Further protection for buyers of new properties

The Council of Mortgage Lenders (CML) today launched an initiative that will provide extra security for people taking out a mortgage for a newly built house after April 1.

According to the initiative, new houses will have to be fully completed and have undergone a satisfactory final inspection before mortgage funds are released and the buyer moves in. The initiative was developed in order to ensure that there will be no recurrence of incidents in the past when people moved into houses only to discover that they were unfinished, or not completed to a satisfactory level.

The process currently in place to protect buyers is known as a 'pre-handover' inspection. All newly built houses must undergo this inspection, which seeks to identify any unfinished work; however, the inspection is not in anyway synchronised with the home-buying process. From now on, however, lenders will not release funds unless a final inspection has been completed satisfactorily, with the assurance that a full new home warranty will be in place on or before legal completion. The arrangements apply to all new properties being built or converted in accordance with a new home warranty scheme.

Commenting, the CML's director general, Michael Coogan, said: "It is clear that some borrowers have experienced problems with new houses that are not fully completed and ready for occupation. Our new initiative will ensure that in future everyone taking out a mortgage to buy a new home can be confident that it has been satisfactorily completed and a new warranty is in place. This is an important additional step to reduce stress in the house-buying process."

House Builders Federation spokesman Pierre Williams gave his support to the new initiative, saying: "We are well aware that on the rare occasion when someone moves into a new home that has not been properly finished, it causes distress. It also creates a disproportionately negative view of house-builders among the public. This new approach will change that. The latest surveys show a surge in popularity of new homes among buyers and this scheme can only help increase this trend."