Unit 4:13 Property Code

Question 1

Property Assessment - Lender Considerations

Answer 1

• Factors affecting property value (title deeds, property type, location, age, condition, construction)
• Additional considerations like insurance requirements
• For buy-to-let properties, rental yield assessment
• Property will be checked by a valuer to ensure mortgage is granted
• Required details include: address, purchase price, property type/number of rooms, tenure
• Surveyor checks if structural alterations are present and if vacant possession is available

Question 2

Property Valuation Requirements:

Answer 2

• Basic details: Location, price, property type/rooms, tenure (freehold/leasehold)
• Possession status: Vacant possession or sitting tenants
• Structural condition: Alterations, repairs needed, RICS inspection if required
• Property use: Residential/business purpose
• New builds: Builder name and NHBC scheme participation
• Environmental impacts requiring professional assessment

Question 3

Sitting Tenants:

Answer 3

• Assured Shorthold Tenancy (AST) typically runs for 12 months
• Buy-to-Let landlords can reclaim property once AST term ends
• Some properties have sitting tenants with stronger legal protections
• Protected sitting tenants make property less attractive to buyers and lenders

Question 4

Marriage Value:

Answer 4

• Premium paid to extend leases with less than 80 years remaining
• Represents the increase in property value when lease is extended
• Some lenders won’t consider mortgages on properties with leases under 80 years
• Freeholder entitled to 50% of marriage value under leasehold reform

Question 5

Retirement Apartments:

Answer 5

• Leasehold properties in complexes with amenities for older residents
• Difficult to sell due to limited market and hefty service fees
• Many lenders reluctant to offer mortgages on age-restricted properties
• Typically have minimum age requirements (55+ or 60+)

Question 6

Non-Standard Construction Types:

Answer 6

• Prefab houses - Houses made in factories and assembled on site (like big Legos) (concrete panel, timber frame)
• Concrete construction (Wimpey No-Fines, PRC, Airey houses)
• Steel-framed buildings and BISF houses
• Properties with flat roofs or unusual roof materials
• Cob, wattle and daub, or mud construction
• Thatched properties - Houses with roofs made of straw
• Timber-framed properties (especially pre-1970)
• Listed buildings with historic construction methods
• High-rise flats (particularly those over 10 stories)
• Properties with significant non-residential elements

Question 7

Forced Sale Situation:

Answer 7

• Property so unusual that lender would struggle to find a buyer if repossessed
• Concerns marketability rather than just market value
• Lenders assess resale difficulty in loan default scenario
• Results in stricter lending criteria or specialist mortgage products

Question 8

Property Condition and Construction - MVP Checklist:

Answer 8

• Well-maintained properties equal higher value and smoother sales
• Building blocks matter: traditional construction (brick, mortar, tiled roof) preferred by lenders
• Non-standard construction may require specialist lenders
• Property condition directly impacts valuation and lending decisions
• Lenders assess both marketability and security value

Question 9

Prefabricated Houses

Answer 9

• Factory-built homes assembled on-site, not traditional brick/block construction (like legos)
• Often considered non-standard by mortgage lenders
• You wont get mortgage on Prefab
• Concrete prefabs from post-war era particularly problematic for lending
• Modern timber-frame prefabs generally more acceptable to mainstream lenders

Question 10

EWS1 (External Wall System) Assessment:

Answer 10

• Fire risk assessment for external wall systems in residential buildings
• Required by most lenders for flats in buildings over 18m
• Option A: External wall materials unlikely to catch fire
• Option B: Combustible materials present
  B1: low risk,
  B2: high risk requiring remediation
• Significantly impacts mortgage availability and property value
• Form must be redone every 5 years

Question 11

Multiple-Use Properties:

Answer 11

• Buildings with mixed usage (e.g., shop on ground floor, flat above)
• Many lenders reluctant to lend due to control/security concerns
• Residential occupants often have limited control over commercial premises
• Noise, odours, and commercial activities may impact residential value
• Maximum commercial element typically 25-40% depending on lender

Question 12

Flood Re Scheme:

Answer 12

• Government-backed reinsurance scheme for high flood-risk properties
• Enables affordable home insurance for properties in flood-prone areas
• Limited to residential properties built before 2009
• Premiums capped based on property’s council tax band
• 25 years

Question 13

New Consumer Duty

Answer 13

• Applies to retail customers – The Duty covers products and services offered to retail customers, including mortgages, insurance, and investment products.
• Applies to all firms in the distribution chain – Even if a firm doesn’t have a direct relationship with the customer, it still has to consider customer outcomes.
• Focuses on outcomes, not just rules
  – The Duty shifts away from a tick-box, rules-based approach to one based on delivering good customer outcomes.