The Council of Mortgage Lenders (CML) has made changes to its Disclosure of Incentives Form ("DIF") for new build housing. The new form must be used for all new build sales from 1 October 2011.   

Developers will recall that the DIF was introduced, in September 2008, with a view to putting valuers and lenders on notice of any incentives being offered by developers to purchasers of newly built or renovated homes. The drive of the DIF was to counteract, what lenders believed to be, a lack of clarity in the new build housing market, particularly in city centre developments which were attracting large numbers of buy-to-let investors and where mortgage fraud was perceived to be at its highest.

With the onset of the credit crunch, the DIF came to take a back seat. However, recent market reports suggest that there has been an increase in the number of reservations for new build properties. It is anticipated, therefore, that the DIF may come back to fore, to play a role in restoring the reputation of the new build market.

The new DIF requires disclosure of shared ownership, equity loans and part exchanges – widely used levers in the current market. The principal change in substance is that more detail on the type of incentive offered needs to be given on the form submitted to the valuer.

Developers, including housing associations, need to be aware of the changes and to adapt internal sales procedures accordingly.

A copy of the new DIF Form is available on CML’s website accessible here.

For further information and guidance on the new DIF, please contact Ruth Maclean or your ususal contact in our CRE department.

This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.