL cases)
• Do provide an explanation in Section 14b as to why the property is unsuitable
• Do not provide any other comments in section 14
• Do not use any standard phrases which include the words ‘this is reflected in the mortgage
valuation’
When declining a property Valuers must not in any circumstance make any suggestion that the
property might be acceptable if certain works are done. If the property is unsuitable because it fails to
meet more than one lending criteria all reasons must be stated in section 14b.
Retentions
Valuers should note that retentions of less than £2,000 are rarely imposed by the Bank.
A figure equal to the whole advance (as shown on the instruction) must be used whenever a total
retention is required.
Total retentions are required when either the property is not suitable for lending without certain works
being completed or the valuer is unable to confirm the property is suitable for lending without being
provided with additional information. Provision of the additional information will enable to the valuer to
confirm whether the property meets Santander’s lending policy. An example of this is the provision of
documentation to confirm details of the repair scheme carried out to a PRC property or where a Structural
Engineer’s report is required.
Santander will accept retentions on Buy to Let cases in certain circumstances – see page 16.
When determining whether a retention is warranted refer to the specific sections below for each issue.
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Upgrading an External Inspection
Properties where the estimated value is £1,000,000 or more, flats and maisonettes and Joint
Ownership/Low cost Housing Schemes are all excluded from External Valuation Inspections – any cases
received that fall into these categories should be upgraded to a VMP and the panel manager informed.
Valuers must not complete the External Inspection Valuation (EIV) in the following circumstances:
• If the customer’s estimate of value is more than 10% above or below the valuation
• If the property cannot be clearly seen from a publicly accessible location.
• Where there are or likely to be any unusual features to the property, legal or structural related
issues
• Where the plot obviously exceeds 1 acre
• Buy to Let valuation instructions
If for any reason the valuer considers the property is not suitable for an External Inspection, and/or it
falls into one of the categories above the valuer should inform the panel manager and upgrade the
report type to a VMP.
In addition, it should be noted that properties cannot be declined based only on an External Inspection. If
the valuer is aware prior to the inspection that the property is unsuitable for mortgage the instruction
should be cancelled and the panel manager advised of the reason. If the valuer becomes aware during
the inspection that the property is unsuitable then the case should be upgraded to a full inspection.
It is the valuer’s responsibility to upgrade any EIV to a full inspection where an external inspection is
inappropriate. The EIV form must not be completed where an inspection is upgraded.
Additional Lending
When carrying out an inspection for additional lending the valuer should follow the guidance notes and
report accordingly if the property no longer meets the Bank’s lending criteria. In all such cases, valuers
should withhold a Market Value in Present Condition. However, where a Value after Improvements is
also not applicable, a brief explanation should be given of why the property is outside lending criteria
and a valuation figure provided in section 4 of the report. The valuation should represent the value of
the property as if it were to be sold for residential owner occupation in its current condition/format and
reflecting any restrictions that may be applicable due to the breach of lending criteria. This also applies
where the property is already in mortgage to Santander and the customer is looking to switch mortgage
products (identified as instructions from Retentions).
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Property Matters
Construction - Acceptable
Subject to valuer judgement both in terms of construction/repair and marketability the following types
of construction are acceptable to Santander.
Traditional: Main walls – not less than 225mm thickness in brick, block or stone, cavity, solid or post
1960 timber frame.
Roof – Pitched - slated, tiled , thatched.
Flat - felt, asphalt or metal sheeting.
Non Traditional: Pre 1960 (and post 1960 timber clad) timber framed dwellings.
In situ cast concrete eg Wimpey No Fines and Laing Easiform
Designated PRC houses and bungalows repaired under PRC Homes Ltd Repair
Scheme or Non Traditional Homes Appraisal Scheme Category 5 (as confirmed by a
NTHAS Structural Engineer) - providing all adjoining properties have also been
repaired. To be acceptable there must be either a PRC Homes Ltd Certificate or
confirmation by a civil or structural engineer that the repair scheme was licensed by
PRC Homes Ltd prior to its demise in September 1996. Recent repair schemes
completed to PRC or NTHAS specification may be acceptable if there is an insurance
backed warranty in place, subject to key requirements also being satisfied.
Non Designated PRC Houses and bungalows, but subject to a satisfactory Structural
Engineer’s report.
LPS houses and bungalows, but subject to a satisfactory Structural Engineer’s report.
Steel Frame subject to a satisfactory Structural Engineer’s report if necessary.
Modern Methods of Construction (MMC) subject to having BRE approval and an
NHBC or similar warranty (even though it may have expired) and buildings
insurance being readily available. Only recent systems (generally from the mid
1990’s onwards) are regarded as modern methods. The Key Requirements must be
capable of being met.
Modern Flats – New Build or Conversions of framed construction with NHBC or
similar warranty (even though it may have expired).
Cross Wall construction.
See Appendix 1 for lists of non traditional house types generally acceptable subject to the Key
Requirements being met.
See Appendix 2 for mandatory phrases for PRC, non designated PRC and LPS construction types.
Construction - Unacceptable
In general a property should not be declined solely on the grounds of its construction except in the case
of those types listed below.
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Unrepaired PRC houses and bungalows or repaired under schemes not listed above. If any adjoining
properties have not been repaired then the subject property should be declined whether repaired under
an acceptable scheme or not.
PRC flats and maisonettes (whether repaired or not)
LPS flats and maisonettes.
Single skin construction – Properties constructed entirely in single skin brick/blockwork are not
acceptable. Where part of the property is built in single skin construction the case should be treated on
its merits. Two or more storeys of single skin construction is potentially unstable and will not be
acceptable if it forms a large part of the property.
Mundic class B or C is unacceptable – see page 21 below.
Condition
A property should not be declined simply because it is in a poor state of repair. However, the property
must be in a habitable condition at the point of release of mortgage funds. If the property is capable of
economic repair but is not currently habitable a total retention should be imposed. For properties in
poor repair the Bank expects an appropriate retention to be recommended with the valuation in present
condition fully reflecting the impact on marketability due to the lack of amenities and/or disrepair. A
total retention should be recommended for such matters as dry rot, ongoing movement etc, until
specialist reports are received.
Incomplete projects such as barn conversions or self builds should not be declined but accepted subject
to a total retention until all works are complete and the property satisfies the key requirements.
Where the property is already in mortgage to the Bank and repairs are proposed/underway the property
should not be declined but an appropriate retention should be recommended – including a total
retention when deemed necessary.
Unacceptable property types
In addition to the unacceptable construction types listed above there are various other
scenarios/property categories which are not acceptable to the Bank for mortgage purposes:
• Live/work units
• Sheltered accommodation and retirement properties with age restrictions
• Properties which are not fully self-contained eg services on shared meters
• Properties being purchased under a shared equity scheme (excluding Help to Buy)
• Properties where there is planning consent to demolish and rebuild (regardless of the applicants’
intentions)
• Properties where there is planning consent for additional dwellings to be created within the
curtilage (either new build or conversion of existing outbuildings)
• Properties with Agricultural Restrictions
• Properties with onerous restrictions on the type of occupancy (eg where occupation is restricted
to part of the year only or there are restrictions on resale)
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• Properties with commercial use occupying more than 60% of the entire property(including
outbuildings) and/or where the property cannot be marketed readily for owner occupation due
to the nature of the use or adaptation of the premises
• Bed and Breakfast premises
• Farms or registered small holdings
• Premises where there is a caravan site within the boundaries
• House with cattery, kennels or livery/equestrian business
• Properties with more than one holiday cottage within the boundaries
• Office use in the main property or outbuildings where the staff employed do not ‘live in’
• Garage/yard used for commercial repair/renovations
• Freehold flats unless there are positive enforceable covenants for maintenance and repair
• Flats immediately above commercial premises where the use is likely to cause a nuisance
The following circumstances are also unacceptable to the Bank and the property should be declined:
• If a property investment club is involved in the transaction
• It is a hidden BTL/vacant property (on remortgage cases for owner occupation)
• The applicant is not in occupation (on remortgage cases for owner occupation)
• The applicant is in occupation and it is a BTL remortgage case
• BTL properties where major works are required to make the property lettable
• There is a restriction on the sale/resale price
• Onerous overage/clawback clauses
• Properties where the demand is limited to cash buyers or investors only (but see page 16)
• Properties with commonhold titles
• Properties with more than 10 acres of land or where the titles have been split to reduce the land
to less than 10 acres but the balance of land will remain in the ownership of the applicant or
close family member
• Unexpired lease term of less than 55 years
Marketability remains the overriding factor in recommending a property as suitable for Santander.
Simply because the property does not fall into one of the categories listed above does not make it
acceptable to the Bank. To be suitable the key requirements listed on page 5 above must be satisfied or
capable of being satisfied.
New Build
New build and new conversions must be finished before completion of the mortgage. An appropriate
building warranty or professional consultant’s certificate must be available.
A property is defined as new build if it has been built or converted within the last twelve months, not
occupied since build or conversion, is being sold by the builder or developer, or has not previously been
used for residential purposes.
When valuing new build properties, valuers should:
1. Value the property by reference to comparable sales of new and second hand properties in
accordance with the Red Book.
2. If the property can be valued within 5% of the sale price, then the valuation should be at the sale
price.
Only if there is strong evidence that the valuation figure should not be increased to the purchase price,
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will down valuations of less than 5% be accepted. This applies to new build purchases only.
Santander will only accept a newly built or newly converted property if it is provided with an approved
new build warranty, or it is built under the supervision of a suitably qualified professional (with
professional indemnity insurance).
A warranty/professional consultant’s certificate (PCC) is not required where a dwelling house has been
converted into flats/maisonettes (subject to the creation of a maximum of 4 units). Where the conversion
is from another type of property, a warranty/PCC will be required.
Acceptable Building Warranties
• NHBC- Buildmark
• Premier Guarantee (New Homes, Self Build and Completed Housing)
• BLP (Building Life Plans) residential housing warranty insurance (BLP Secure and Secure Plus)
• BOPAS (Build offsite Property Assurance Scheme)
• LABC Warranty (New Homes, Self Build, Completed Housing)
• Build Zone 10 year warranty (New Home, Self Build, Completed Housing)
• Checkmate New Home Warranty
• CRL Structural Defect Insurance
• Build Assure 10 Warranty
• Global Home Warranties 10 year Structural Defect Insurance
• Q Assure Build ( Q Policy for Residential and Bespoke Properties)
(This list is updated from time to time – any changes will be posted in the CML Lenders Handbook)
Professional Supervision – acceptable qualifications
Santander will only accept properties which have been supervised by professionals who hold one or
more of the following qualifications:-
• The Royal Institution of Chartered Surveyors (FRICS, MRICS)
• The Institute of Structural Engineers (FIStructE, MIStructE)
• The Chartered Institute of Building (FCIOB, MCIOB)
• The Association of Building Engineers (FB Eng, MB Eng)
• The Chartered Institute of Architectural Technologists (CIAT)
• The Institute of Civil Engineers (FICE, MICE)
• Architect Registered with the Architects Registration Board (ARB). An architect must
be registered with the Architects Registration Board even if also a member of another
institution e.g. the Royal Institute of British Architects (ARIBA)
Where the consultant has not supervised the entire build process, but merely carried out an inspection of
the property after completion, this is not acceptable and the property should be declined. The suitably
qualified person must have professional indemnity insurance cover appropriate for the build scheme
concerned.
New properties should only be recommended for mortgage if there is demand for the property in the
second hand market from owner occupiers (see exceptions for BTL cases). If the demand for the property
exists only because the developer is able to offer incentives, deposits etc, which are lost on purchase, the
property should not be recommended for mortgage.
Only property awaiting first occupation should be valued on the basis of ‘new build’ property. If a ‘new
build’ property has been occupied, it must be valued on a second hand basis.
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Outstanding construction work should not be classified as repairs. Retentions should only be
recommended where defects are identified in work already completed except in the case of incomplete
self build properties.
However, where the valuer inspects an incomplete self build property/partially complete converted
property for remortgage, then the valuer must specify in Section 11 that the property is to be completed
and require an appropriate warranty/certificate to be provided. A total retention should be imposed and
only a ‘when finished’ valuation provided. A present value must not be provided.
CML Forms and Incentives - For new build properties cash incentives, or their equivalent (eg vouchers) are
only acceptable if they are provided by the builder or developer and do not exceed 5% of the purchase
price. Reasonable legal fees and/or stamp duty paid by Builders/Developers are not included when
calculating the 5%. The property should be declined if the valuer is made aware that the incentives offered
are unacceptable.
Valuers are recommended to obtain a CML Disclosure of Incentives Form for all new build and new
conversion properties which are being occupied for the first time. Known incentives should be reported in
the VMP. However, the property must be valued on the basis of the comparable evidence and a straight
arithmetical deduction of any incentives from the asking price to achieve the valuation figure is not
acceptable.
If the CML form is not available the valuer is expected to provide a valuation in accordance with the Red
Book. Santander will rely on the conveyancer to confirm the details of the CML form and refer back to the
valuer if there are any apparent discrepancies.
The mandatory phrases must be used for all new build cases – see Appendix 2
If the valuer is aware of incentives being offered that do not appear on the CML form this should be
reported by emailing intel@lgsurvey.co.uk
Where a property has been let by a developer, but not previously sold, a copy of the completed CML form
should be obtained. The property should be valued on a second hand basis and an acceptable
warranty/PCC must be in place.
Help to Buy – Equity Loan - Santander participates in the Government’s Help to Buy initiative in England.
If a property is being purchased under any Government initiatives this will be confirmed on the CML form
in Section 3 - ‘Other Scheme’. Cash incentives or their equivalent in vouchers (including payment of
removal costs) are not acceptable to Santander on purchases within the Help to Buy Scheme. Valuers
should follow the guidance above for new build properties and use the appropriate mandatory phrases to
confirm the property complies with the scheme and lender requirements.
Flats
Freehold flats are not normally acceptable securities unless the freehold is shared with other owner
occupiers of the block, there are enforceable positive covenants in place for maintenance and repair, and
there is proven demand in the local market for this type of property. A single freehold flat may be
acceptable where the freehold is in respect of the whole building and the remaining flats are held on
long leases.
Modern coach houses/flats where the ground floor access is included are acceptable.
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High rise flats (defined as above 6 storeys) will normally be acceptable where there is lift access, subject
to the level of service charge and the Bank’s key requirements. Ex Local Authority flats are acceptable
subject to proven demand for owner occupation.
LPS flats and maisonettes are not acceptable and should be declined using the mandatory paragraphs.
PRC flats and maisonettes are also unacceptable.
Flats and maisonettes above commercial premises may be acceptable and should be treated on a case
by case basis. Factors such as location, access, the type of commercial use etc must all be taken into
account in determining suitability. Flats immediately above premises such as restaurants, take aways,
launderettes or any use which generates unacceptable noise levels or involves anti social opening hours
are unacceptable as are uses such as workshops and trades involving the use of dangerous chemicals.
Retirement flats with occupancy restrictions are not acceptable.
Buy to Let
To be acceptable for a Buy to Let mortgage there must be demand for the property for owner
occupation. However, the property may be acceptable where demand is limited to the investor market if
it is considered sustainable based upon the valuer’s knowledge of the location and the local economy eg
commuter belt, university town etc.
Properties must meet the following criteria to be acceptable:
• The property must have a minimum value of £75,000
• The property must be capable of being let in normal market conditions within 3 months
• The property must not be let to or occupied by a previous owner
• The lease term must be for 12 months or less
• There must be a single tenancy agreement (AST or equivalent)
• Demand must not be limited to cash purchasers
• Properties must not be purchased under affordable housing schemes (eg shared ownership
scheme or Help to Buy)
Properties which do not meet the above requirements must be declined.
The RICS definition of Market Rent should be used as the basis for calculating the rental. The valuer
should assume a term of one year and the rent should be stated as an annual amount, based on
continuous occupation. Where it is known that rental demand for the property is seasonal the estimated
rental should reflect periods of fluctuating rental income in any one year but there is no need to make
any allowances for void periods. The rental figure provided should reflect the property’s current
condition unless repairs are necessary and a retention has been recommended. In such cases the market
rent should be provided on the assumption that the repairs have been completed.
It is acceptable to provide a rental figure based on a letting to unrelated persons (eg students) provided
the property is, or will be, let on a single Assured Shorthold Tenancy (or equivalent). If the property is let,
or likely to be let to 4 or more individuals the rental must be calculated on a maximum of 3 individuals
only and comment provided in section 14b.
No rental figure should be provided if the property is being declined.
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The valuer should assume the property will let within a period of three months from the date of
commencement of the mortgage (ie not the date of inspection). Where the valuer believes this is not
achievable an explanation should be provided in section 14b and the property declined.
The capital value should be provided on the basis of vacant possession irrespective of whether the
property is currently let or not. It should be assumed that the property will sell within a period of six
months in normal market conditions unless, in the valuer’s judgement there are overriding factors which
make this unlikely. In such cases an explanation should be provided in section 14b and the property
declined.
Where a property requires substantial repair or alterations which cannot be completed within three
months then it will not be acceptable and should be declined. Work that can be completed within 3
months and is required to make the property lettable must be reported as an essential repair with a
retention amount of not less than £2,000 to ensure that the works are carried out as a condition of
mortgage. As a guide, repairing or renewing electrics, replacing a boiler or installing basic amenities are
all works which can be completed and allow a tenancy to commence within 3 months.
Major structural repairs or works which require planning or building regulation consent would not be
consistent with a tenancy commencing within 3 months and such properties should therefore be
declined.
Houses in multiple occupation that are subject to mandatory licensing are not acceptable security and
should be declined. Such properties are typically three or more storeys high and occupied by five or
more persons forming more than one household. Careful consideration should be given to the nature of
other properties in the locality and the property should not be declined simply because it could in theory
become an HMO.
Properties subject to local authority selective licensing may be considered on their individual merits.
Valuers should be aware of the different regulations applicable across Scotland, Wales, Northern Ireland
and England as well as individual local authority requirements.
The definition of a HMO in Scotland can apply to all properties with 3 or more bedrooms. However, the
property should only be declined where it fits the profile outlined above or where the majority of the
properties in the area are likely to be classified as HMO’s and demand for owner occupation is limited.
The mandatory paragraph must be used for all Scottish BTL properties with 3 or more bedrooms.
Annexes
Santander will consider lending on property with annexe accommodation if it is appropriate to the type
of property and its locality. In determining whether the annexe is acceptable or not the valuer should
have regard to the relative size of the two areas of accommodation and the current configuration but the
prime consideration should be whether or not the property as a whole is readily marketable/saleable as
a single residential unit for owner occupation. In general, if this is answered yes and providing there are
no other factors that take the property outside lending criteria, the property can be recommended as
acceptable to Santander.
A single holiday cottage in the grounds may be acceptable provided the income generated is not the
source of funding for the mortgage and all other criteria are met.
The definition of annexe is ‘a subsidiary building or an addition to a building, or something used in
addition to’.
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Legal Matters
Tenure
Freehold and long leasehold tenure are acceptable. In Scotland absolute title (ex Feudal) is acceptable.
Commonhold is unacceptable. Possessory and qualified titles may be acceptable subject to a suitable
indemnity policy and valuer comments on marketability/saleability.
Lease Term
Where the remaining lease term is less than 55 years the property must be declined.
Santander require the market value at the time of inspection to be based on the unexpired lease term as
shown on the land registry entry for the property.
Where a property is identified as leasehold on the instruction, or where it subsequently becomes known
that the tenure is leasehold, the valuer is expected to request details of the lease term from the panel
manager. The process to be followed is set out in the panel manager’s guidance note entitled Santander
Title Plans and Unexpired Lease Process. Adherence to these procedures is mandatory and is subject to
audit.
Where the valuer is advised that the remaining lease term is 65 years or less but more than 55 years the
case must be referred back to the panel manager for further review by emailing
santander@lgsurvey.co.uk before providing the valuation.
In the rare instances where the title register is not available and the valuer is unable to verify the
unexpired lease term, for valuation purposes the unexpired term should be assumed in accordance with
the RICS Red Book – currently 85 years. Valuers must not make an assumption of 85 years where the
actual lease term can be determined.
The valuation of leasehold tenure is affected by the outstanding term and the market demand for the
type of property in its locality. When recommending a property where the lease has less than 85 years
remaining as suitable for mortgage purposes the valuer is confirming the property meet’s the Bank’s key
requirements at the valuation figure provided. The locality may well be the determining factor for many
of these cases.
Where the instruction indicates the lease is being extended simultaneously with or prior to
commencement of the mortgage term, a total retention should be recommended. A valuation on
completion of repairs, based on a minimum term of 99 years (or the new term if advised) should be
provided.
The mandatory phrases must be used for all leasehold cases – see Appendix 2
Title Plans
It is crucial that the title(s) registered by the conveyancer relates to the property valued for security
purposes. The Bank requires the valuer to request and check the title plans in specific circumstances:
• Where the security has or appears to have 5 acres of land or more
• Where the security is a combination of two or more properties now converted into one
• Where there is a self contained annexe or outbuildings
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• Where access to the property appears to be across a neighbouring property
• Where the applicant or any connected party owns adjoining land (contiguous – shared
boundary) which is not included in the valuation
• Where the valuer is aware that the property being valued is on more than one title deed
• Where the security has been newly created by separating land from an adjacent
property/title (eg barn conversion being sold off from a farm or a house being built on land
previously part of an adjacent garden)
This list should not be considered exhaustive and Santander rely on the valuer to request sight of the
title plans in any circumstances where they believe it to be necessary to validate the security being
valued.
The process to be followed in requesting and reporting on title plans is set out in the panel manager’s
guidance note entitled Santander Title Plans and Unexpired Lease Process. Adherence to these
procedures is mandatory and is subject to audit.
Where the title plan has been seen prior to report sign off there is no requirement to answer question 8b
Yes unless further information is requested in section 14b.
It is the responsibility of the valuer to ensure the Title Plan is correct for the subject property. Only
when the entire property inspected and valued is covered by the plans submitted should the valuer
confirm that the title documents correspond to the valuation report.
The mandatory phrases must be used where Title Plans have been requested – see Appendix 2.
Purchase Schemes
Right to Buy – properties being purchased under the Right to Buy scheme should be valued on the basis
of open market value ignoring any discount provisions and pre-emption clauses. The mandatory clause
must be included in section 14b of the report. Where the tenant/purchaser is in occupation the question
‘Was the property tenanted at the time of inspection?’ should be answered Yes.
Shared Equity Housing Schemes – Santander will not lend where the property is being purchased under
a Shared Equity Scheme such as those where the developer retains a share of the property. (Excluding
Help to Buy in England only)
Shared Ownership – Shared Ownership schemes where the retained share is owned by a housing
association will be considered on their merits. The valuation should be provided on the basis of 100%
share with full vacant possession, disregarding any premium associated with the shared tenure or shared
ownership arrangements. Details of the percentage split should be provided in section 14b.
Help to Buy – Santander participates in the Government’s Help to Buy Equity Loan scheme in England only.
See the New Build section above for Help to Buy procedures.
Back to Back Sales
Where the valuer is advised or becomes aware that the property is the subject of a back to back
transaction (within the last 6 months) this should be reported in section 14b and no Present Condition
Value provided– the Bank requires the legal advisors to make further enquiries. Consideration should be
given to completing a SAR – particularly on new build properties. A value on completion should be
provided.
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Occupancy Restrictions
Santander will consider properties with local occupancy restrictions (eg. s.106 agreements) so long as the
restriction is not onerous and does not significantly affect the property’s marketability. For examples of
unacceptable occupancy restrictions refer to the Unacceptable Property Types listed above.
Land Issues
Provided there is no commercial use Santander will accept properties with up to 10 acres of land unless
there are restrictions/planning requirements which are not in line with residential occupation. Where
the land is in excess of 10 acres but in keeping with the size and type of property valuers are expected to
take a common sense approach in line with the Key Requirements and the Guidance provided
throughout these notes. Properties with land considerably in excess of 10 acres can be referred to the
Bank for consideration where all other criteria are met.
It is not acceptable for titles to be split simply in order to meet the 10 acre requirement
Where contiguous land is owned either by the applicant or a related party the valuer should consider
whether:
• It is practical for the property being valued to be separated from the remainder eg access
arrangements, quiet enjoyment
• The marketability of the property being valued is adversely affected by the use of the remaining
land
If the property could not readily be sold as a separate entity on the open market it should be declined.
This guidance also applies where valuers are asked to provide a valuation for release of land. A valuation
figure should be provided for the property after the land has been released but only if the remaining
security is capable of being readily sold as a separate entity.
Commercial Use
Properties with an element of commercial use will be acceptable provided
• There is no planning restriction preventing the property being used for residential purposes
• The property retains the character of a residential dwelling and can be marketed/will appeal as
such without significant alteration.
• Less than 60% of the property (including any outbuildings) is used for commercial purposes
• The use doesn’t fall into one of the categories listed above on pages 12/13.
However, if any security of tenure is conferred by the commercial (or agricultural) use the property will
be unacceptable and should be declined. This does not apply to any informal arrangements where no
security of tenure can be claimed.
Where a commercial use exists but it is intended to convert the property back to a single residential
dwelling the property will be acceptable on completion of the works provided it satisfies the criteria
above and the key requirements. A total retention must be imposed until all works are complete.
Where a commercial use exists any additional value attributable to such use must be disregarded and
the property valued on the basis of residential use only.
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Environmental Issues
In general, environmental factors are subject to valuer judgement in terms of their impact on value and
marketability. Valuers should be aware of and follow the latest guidance from the RICS and/or the
Government in all instances. Comments should be made in section 14b as appropriate including
confirmation that the valuation figure has taken account of the relevant issues.
Mundic
Properties affected by Mundic can be found mainly in Cornwall and parts of West Devon, usually
constructed between 1900 and 1960. (Post Codes affected include: All TR, PL10-20, 22-35, EX 20, 22, 23)
Where the presence of mundic is suspected the valuer must request a concrete screening test to be
prepared in accordance with the latest RICS Guidance. Properties classed A or A/B are acceptable unless
the valuer has any other concerns. Properties classed as B or C are unacceptable and should be declined.
Where the test has been prepared for the vendor or other third party it must be assigned to and
responsibility extended in favour of the applicant/customer and Santander before completion in order
for it to be acceptable. Tests generally remain valid for a period of 6 years.
Suspect concrete purpose built and converted flats are not acceptable unless the entire block has been
tested.
When reporting on mundic cases the Mandatory phrases must be used in sections 10 and 11 of the
Mortgage Valuation (sections 3 and 4 for a revaluation) and a total retention imposed until a satisfactory
concrete screening test report has been provided. A Market Value on Completion should be given on the
assumption that a satisfactory report will be forthcoming.
Solar Panels
Where solar panels or photovoltaic cells have been installed on the roof of the subject property,
Santander rely on their legal advisers to confirm that the provider is on the Lender’s approved list of
installers and that any lease arrangements comply with the Bank’s requirements. The valuer should state
any assumptions made with regard to Planning/Building Regulation consents and that the roof is capable
of bearing the increased load.
Coal Mining
There is no standard requirement to request coal mining reports in areas of current or past mining
activity as this is the responsibility of the Lender’s legal advisers. Valuers should use their judgement and
only request reports where they have concerns based on local knowledge. Actual or suspected structural
damage should be reported in the same way as any other structural defect.
Other forms of mining or extraction such as Potash Mining and Fracking should be considered and
reported on in the same way.
Japanese Knotweed
Valuers should refer to the RICS Guidance when reporting the presence of Japanese Knotweed and
follow the classification guide for categories 1-4. No action is required for categories 1 and 2 and no
comment is necessary in section 11. Any concerns can be reported in section 10 .
Where an outbreak is identified as falling within category 3 or 4 the table below should be followed
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1.
Current
Situation
2.
Descriptors
*
3.
RICS
Category
*
4.
Reporting for Santander
Scenario A
Japanese
Knotweed is
currently
undergoing a
treatment
plan
Japanese Knotweed is
within 7 metres of a
habitable space,
conservatory and/or
garage, either within the
boundaries of this
property or in a
neighbouring property or
space
and/or
Japanese Knotweed is
causing serious damage to
outbuildings, associated
structures, drains, paths,
boundary walls and
fences and so on.
4
The following phrase should be included in
Section 11 of the VMP (or other report).
A total retention must be imposed.
Japanese Knotweed was noted growing close to
the property. It is understood a treatment plan is
in place. This plant grows vigorously, is extremely
difficult to eradicate and can cause damage to
drains, patios, drives etc. The valuation assumes
that treatment is being undertaken by a
competent specialist, licensed to handle
controlled waste and with a 5 year insurance
backed guarantee. Where the treatment is
programmed to continue for several years the full
cost of the treatment must be held in escrow or a
Bondpay scheme.
Although Japanese
Knotweed is present
within the boundaries of
the property, it is more
than 7 metres from a
habitable space,
conservatory and/or
garage. If there is damage
to outbuildings,
associated structures,
paths and boundary walls
and fences, it is minor.
3
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Scenario B
Japanese
Knotweed is
not currently
being treated
Japanese Knotweed is
within 7 metres of a
habitable space,
conservatory and/or
garage, either within the
boundaries of this
property or in a
neighbouring property or
space
and/or
Japanese Knotweed is
causing serious damage to
outbuildings, associated
structures, drains, paths,
boundary walls and
fences and so on.
4
The following phrase should be included in
Section 11 of the VMP (or other report).
Japanese Knotweed was noted growing close to
the property. This plant grows vigorously, is
extremely difficult to eradicate and can cause
damage to drains, patios, drives etc. Further
investigation is required by a competent
specialist, licensed to handle controlled waste and
able to provide a 5 year insurance backed
guarantee on completion of any work. Where the
treatment requires a programme of eradication
over several years the full cost of the treatment
must be held in escrow or a Bondpay scheme to
release to the specialist as required.
A total retention must be imposed.
Although Japanese
Knotweed is present
within the boundaries of
the property, it is more
than 7 metres from a
habitable space,
conservatory and/or
garage. If there is damage
to outbuildings,
associated structures,
paths and boundary walls
and fences, it is minor.
3
* [RICS information paper IP27/2012] “Japanese Knotweed and Residential Property]
If a treatment programme is required the total retention can be reduced once actual costings are
provided to the valuer together with confirmation that a transferable 5 year bonded warranty will be put
in place. The retention can only be released on confirmation that the monies have been paid into the
Bondpay/escrow account and commencement of the treatment programme has been evidenced.
Use of the paragraphs above is mandatory.
In areas where Japanese Knotweed is known to be prevalent but there is no evidence at the time of
inspection valuers can report any concerns in section 10.
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Contaminated Land
Valuers should be aware of current legislation in respect of contaminated land and using local knowledge
report accordingly, reflecting any concerns in the valuation figure.
Asbestos
Asbestos materials were widely used in the construction industry for many years before the health risks
were fully understood. Consequently many properties will contain asbestos products in one form or
another. It is only when asbestos is damaged or disturbed and fibres are released into the air that any
risk occurs.
Valuers should be aware of the latest RICS Guidance. The reporting of asbestos should reflect the degree
of severity of the problem and the valuation take into consideration that the safe removal and disposal
of asbestos products can be costly.
Flooding
Flooding has many causes including tidal, fluvial and surface water drainage. Valuers should be aware of
the latest information paper published by the RICS, the insurance position (Flood Re) and refer to the
maps provided on the Environment Agency website. Valuers should advise that the valuation figure is
based on the assumption that insurance is available on usual terms in areas of known flooding.
Radon
Valuers should be aware of the Radon Atlas produced by the Health Protection Agency (HPA) (now Public
Health England) and report accordingly.
HS2
Valuers are expected to have good local knowledge in areas affected by the HS2 route and not blight
properties unnecessarily. Valuers should refer to the government website www.hs2.org.uk for details. A
comment should be made in section 14a if the valuer is aware that the property is situated within an
influencing zone and this has been reflected in the valuation figure. Further information on post codes
affected can be obtained by emailing HS2enquiries@hs2.org.uk
Private Water Supply and Drainage
Santander will lend on properties with a private water supply provided there is a right to receive an
uninterrupted supply and that it has been tested and complies with the latest statutory standards for
drinking water.
There is no requirement to inspect the title plans where there is private drainage but the valuer must
request the conveyancer to confirm that there are adequate rights of useage and access for maintenance
and repair using the mandatory clause in section 14b of the report.
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Appendices
Appendix 1 Construction Types
The following lists of construction types should not be considered exhaustive.
Timber Frame
Timber frame/system properties should be considered on the construction/marketability merits of the
individual unit.
Aberdeen Corp. Heath Scottwood
Blackburn Lanark CC Solid Clear
Carmule London CC Spooners
Caspon McAlpine Swedish Timber
Colt Newcastle Corp Thorwall
Cowieson Perren Weir
Guildway Scottish Special HA
LPS
LPS houses and bungalows should be considered on their individual merits subject to a Structural
Engineer’s report.
Anglia Gerrard ‘Incon’ PAC
Barvis GLE Reema Conclad + Contrad
Balency Gregory Ridgeway
Basingstoke Dev Group Harley Haddow SB2
Beale & Son HDC Skarne (Crudens)
Belfry (Belcon) HSSB (Lindsay Parkinson) Southend 3M
Bison (1) Incon Spacemaker (Shepherd)
BRS Battery Cast Laing/BRS (1) Stubbing Ind. Low Rise
Bryant (1) Larsen & Neilson (TWA) Sundh
Camus Lecaplan Tracoba
Carlton Metracon Trentrox
Cebus MFC (Moss & Son) TWA (Taylor Woodrow Anglian)
Dare Mitchell Camus Wates (3)
Dudley BC Modus Weedon
Edlo Natcon XW (Selleck Nicholls)
Fram NCB (2) YDG mk 1
Fram/BRS Oakridge 12M Jesperson
Notes – 1 Only LPS dwellings built by these builders are affected
2 Only LPS dwellings owned or formerly owned by NCB are affected
3 Not to be confused with designated PRC type.
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PRC
The following PRC types are designated defective under the Housing Acts
Airey Myton Stour
Boot Beaucrete Newland Tarran
Boot Pier & Panel Orlit (types 1 & 2) Ulster Cottage
Boswell Parkinson-Frame Underdown
Cornish Unit (types 1 & 2) Reema Hollow Panel Unity (Butterly)
Dorran Schindler (Hawkesley SGS) Waller
Dyke Smith Wates
Gregory Stent Wessex
Morrell K Stonecrete Winget
Woolaway (Houses)
Scotland – Blackburn – Orlit Tarran
Boot Tarranclyde
Dorran Tee Beam
Lindsay (Ayrshire CC) Unitroy
Myton-Clyde Whitson- Fairhurst
Orlit (types 1 & 2) Winget
Steel Frame
The following systems are known to be steel framed and should be considered on their individual merits.
Arcal Dorlonco Norwest
Arrowhead Falkner Nutall Open System Building
Athol Fincast Presweld
Birmingham Corp Gateshead Pyrcol
BISF Gee Walker & Slater Riley
Blackburn Hawthorn Leslie Rubery Owen
Braithwaite Hilcon SFI (Inclutex)
British Housing Hitchen Spaceway
Cornes Homeville Steane
Coventry Corp Howard Stewart & Lloyd
Craig Kehouse Unibuilt Telford
Crane Leeds Corp TRN
Cryden Cussins Livett Cartwright Trusteel
Dennis Lowton Cubitt Universal Type 1
Dennis Pulton Modular Unitroy
Dennis Wild New Georgian Weir
Discus Nissen Petren 5M
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Appendix 2 Mandatory Phrases
The following phrases must be used, without alteration, for the circumstances described.
Movement
The following phrases must be used where a Structural Engineer’s report is required
Section 10
Para 1 – Evidence of movement was noted in the form of (brief description). This appears
significant and likely to be progressive.
Section 11
Para 2 - Obtain a report from a qualified structural engineer or chartered building surveyor
advising on the structural stability of the property as a whole. Any recommendations
must be carried out under professional supervision.
Trees
The following phrases must be used where there is evidence of movement associated with trees
Section 10
Para 3 – There is a/are tree(s) growing approximately (text) metres from the property. This
tree/These trees constitute a risk to the structural integrity of the property.
Specialist advice from an arboriculturist or specialist engineer is recommended.
Section 11
Para 4 – Obtain a specialist report and carry out any recommendations in respect of the
tree(s) noted in section 10 above.
Mundic
Where the presence of Mundic is suspected the following phrases must be used
Section 10
Para 5 – Due to the property’s construction, age and location the concrete elements of the
structure may contain deleterious aggregate commonly known as Mundic. A
concrete screening test is required to determine the property’s suitability as a
mortgage security. The valuation figure in section 15 assumes a classification A or
A/B.
Section 11
Para 6 – Obtain a concrete screening test report for the presence of Mundic, prepared in
accordance with RICS guidelines.
PRC Properties designated defective
For repaired PRC houses the following phrases must be used
Section 10
Para 7 - The property is of a type designated defective under the Housing Act 1985/Housing
(Scotland) Act 1987.
Section 11
Para 8 – Evidence must be provided that the property has been repaired under a recognised repair
scheme licensed by PRC Homes Ltd or to NTHAS Category 5.
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For unrepaired PRC houses the following phrase must be used
Section 14b
Para 9 – The property is of a type designated defective under the Housing Act
1985/Housing (Scotland) Act 1987. This type of property is not considered
acceptable for mortgage purposes.
For all PRC flats/maisonettes whether repaired or not the following phrase must be used
Section 14b
Para 10 - The property is a flat/maisonette of a type designated defective under the
Housing Act 1985/Housing (Scotland) Act 1987. This type of property is not
considered acceptable for mortgage purposes.
Non designated PRC properties
For non designated PRC houses and bungalows the following phrase must be used
Section 11
Para 11 – The property is of PRC construction but has not been designated defective under
the Housing Acts. A Structural Engineer’s report is required to confirm that the
property is in satisfactory structural condition.
For non designated flats/maisonettes the following phrase must be used
Section 11
Para 12 – The property is a flat/maisonette of PRC construction. This type of property is not
considered acceptable for mortgage purposes.
Large Panel Systems
For LPS houses the following phrases must be used
Section 10
Para 13 – The property is constructed with concrete panels and is classified as a Large Panel
System. A Structural Engineer’s report is required confirming that the property has
been inspected and is considered to be in a satisfactory structural condition .
Section 11
Para 14 – Obtain a report from a structural engineer or chartered building surveyor advising
on the structural stability of the property as a whole. Any recommendations must
be carried out under professional supervision.
For LPS flats/maisonettes the following phrase must be used
Section 14b
Para 15 - The flat/maisonette is in a block constructed with concrete panels and is classified
as a Large Panel System. Flats of this form of construction are not considered
acceptable for mortgage purposes.
New Build
For all new build properties the following phrases must be used, as appropriate
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Section 14b
Para 16– Sales incentives of (text) have been disclosed on this sale and this should be
confirmed by the lender’s legal adviser in accordance with the CML Handbook.
The effect of these on the selling price has been reflected in the valuation.
or
Para 17 No sales incentives have been disclosed on this sale. This should be confirmed by
the lender’s legal adviser in accordance with the CML Handbook.
or
Para 18 No information regarding sales incentives was available at the time of inspection.
The valuation assumes no sales incentives are offered and this should be
confirmed by the lender’s legal adviser in accordance with the CML Handbook.
Para 19 The property is being constructed/ is newly built/has been converted by (insert
Developer) and the lender’s legal adviser should confirm that an acceptable
warranty/Professional Consultant’s Certificate is available.
Para 20 It was not possible to inspect the property as no access was available on site. The
valuation is therefore based on information provided by the developer. The
lender’s legal adviser should refer any discrepancies to the valuer.
Private Drainage
Where the valuer has reason to believe the property is connected to private drainage such as a septic
tank or cess pit the following phrase must be used
Section 14b
Para 21 – The property is believed to be connected to a private drainage system. The
valuation assumes that the appropriate Certification is in place and that rights of
access for use, maintenance etc are enforceable where the drainage is not
located within the property’s boundaries. The system has not been inspected.
Japanese Knotweed
Where Japanese Knotweed Category 3 or 4 is found and a treatment plan is in place the following phrase
should be used
Section 11
Para 22 – Japanese Knotweed was noted growing close to the property. It is understood a
treatment plan is in place. This plant grows vigorously, is extremely difficult to
eradicate and can cause damage to drains, patios, drives etc. The valuation
assumes that treatment is being undertaken by a competent specialist, licensed to
handle controlled waste and with a 5 year insurance backed guarantee. Where the
treatment is programmed to continue for several years the full cost of the
treatment must be held in escrow or a Bondpay scheme.
Where Japanese Knotweed Category 3 or 4 is found but no treatment plan is in place the following
phrase should be used
Section 11
Para 23 - Japanese Knotweed was noted growing close to the property. This plant grows
vigorously, is extremely difficult to eradicate and can cause damage to drains,
patios, drives etc. Further investigation is required by a competent specialist,
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licensed to handle controlled waste and able to provide a 5 year insurance backed
guarantee on completion of any work. Where the treatment requires a programme
of eradication over several years the full cost of the treatment must be held in
escrow or a Bondpay scheme for release to the specialist as required.
Where no evidence of Japanese Knotweed is found but it is known that a treatment plan has been
carried out previously the following phrase should be used
Section 14b
Para 24 – It is understood that Japanese Knotweed has been eradicated from the property.
The lender’s legal adviser should confirm whether an outstanding warranty exists
which will be required to be transferred into the name(s) of the new owner(s).
Right to Buy
Where the applicant is purchasing under the RTB provisions the following phrase should be used
Section14b
Para 25 – It is understood that the applicant is purchasing the property from the Local
Authority/Housing Association as a sitting tenant at a concessionary price. The
valuation ignores any discount applicable.
Leasehold
For properties where the remaining lease term is known the following phrase should be used
Section 14b
Para 26 – The market value at the time of inspection is based on a remaining lease term of
(figures). If the actual term remaining is less than this, it may be considered unacceptably
short as security for the lender.
For properties where the remaining lease term has not been confirmed the following phrase should be
used
Section 14b
Para 27 – The valuation assumes a remaining lease term of (xx-not less than 85 years). If
the actual term remaining is less than this, it may be considered unacceptably short as
security for the lender.
Where it is known that the lease term is to be extended simultaneously with or prior to commencement
of the mortgage term the following phrase should be used
Section 14b
Para 28 – The valuation on completion of repairs assumes the lease will be extended at the point of
completion of the mortgage with a remaining lease term of not less than 99 years.
Title Plans
Where the title plans have been provided by the lender’s panel manager the following phrases
should be used as appropriate
Section 14b
Para 29 – The title plan for the property has been provided by the bank’s panel manager.
The plan, reference (insert title reference), appears to represent the property
inspected for this report.
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or
Para 30 - The title plan for the property has been provided by the bank’s panel manager.
The plan, reference (insert title reference), does not appear to represent the
property inspected for this report for the following reason. (Insert text). The
conveyancer should investigate the situation and the findings should be referred
back to the valuer
Purchase Price/Estimated Value differing from Valuation
Where the purchase price or estimated value differs from the valuation (above or below) the following
phrase must be used
Section 14b
Para 31 - The purchase price/estimated value provided on the instruction is not
supported by evidence of sales of comparable properties.
Amended Reports
Where any report is amended for whatever reason the following phrase must be used
Section 14b
Para 32 – This report has been amended following receipt of (insert text).
Scottish HMO’s
Where the property has 3 bedrooms or more and is a Scottish BTL case the following phrase must be
used if it is being recommended as suitable for mortgage security
Section 14b
Para 33 - The property falls within the definition of a HMO under the Housing (Scotland) Act
2006. However, it is considered suitable security for mortgage purposes as it meets
the Lender’s criteria of being readily saleable for owner occupation. The valuation
assumes the property meets the requirements of the Act and that the applicant
has/will have the necessary licence.
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Appendix 3 Standard Phrases
The following phrases are suggestions covering common issues on which Santander expect comment to
be made. They are not mandatory and should be amended where necessary to fit particular
circumstances. Valuers are free to use their own phrases but should remember at all times they are
providing a mortgage report to the lender and not a survey.
Section 10 – Condition
Para 40 - The general condition of the property appears consistent with its age and type of
construction. Ongoing maintenance and repairs will be required.
Para 41 - The property is in a basic condition with works of repair and maintenance required.
This has been reflected in the mortgage valuation.
Para 42 - The property is in a poor condition having regard to its age and type of construction. It
should be noted that the repairs listed in section 11 are not intended to be an
exhaustive list merely those considered necessary for mortgage purposes. It is likely
that additional expenditure will be required.
Para 43 - The property is being/has been constructed to a satisfactory specification.
Para 44 - It is possible that elements of the property may contain asbestos products. It is only
when asbestos is damaged or disturbed and fibres are released into the air that any
risk occurs. However, as repairs/removal can be costly you may wish to seek specialist
advice now. This risk has been reflected in the mortgage valuation.
Para 45 - Flat roofs have a limited life span and are prone to sudden failure. This has been
reflected in the mortgage valuation.
Para 46 - The evidence of structural movement may deter future purchasers. This has been
reflected in the mortgage valuation.
Section 11 – Repairs/Reports
Para 47 - Instruct a specialist contractor to inspect the whole property and report on internal
dampness and the condition of all timbers including the sub floor/roof void(s)/other.
All necessary works to be carried out and covered by an insurance backed guarantee.
This report is required regardless of any existing guarantees.
Para 48 - Instruct a specialist contractor to inspect the whole property and report on the
condition of all timbers including the sub floor/roof void(s)/other. All necessary works
to be carried out and covered by an insurance backed guarantee. This report is
required regardless of any existing guarantees.
Para 49 - Instruct a qualified electrician to inspect the electrical installation and carry out
recommended works in accordance with electrical and building regulations.
Para 50 - Instruct a ‘GAS SAFE’ approved contractor to inspect all gas pipework, flues and fixed
appliances and carry out any recommended works.
Para 51 - Instruct a roofing contractor to inspect the roof including chimney stacks, flashings,
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barge boards etc. and carry out any necessary repairs/renewal.
Para 52 - (Text) is thought to contain asbestos which is damaged/deteriating with the risk that
fibres will be released into the air causing a health hazard. Asbestos may also be found
in other elements and the whole property should therefore be inspected by a licensed
contractor and all recommended works carried out.
Para 53 - The property has a private water supply. A specialist report should be obtained to
confirm that it complies with statutory regulations for safe drinking water and also
comment on the reliability of the supply.
Section 14a – Marketability
Para 54 - The property’s non traditional construction may deter some purchasers and affect
marketability. This is reflected in the mortgage valuation.
Para 55 - The proximity of (text) may deter some purchasers and affect marketability. This is
reflected in the mortgage valuation.
Para 56 - Some lenders do not accept this type of construction. This will affect future value and
marketability and is reflected in the mortgage valuation.
Para 57 - Future demand is likely to be adversely affected by (text). This has been reflected in
the mortgage valuation.
Para 58 - The property’s non standard construction may lead to higher than average
maintenance/repair costs which may deter future purchasers. This has been reflected
in the mortgage valuation.
Para 59 - Future marketability may be affected by health uncertainties relating to the proximity
of high voltage supply equipment. This is reflected in the mortgage valuation. Further
information can be obtained from the Health Protection Agency.
Para 60 - It is understood the property is subject to occupancy restrictions comprising (text).
This may restrict marketability and has been reflected in the valuation. The lender’s
legal adviser should refer any discrepancies back to the valuer as the valuation figure
may need to be reviewed.
Para 61 - The short length of lease remaining will deter future purchasers and affect
marketability. This has been reflected in the ‘Market Value at the time of inspection’.
Para 62 - The property is situated in an area where flooding has been identified as a potential
risk. This may deter future purchasers. The valuation assumes insurance is obtainable
on usual terms. Any history of flooding should be referred back to the valuer as the
valuation figure may be need to be reviewed.
Section 14b – Other Important Factors
Para 64 - It is not possible to recommend the property as a suitable security for mortgage
purposes because (text)
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Para 65 - It is understood the property is being purchased under a shared ownership scheme
with the applicant purchasing a (text)% share. The valuation represents the 100%
interest assuming vacant possession and no onerous restrictions on resale.
Para 66 - The valuation provided is for the property as new. This figure may not be attainable on
resale.
Para 67 - The property has been altered/extended and the valuation assumes all necessary
statutory and local authority consents have been obtained.
Para 68- The lease has not been inspected and it is assumed it contains no onerous conditions.
The lender’s legal adviser should make enquiries as to any proposed expenditure
planned for the block as a whole which could affect the level of service charge.
Para 69 - The inspection was limited to the interior of the subject flat, adjacent common parts
and such elements of the exterior of the building as visible from ground level only.
Para 70 – It is assumed that all statutory requirements for letting have been met. Checks have not been
carried out as this is outside the scope of a mortgage valuation.
Para 71 – The property was tenanted at the time of inspection. The valuation assumes vacant possession
will be available on completion.
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Valuation for Mortgage Purposes
Form Completion Guide
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Introduction
Valuers must complete the Valuation for Mortgage Purposes in accordance with the Guidance Notes
above and the following guide. Failure to follow reporting requirements will adversely affect processing
procedures and can lead to suspension from the panel.
Reporting Style
Avoid the use of "I" or "We" in the report.
The content of the report should be as concise as possible avoiding long narrative descriptions in the free
text sections, and using mandatory phrases where applicable. Standard phrases can be amended to fit the
circumstances but are indicative of the style of reporting expected.
The use of technical terms, abbreviations and initials should be avoided.
Reports should be checked thoroughly for typing, spelling and technical errors before signing.
Assumptions and Third Party Information
If information provided in the report is based on an assumption, e.g. the length of the lease, the fact that
this is an assumption should be clearly indicated in the text of the report if it is not already explained in
the section wording.
Similarly, information gained from third parties should be explained in the report e.g. "It is understood
from the vendor that ....."
Do not rely on specialist reports, estimates or guarantees available at the time of the inspection. It is
appropriate to acknowledge the existence of such documents but valuers should be non-committal as to
their adequacy.
Disclaimers and Limitations
Santander does not accept the introduction of general disclaimers or exclusion clauses into its reports.
However, where the inspection of a property is specifically limited, eg a room may be locked, this should
be reported in Section 14b. Valuers must use their judgement to determine if an inspection should be
abandoned until further access is made available. Valuers should only report unusual limitations to
inspection. Contact with Third Parties
The contractual duty when completing a VMP is to Santander rather than the applicant/customer or to
any other third party. If an applicant/customer or other interested party, e.g. vendor or selling agent,
approaches the valuer about the report, the valuer should remain non-committal and refer the enquirer
to Santander.
The following notes apply to the form on a “section by section” basis.
It is important that all sections are completed with a single box checked for each option except in
section 8a where all options that apply should be checked.
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Surveyor's Reference
This provides space for the valuer to use their own office reference.
Instructing Branch/BDU
The name of the instructing branch, business development unit or mortgage processing location can be
found under ‘source’ on the Quest Client page. If this information is not provided, state, "Not known".
Application Reference
The reference should automatically map across from the instructions to the report. If not the reference
should be entered in the appropriate space – it will start with either AA, AF or ZO.
Processing Location/Mortgage Centre
This should be completed as Teesside in all cases.
Property Address
The address on the instruction will be as provided by the applicant at the branch or broker. Experience has
shown that this information cannot always be relied upon. Valuers must check the address during the
inspection and make sure it is correctly shown on the report, correcting any errors and advising any
amendments in Section 14b.
The postcode is important as it is used for insurance purposes, please ensure that this is correct. If a
postcode is not provided in the valuation instructions please find this out and provide on the report.
Applicant's Name
This information will be provided in the valuation instruction. Include the titles and initials of the mortgage
applicants if known, e.g. "Mr A and Mrs B Smith".
Please ensure that the applicant(s) name is correct on the valuation form and typed in upper and lower
case.
Date of Inspection
This is the date on which the property was inspected.
Purchase Price or Estimated Value (as stated in the instructions)
The figure entered in this field, must be the figure provided in the valuation instructions. If the valuer is
aware that purchase price given is incorrect, an explanation along with the correct figure should be given
in Section 14b. If the instructions do not provide a purchase price or estimated value and this information cannot be
ascertained from a third party, e.g. the vendor or the estate agent, state, "Not Known".
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Is this a transcription?
Before preparing a transcription report, valuers must ensure that the case meets Santander’s
requirements for permitting transcription reports – see page 8 above.
If the report is a transcription report, select “Yes” otherwise select “No”. Was the property tenanted at the time of inspection?
Please answer ‘Yes’ if property was tenanted at the time of inspection (this includes tenants who are also
applicants purchasing under the RTB scheme or from their landlord).
Does this mortgage valuation relate to the purchase of a property?
Answer ‘Yes’ or ‘No’ as appropriate. Valuer must establish whether the property is being purchased
(including RTB purchase) or remortgaged.
Section 1: Tenure
This information should be taken from the valuation instructions, unless the valuer has information to
the contrary.
Select the appropriate option – Freehold, Scottish (ex Feudal), Long Leasehold or Other.
Where the property is leasehold, valuers must state the actual term of the lease as stated on the title
deed extract in the field provided (unless unavailable) and use either paragraph 26 or 27 (mandatory) in
section 14b.
Valuers are not expected to find out details of service charges but if they know that charges are abnormally
high, they should make comment in section 14a if they are likely to affect marketability. In the absence of
information to the contrary, reasonable service charges should be assumed having regard to the age and
character of the security and in accordance with current RICS Guidance.
If “Other” is chosen, valuers should provide an explanation of their assumption and the source of their
information in section 14b as appropriate.
For shared ownership property, tick ‘Leasehold’ option and make appropriate comment in Section 14b.
Section 2a: Property Type The options are mutually exclusive; valuers should select the most appropriate. Where the property does not fit exactly into a category, valuers should use their judgement and select
the option that best fits the type of property concerned.
When “Other” is chosen, please provide an explanation in section 14b. For modern coach houses where
the property is freehold subject to the long leases of various garages/car ports, report as a freehold
house and provide further information clarifying the situation in Section 14b. Do not report them as
freehold flats as they will be declined. Section 2b: Property Style The options are mutually exclusive; for houses/bungalows, valuers should select the most appropriate.
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Where the property is a flat/maisonette, High-rise or Low- rise block should be selected. Flats must not be reported as being semi-detached, mid or end terrace. Where the property does not fit exactly into a category, valuers should use their judgement and select
the option that best fits the style of property concerned.
When “Other” is chosen, please provide an explanation in section 14b as appropriate.
Section 2c: Public Sector
Valuers should use their judgement based on the appearance of the property and their knowledge of the
history of the area to answer this question. Where this question is answered “Yes”, a brief explanation
should be provided in Section 14a or 14b as appropriate. Section 2d: Approximate Year of Construction
State the actual year of construction where known, otherwise an approximate year of construction should
be entered. The format must be four numbers, e.g. 1960. Do not enter text such as “late 1800’s”, “18th
Century” or “1930’s”. For converted properties, the year of conversion should be stated in Section 14b.
It is appreciated that it is difficult to be precise when dealing with period properties and in such
circumstances an “educated guess” will suffice. Section 3: Flats and Maisonettes
State the floors on which the unit is located using abbreviations rather than words e.g. LG, G, 1, 2, 3. A
forward slash is permissible for split level accommodation in flats or maisonettes e.g. 1/2. State the
number of floors in the block e.g. "4". State whether a lift is provided by selecting "Yes" or "No" Section 4a: Construction
State the most appropriate generic construction type by selecting one of the options. Large panel system
must not to be used for properties constructed since 2000.
Even if a former PRC property has been repaired, valuers must still tick “PRC designated”. There are
Mandatory phrases for use when PRC (designated and non designated) or LPS construction is identified –
see pages 27/28 above.
Where “Other” is selected, please ensure that an explanation is provided in Section 14b as appropriate.
For non-conventional construction, valuers should make appropriate enquiries of the vendor, estate agent
or local authority to establish the name of the system which should then be inserted in this section of the
report; e.g. “Wimpey No-Fines”. If enquiries are unsuccessful, state “Not Known”. Section 4b: External Finish
Main Walls – A one word answer is all that is required e.g. stone, brick, rendered etc. It is not necessary to
state whether the walls are of cavity or solid construction. In the case of a property with a number of
different wall finishes, state the predominant finish.
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Main Roof - State whether the main roof cover is pitched or flat and briefly describe the covering e.g.
"pitched and slated". In the case of a property with a number of different types of roof cover, describe the
main roof cover. Substandard methods of construction, which are likely to affect marketability, should be reported in
Section 14a.
The inability to inspect significant sections of the external walls or roof covers due to access problems or
sight lines should be reported in Section 14b (and Section 10, if appropriate). Section 4c: Building Insurance Code
This is a code used for building insurance rating purposes. The most appropriate code should be stated
having regard to the following table:
Code Walls Roof
01 Class 1 Class 1
02 Class 1 Class 2
02 Class 2 Class 1
03 Class 2 Class 2
51 Class 1 Thatch
52 Class 2 (some brickwork) Thatch
53 Class 2 (no brickwork) Thatch
59 Special Thatch
99 Special Special
Walls - Class 1 walls means 50% or more of the external walls (including party walls) are built of brick,
stone, concrete, metal or tile. Also included are modern (post 1960) timber framed houses unless clad with
a combustible material. Other walls are to be categorised as Class 2.
Roofs - Class 1 means 70% or more of all roof surfaces are of slate, tile, metal, concrete, asphalt or felt on
timber. Other roof coverings are to be categorised as Class 2, or Thatch.
Special - Unusual types of construction, e.g. windmills, oast-houses etc are classed as special. Section 4d: Mundic
If this section is answered “Yes”, the mandatory phrases should be used in Sections 10 and 11 requiring
the applicant to obtain a Mundic screening report – see page 27. Section 5a: Accommodation
Use numbers, not text to state the number of principal rooms. Where the current use of a room varies
significantly from the use for which it was designed, e.g. a bedroom used as a study, valuers should use
their judgement to include such rooms in the most appropriate category.
Number of floors - state the number of floors on which habitable accommodation is provided i.e. ignore
cellars and non-habitable attics for the purposes of this Section.
Number of living rooms - do not include kitchens unless they are part of a kitchen/dining room.
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Number of bedrooms - do not include "box rooms" if they are so small as to be incapable of use as a
bedroom. In the case of a studio flat/bedsit state "0" bedrooms and "1" living room. Explanatory comment
should then be made in Section 14b.
Number of bath/shower rooms - include any en-suite bathroom/shower room. Do not include separate
WCs unless a bath or shower is provided in that room.
It is not necessary to record room sizes or room fittings. Any abnormal or significant factors that affect
marketability should be reported in Section 14a or 14b as appropriate.
Section 5b: Gross External Floor Area of Dwelling
Round to the nearest square metre. Floor space with headroom of less than 1.5 metres and integral
garages should be excluded.
The floor area of flats should be measured to include the width of external walls and to the centre line of
party walls. Common parts, common halls and staircases should be excluded. Valuers should exercise their
own judgement in each case as to whether extensions such as conservatories should be included in the
floor area or recorded as outbuildings in Section 6b. Section 5c: Estimated Rebuilding Costs
Valuers should use BCIS on line or the current BCIS tables including allowances for garages, domestic
outbuildings, greenhouses, swimming pools, service tanks, drains, septic tanks, garden walls, gates, etc.
Any anomalies, or parts of the property that the valuer believes should be excluded from the sum insured,
should be clarified in Section 14b of the report.
If the valuer considers that it is not appropriate to provide a recommended reinstatement cost by applying
the BCIS tables, a provisional figure should be provided and an explanation of the difficulty should be
reported in Section 14b e.g. listed buildings with extensive period features which would require specialist
rebuilding.
For flats and maisonettes calculate the reinstatement cost for the subject flat only, not the cost of
rebuilding the whole block. A statement stating this has been done is not required. Section 5d: Residential Element greater than 40%
The percentage figure should be calculated using the total floor area including both habitable and non-
habitable accommodation, plus outbuildings and land. The valuer is not stating that the property is
acceptable because the residential element is more than 40% of the total area so the question should
simply be answered factually.
Section 6a: Garage/Parking
Valuers should use their judgement and choose the most appropriate generic garage/parking facility by
selecting one of the options.
Valuers should give a brief description to clarify the garaging and parking facilities, e.g. “The garage actually
has space for three or more vehicles” or “There is a double garage and a single garage”.
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Pertinent information on the garage should be included in this Section. Significant defects should be
reported in the normal way. Section 6b: Outbuildings / Common Facilities
Briefly describe outbuildings that are permanent and which contribute to the value of the property, eg
conservatories which are not considered to be part of the main accommodation should be included here.
In particular, include any outbuildings that have been included in the recommended rebuilding cost.
Do not comment about the condition of outbuildings in this section. Significant defects should be
considered for comment in section 10 or 11.
In the case of flats, it is not necessary to describe normal common parts but any unusual features, such as
shared sports facilities, should be described.
If there are no outbuildings/common facilities, state ‘None. Section 7a: Service Connections
There is a separate question for each of the services.
Where any of the services appear to be non-mains, valuers should comment on the type and location in
section 14a or 14b as appropriate. Where non mains drainage is selected the mandatory phrase must be
included in section 14b – see page 29.
If it is not possible to determine whether a particular service is provided, state “No” and comment in
Section 14b. Section 8a: Site
The options in this section of the report are not mutually exclusive. Valuers should select all boxes which
apply to highlight irregularities that require investigation by the conveyancer. A brief explanation of each
issue should be provided in Section 14a or 14b as appropriate.
Where a property has a significant amount of land (in excess of an acre), the approximate extent of the
land should be stated in Section 14b.
If it is known that the applicant or close family member owns adjoining land/property which is not included
in the mortgage valuation please provide details to intel@lgsurvey.co.uk Section 8b: Does the surveyor need to inspect the title plans prior to confirming the valuation
Select from either "Yes" or "No", but remember to change to NO once the plans have been seen.
Valuers must request the title deed plan in the specific circumstances set out earlier in this document. In
addition, valuers may request the title plans if there are concerns regarding issues that might be significant
to the valuation, e.g. non contiguous land, access across neighbouring land, ill defined boundaries or land
included with the property etc.
When this section is answered "Yes" initially, please follow the process set out on pages 18/19 and use the
mandatory paragraphs in section 14b (see page 31). It is recommended that a sketch plan is prepared on
site in such cases sufficiently detailed for the purposes of comparison when the title plan is obtained.
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Section 9: Location
Valuers should use their judgement and select the most appropriate option. Where “Other” is selected,
please provide an explanation in Section 14b.
Any issues concerning the property's location, which significantly affect marketability, should be
reported in Section 14a. Section 10: Condition (to include movement and tree mandatory phrases)
Comments about the condition of the property should be concise and of a general nature. There are
several standard phrases on page 32 which indicate the style of reporting expected in this section.
Valuers should avoid making specific reference to minor defects that are unlikely to affect market value.
To do so implies that a detailed inspection of the property's condition has been undertaken. Minor defects
should not be included in a valuation report.
Defects that detract significantly from marketability/ value should be included in Section 11
recommended repairs rather than listed in this section.
Structural Movement and Trees
There are a number of mandatory phrases for reporting structural movement and the potential problems
from trees. The use of these phrases triggers different actions by mortgage processors.
It is important that valuers report ALL evidence of movement even though this may be slight. There is a
standard phrase for use where non progressive or non serious movement is noted (page 31). Mandatory Phrases for Movement
These must be used where a structural engineer’s report is required and can be found on page 27 above,
for use in sections 10 and 11.
Mandatory Phrases for Trees
These phrases warn of the potential risk to structures from tree growth rather than dealing with evidence
of structural problems that are already apparent. If ongoing movement is apparent, or suspected, the
mandatory phrase for movement must also be used in section 10.
If trees within the curtilage of the property are a potential threat to neighbouring properties, for example
there may be a public liability risk, appropriate comment should be made in Section 14b.
When reporting the presence of trees, valuers should not recommend specific remedial actions, e.g.
lopping or removal, without specialist advice. The possibility of Tree Preservation Orders should also be
reported.
There are other Mandatory phrases for use in section 10 which are referred to elsewhere in this guide –
see pages 27 -31.
Section 11: Repairs/reports/information recommended as a condition of the mortgage
If specialist reports, further information or repairs are required as a condition of the mortgage, select ‘Yes’.
If ‘No’ is selected, the text field should be left blank.
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Only defects which affect the value and/or marketability of the property (and can be remedied), should be
included in this section. The only minor defects permitted in Section 11 are those of a progressive nature
which are likely to become a major defect if not remedied and health and safety issues.
Cosmetic repairs or improvements should not normally be included in Section 11. Works of improvement
should only be included when the valuation instructions specifically state that it is the applicant’s intention
to undertake improvements as part of the mortgage application, ie the mortgage offer is to be based on a
‘when improved’ valuation.
All Section 11 requirements should be typed in a numbered list, giving precise details of the repairs
required in an instructional format to ensure that the applicant and underwriters know what is required
to progress the loan.
Both standard and mandatory phrases are set out in Appendices 2 and 3 above for use in section 11.
Valuer’s must ensure the mandatory phrases are used where available.
Valuers must not include statements such as ‘subject to estimates’, nor recommend undertakings,
maximum LTVs etc. Specialist Reports
The recommendation for specialist inspections should normally require the whole property to be
inspected and reflect the inter-related nature of defects, eg where there is evidence of rising damp, there
is always the risk of associated timber decay. Retentions
If any works are listed in Section 11, a suggested retention must always be provided. This must be the
valuer’s estimate of the cost of the recommended repairs (unless a total retention is required). Retentions
must always be a numerical figure. The estimate of cost helps the underwriters with their lending decision.
Valuer’s should note that retentions of less than £2,000 are rarely imposed.
Where a retention is recommended for a BTL property in accordance with the Guidance Notes above this
must be for not less than £2,000.
Retentions are not required for the completion of a new build property. Total retentions
Total retentions are required when either the property is not suitable for lending without certain works
being completed or the valuer is unable to confirm the property is suitable for lending without being
provided with additional information. Provision of the additional information will enable to the valuer to
confirm whether the property meets Santander’s lending policy. An example of this is the provision of
documentation to confirm details of the repair scheme carried out to a PRC property or where a Structural
Engineer’s report is required.
Specialist reports may be forwarded to valuers for consideration via the PVQ process. In addition to
responding to the PVQ any changes to valuation or retentions must be followed up with a revised
valuation report with a comment to clarify what information/documents have been provided in section
14b.
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What valuations are required when there is a ‘Total retention’?
Where there is a ‘total retention’, a ‘Market Value on completion of repairs in Section 11’ should be
provided. A ‘Present Value’ should never be provided when there is a total retention. A figure equal to
the whole advance (as shown on the instruction) must be used whenever a total retention is required.
If the property is to be declined section 11 must be left blank. Section 12a and 12b: New Build (to include new conversions)
Valuers should tick ‘Yes’ for all new build and new conversions as well as new build/new conversions which
have been recently occupied for the first time. If the property is capable of being completed within a
working week, the valuer should select ‘Yes’ to 12b.
Mandatory paragraphs must be used in section 14b (see page 29). Section 12c-i: Buy to Let applications
The guidance on page 16 above should be followed for all BTL cases. Standard phrases are available for
use in section 14b if appropriate (see page 34).
When providing annual figures, do not deduct for voids. The valuer’s opinion of rental value must reflect
the condition of the property at time of inspection unless a retention has been recommended. Where
repairs have been recommended the rental value should assume these have been completed. For new
builds the rental should be provided on the assumption that construction has been completed. The
estimated current annual rental value is on the basis of an unfurnished let.
Section 12c: The valuation instruction will indicate if the case is a BTL application.
Section 12d: If it is unclear that the property is currently let an assumption should be made and an
explanation provided in section 14b.
Section 12e: Valuers should advise if the property is likely to let within 3 months from the
commencement of the mortgage, in ‘normal market conditions’. If the answer to this
question is no the property should be declined for mortgage with an explanation provided
in section 14b.
Section 12f: Valuers should advise if the property is likely to sell within a 6 month period, in ‘normal
market conditions’. If the answer to this question is no the property should be declined for
mortgage with an explanation provided in section 14b.
Section 12g: Valuers should advise if the property is, or likely to become an HMO due to location,
character and layout. If the answer to this question is Yes the property should be declined
for mortgage with an explanation provided in section 14b. This question should not be
answered Yes simply because the property could in theory become and HMO.
(For Scottish properties see separate guidance on HMO’s and use the Mandatory phrase in
section 14b if appropriate.)
Section 12h: Valuers should complete the passing rent or estimated rent as advised on the instruction
(annual rent).
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Section 12i : Valuers should provide an opinion of the rental value of the property on an annual basis,
taking into account the condition of the property at time of inspection. If the property is
being declined this should be £0. Where a retention has been made the full rental value
should be provided assuming the works have been completed.
Section 13: Roads
Select the option that best describes the circumstances. If “Other” is chosen, please ensure that an
explanation is provided in Section 14b.
In cases where it is likely that expenditure will be incurred on the road in the foreseeable future, valuers
are not expected to quantify the cost. It is recommended that where incomplete the valuer should use the
words ‘Nil if road bond’. It will be the subject of a post valuation query if no such bond exists.
If the condition of the road is such that it affects the property's value and/or marketability, comment
should be made in Section 14a. Section 14a: Marketability
Where the question has been answered “Yes”, valuers should describe in concise terms the nature of any
adverse factors that affect the marketability of the property, e.g. proximity to an obnoxious use, busy
roads, unusual design features, high maintenance liabilities, poor structural condition.
This section should also be used to report concerns with regard to the risk of flooding, damage caused by
mining subsidence and any other environmental risk. Valuers should indicate where such matters have
been taken into account in their valuation figure.
If there are factors that adversely affect the marketability of the property such that an extended marketing
period (normal market conditions) in excess of 3 months to let, (if BTL application) or in excess of 6 months
to sell will be required, then these should be reported in Section 14a and the property declined for
mortgage.
There are standard paragraphs available for use in section 14a – see page 33. Section 14b: Other Important Factors
This section should be used to report matters that require further clarification and to record assumptions
made in other parts of the report e.g. matters to do with tenure, town planning, use of the property.
Valuers should indicate where such matters have been taken into account in their valuation figure.
This section should be used if there is a requirement for the conveyancer to investigate matters – see
suggested standard phrases above on pages 33/34.
Any assumptions on which the valuation is based should be stated in this section.
Unusual limitations to the inspection due to lack of access should be mentioned in this section.
Where the valuation differs from the purchase price/estimated value provided by the Bank (either higher
or lower), the mandatory paragraph must be used in Section 14b (page 31). Valuers should also advise the
Bank if the price agreed varies from the figure provided by the Bank.
If the property is to be declined all reasons for the decline must be provided in this section.
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The mandatory paragraphs set out in Appendix 2 above must be used as appropriate. Section 14c: Acceptability for mortgage purposes
This section should be answered "No" if the property is being declined. In this case, the valuation sections
should be completed as "Not Applicable" and an explanation of why the property is not considered to be
acceptable security should be provided in Section 14b. There is also no need to provide an estimated
rebuilding cost or to recommend repairs in Section 11. Section 14d: Occupation Restrictions
Where valuers have reason to believe that properties are or could be subject to occupancy restrictions
(e.g. local occupancy) they should select “Yes” and provide an explanation in Section 14a. Section 15: Valuation for Mortgage Purposes
Valuers should indicate that the valuation is provided on the assumption of vacant possession by selecting
“Yes”. BTL cases should be valued on a vacant possession basis even though the property is or will be let.
If “No” is selected provide an explanation in Section 14a.
N.B. It is very important to the lending process that regard should be had to properly checking the entering
of valuation figures before sign off. Please ensure that full stops are not used in the valuation figure and
that the words match the valuation. Valuers should never complete a valuation field with ‘0’, ‘nil’ or
‘zero’. If a valuation is not being provided, complete the field with the words ‘Not applicable’. Market Value at the time of inspection
If the valuer provides a ‘Market Value at time of inspection’ this is taken as confirmation that the Property
is mortgageable in its condition/use at the time of inspection.
This valuation should always be given except when:
• The property is not acceptable for mortgage
• A new build property is not close to completion
• A total retention is made
In these cases, as above, complete ‘not applicable’ in the valuation fields. Where the property is not
acceptable for mortgage an explanation should be provided in Section 14b. New Build
When a new build property (being purchased) is close to completion (completion of the property within a
week) a Market Value at time of inspection’ should be given as the property is almost finished, this should
be the valuation of the completed unit. Where the property being purchased is incomplete or an
incomplete/unfinished property is being remortgaged, the valuer should refer to the guidance above.
Market Value on completion of repairs in section 11, or, if new build when the property is finished
A figure is required in this section when:
• Repairs are recommended in Section 11
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• A total retention has been made – it is the value assuming Section 11 conditions are met/works
are complete
• A new build property is not close to completion – the valuation should assume completion of the
property
If the property is being declined all valuation fields should be completed as “Not Applicable”
It is recognised that the difference between "before" and "after" valuations is not a simple mathematical
deduction of the cost of repair and in some circumstances the two valuations may be the same.
Signature
This section of the form should be completed in full. The name and qualification of the inspecting valuer
should be typed, in addition to the valuer’s firm details, RICS number, and panel appointment number and
company surcode (first 3 letters of company name) – eg 2456 SAR
The name, address and telephone number of the valuer will be visible to the customer and the
conveyancer.
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Revaluation Reports (Additional Loans)
Form Completion Guide
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A revaluation is instructed when the customer is seeking an additional loan. Revaluations require all
properties to be inspected internally. When carrying out an inspection for additional lending the valuer
should follow the guidance notes and report accordingly if the property no longer meets the Bank’s lending
criteria. The address and references should be completed from the information provided on the instruction. The
Surveyor’s Reference is for the valuer’s office use and not Santander. The instructing branch is shown as
‘source’ on the Quest client page – state ‘not known’ if it is missing. The application number is also on the
client page and will begin with either AA, AF or ZO. If the Mortgage Account number is not provided state
‘not known’. The Processing Location/Mortgage Centre is Teesside. Provide as full an address as possible. The postcode is important and is used for insurance purposes. If a
postcode is not provided in the valuation instructions, valuers should find this out and complete it on the
report form. Any changes should then also be advised in section 4. Section 1: Tenure - Valuation assumption This information should be taken from the valuation instructions unless the valuer has information to the
contrary. If “Other” is chosen, valuers should provide an explanation of their assumption and the source of their
information in section 4. Valuers must state the unexpired lease term. The appropriate mandatory phrase for leasehold property
should be used in section 4. Section 2: Purpose of the Additional Loan Information regarding the purpose of the additional loan is generally included in the instruction. Valuers
should select one of the options based on their understanding of the purpose of the loan and only depart
from the purpose indicated in the instruction if contrary information is indicated by the occupier. If “Other”
is chosen, valuers should provide a brief explanation in section 4. Where the purpose of the loan is for improvements or alterations, valuers should list the works of
improvement that the applicant is known to be making, e.g. extension, new kitchen, fitting central heating.
For ‘Release of land/buildings’, the valuer should be made aware of the element of land to be released
and the intention for adjoining land so they can confirm not only the reduced value of the decreasing
security but whether the proposal would impact on marketability/access etc. The only valuation required
is for the property once the land has been released. This should be provided in the ‘when finished’
valuation field.
Valuers should include the approximate cost of the improvements/alterations in the space provided. Section 3: Repairs/reports recommended as a condition of the Additional Loan
Recommended repairs should be restricted to those that, if not attended to, will materially affect the value
and/or marketability of the property. For more details, refer to the guidance notes for the Valuation for
Mortgage Purposes. Wherever possible include a (realistic) suggested retention figure.
Special Instructions for properties at risk of Mundic
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When there are reasons to suspect that the property may be affected by Mundic, Santander requires
valuers to recommend a Mundic screening report be obtained prior to releasing the funds and a total
retention should be imposed with only a ‘when finished’ valuation provided.
Section 4: Comments
This section should be used where it is necessary to provide clarification of replies given in other sections
of the report or to identify other important factors to be brought to Santander’s attention.
If both Market Value in Present Condition and Value after Improvements are not applicable, a brief
explanation should be given of why the property is outside lending criteria and a valuation
figure provided in section 4. The valuation should represent the value of the property as if it were to be
sold for residential owner occupation in its current condition/format and reflecting any restrictions that
may be applicable due to the breach of lending criteria.
Section 5: Valuation for Mortgage Purposes
Valuers should indicate that the valuation is provided on the assumption of vacant possession by selecting
“Yes”. Otherwise select “No” and provide an explanation in Section 4.
Do not complete any of the valuation fields with ‘0’, ‘nil’ or ‘zero’, if a valuation is not being provided,
complete the field with the words ‘Not applicable’. Market Value in present condition
A ‘Market Value in present condition’ should be provided except when a “total retention” is being
suggested in Section 3, when the property is being valued for ‘release of land’ or if the property no longer
meets lending criteria.
Where a total retention is recommended, “Not Applicable” should be typed in the ‘Market Value in present
condition’ field. Market Value when finished
A ‘Market Value when finished’ is required when works of improvement/ repairs are listed and costed in
Section 2, or when a retention is recommended in Section 3 for repairs. When the property is being valued
for release of land, only the ‘Market Value When Finished’ should be provided, to reflect the value of the
property once the land has been released/sold off. Section 6: Buy to Let
If the instruction is for a BTL mortgage this will be stated on the instruction. These questions should be
answered in the same way as if for a VMP. Signature
This section of the form should be completed in full. The name and qualification of the inspecting valuer
should be typed, in addition to the valuer’s name, RICS number, and panel appointment number and firm’s
surcode eg 8905 CWS.
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Re-inspection Report
Form Completion Guide
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The property is to be inspected internally. Form Completion The address and references should be completed from the information provided on the instruction. The
Surveyor’s Reference is for the valuer’s office use and not Santander. The instructing branch is shown as
‘source’ on the Quest client page – state ‘not known’ if it is missing. If the Mortgage Account number is
not provided state ‘not known’. The Processing Location/Mortgage Centre is Teesside.
Provide as full an address as possible. The postcode is important and is used for insurance purposes. If a
postcode is not provided in the valuation instructions, valuers should find this out and complete it on the
report form. Section 1 : Purpose of Reinspection – Valuers should check the purpose of the re-inspection prior to
inspecting the property and completing the form. If there are any queries regarding the reason for the re-
inspection, please check with the relevant mortgage centre. Reinspections may be instructed where the original report is over 6 months old and an up to date valuation
is required to progress the case. If this is the case OOD will appear in the instruction notes and valuers
should select ‘Other’ and put ‘Out of date report’ in the text reason field. Section 2 : Details of Outstanding Work - If there are any significant items of work outstanding, briefly
indicate these in a clear and precise manner, using terminology that can be readily understood by the
applicant/customer. If relatively minor items are outstanding a general comment is sufficient. Only works detailed in the original valuation report should be inspected and commented upon. Section 3 : Recommendations - Where not all of the essential repair items listed in the original report have
been undertaken the valuer must use his/her judgement as to whether or not this may affect the value of
the mortgage security. If the outstanding items are significant, then it may be appropriate to recommend
a further retention and/or re-inspection. Section 4 : Current Value - The Company requires an updated valuation if at the time of re-inspection it is
materially different from the original valuation. The Company regards a 10% increase or decrease in the
value as being materially different. Justification for the revaluation should be stated on the re-inspection
forms. If a valuation is not being provided for whatever reason, complete the field using ‘Not applicable’.
Do not use ‘0’, ‘nil’ or ‘zero’. Section 5 : Other Important Factors/Remarks - Use this section to comment on any other factors that may
be pertinent to the re-inspection of the property, e.g. the property’s general condition may have
deteriorated since previous inspection, or it may be necessary to clarify the reasoning behind the request
for a further re-inspection. Signature - This section of the form should be completed in full. The name, qualification, valuer’s number
and surcode of the inspecting valuer should entered. Applicants do not receive copies of re-inspection
reports.
When completing a Reinspection Report for a new bui ld property (with warranty and being sold completed) ensure that the report is completed in l ine with the original VMP in respect of the retention and works recommended. If there were no works in Section 11 of the VMP and no retention was recommended then there should be no works or re tention in the Reinspection Report, unless defects have been noted.
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External Inspection
Form Completion Guide
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External Inspection Valuations are carried out on behalf of Santander to assess the value of a property and
assist underwriters in making lending decisions. The contents of these reports should not be disclosed to
the customer or to their conveyancer.
The circumstances in which an External Inspection is not appropriate and/or should be upgraded to a VMP
are outlined on pages 9/10 above.
Valuers are expected to get out of their vehicles to carry out an external inspection. The property should
be viewed from the nearest publicly accessible point and from as many angles as possible. Valuers should
not go onto private land, including shared driveways and private alleyways
Upgrading the EIV to a VMP Where valuers need to upgrade the EIV to a full inspection and VMP they should contact the panel
manager to inform them that this has been done and advise the reason for the upgrade. The reason for
the upgrade will be recorded by the panel manager and should also be recorded in the valuer’s site notes.
Where an inspection is upgraded the EIV form must not be completed. The valuer is responsible for
arranging and carrying out the internal inspection and completing the VMP. Only the VMP report should
be completed and the VMP fee will be paid.
It is valuer’s responsibility to upgrade any EIV to a full inspection where an external inspection is
inappropriate. The case will not be reinstructed as a VMP.
Form Completion
The address and references should be completed from the information provided on the instruction. The
Surveyor’s Reference is for the valuer’s office use and not Santander. The instructing branch is shown as
‘source’ on the Quest client page – state ‘not known’ if it is missing. The application number is also on the
client page and will begin with either AA, AF or ZO. The Processing Location/Mortgage Centre is Teesside. The estimated value and advance required should also be found on the instruction. The External Inspection
Valuation report is a short form requiring minimal input. The boxes are all self-explanatory and no
comments are required.