Nationwide Building Society Valuers’ Manual

Version – 12 June 2019

Table of Contents

Number Title Page No

1 Introduction

1.01.1

Purpose of ManualGeneral Enquiries

44

1.2 Reports and Service Levels 41.3 Forms

Appendix 1Appendix 2

555

2 General Requirements

2.0 Valuer Qualifications 62.1 Valuer Requirements and Contract Details 62.2 Panel Appointments 62.3 Type of Transaction – Mortgage Valuation Report

(MVR)6

2.4 Ownership Type – Further Advance Revaluation Report.Appendix 1 - Post First RICS qualification Nationwide Acceptance Criteria

6

6

3 Policy Matters and Standards, Services and Insurance

3.0 Roof and Basement Inspections 73.1 Instruction to Panel Valuers Scotland 73.2 Applicant Produced Reports England Wales and

Northern Ireland8

3.3 Negligence Claims 83.4 Valuation and Recommendation 83.5 Declining Unsuitable Securities 83.6 Defects 83.7 Specialists Reports 93.8 Retentions 113.9 Duplicated/Simultaneous Applications 123.10 Leasehold Tenure 123.11 Roads 133.12 Rights Of Way 133.13 Services/District Heating 133.14 “Hope” or “Development” Value 153.15 Alterations and Extensions Recently Carried Out 153.16 Flying Freeholds 153.17 Release of Part Security 153.18 Property Insurance 153.19 Restrictive Covenants – Breaches 183.203.21

BlightUninhabitable Properties

1818

4 Structural Movement Reporting and Mining

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4.0 Valuers Guidelines – Structural Movement and Reporting

20

4.1 Mortgage Valuation Report Questions 204.2 On receipt of engineer’s/surveyor report 224.3 Underpinned Properties 224.4 Outbuildings 224.5 Drains Test 224.6 General Subsidence, etc in Locality 224.7 Tie Bars, Straps 224.8 Cavity Wall Tie Failure 234.9 Trees and Buildings 234.10 Floors – Sulphate/Chemical Attack 234.11 Floors – Settlement 234.124.13

Mining ReportsMining Subsidence Damage/Activity/Suitability – Policy

2324

4.14 Mining Damage or Possible Future Damage 244.15 Old Mine Shafts 244.16 Mining Reports Referred after Valuation 25

Appendix 1 – Key Statements 25

5 Security Types

5.0 Introduction 265.1 New Dwellings 265.2 Second-Hand Dwellings without

Guarantees/Certificates28

5.3 Rural Properties 285.4 Large Properties 295.5 Part Possession Dwellings 295.6 Properties in or Previously in Multiple Occupation 295.7 Flats/Maisonettes – for Owner Occupation 305.8 Duplex (Over and Under) Dwellings (Hebden Royd in

West Yorkshire only)33

5.9 Low Cost Home Ownership Schemes 335.10 Shared Ownership 345.11 Resale Price and Occupancy Restrictions 355.12 Equity Shares 355.13 Second Homes/Holiday Accommodation 365.145.15

Commercial PremisesPermitted Development Rights (PDRs)

3636

Appendix 1 – Office to Residential ConversionsAppendix 2 – New Build Keying Guide/Shared Appendix 3 – Shared Ownership Retentions

373737

6 Construction and Environmental Issues

6.06.16.26.3

IntroductionTimber Framed StructuresPRC & LPSInsulated Concrete Formwork (ICF)

38383839

6.4 Construction of Walls and Roofs 396.5 Thermal Insulation 406.6 Half Brick Walls 406.76.8

Sub-Standard Annexes/’StructuresHigh Alumina Cement (HAC)

4041

6.9 Hazardous Materials/Circumstances 416.10 Mundic 416.116.12

Solar PanelsJapanese Knotweed

4242

7 Mortgage Valuation Reports

7.0 Introduction 447.1 Terms and Conditions of Engagement 44

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7.2 Site Notes 447.3 Report Form 447.4 Comparable Evidence 467.5 Report Writing 477.6 General Remarks section of MVR 477.7 Signing Reports 477.8 Date of Report 47

8 The Homebuyers Report

8.0 Introduction 48

9 Further Advance Revaluation Report

9.1 The Valuation 499.2 The Inspection 499.3 Report Form 499.4 Property Insurance 499.5 Signing Reports 499.6 Date of Report 49

10 Possession Cases

10.0 Management 5010.1 Valuations for Purchasers 5010.2 Possession Sales to NBS Staff, Etc 5010.3 Shortfall on a borrower sale 50

11 Keying Guide

11.0 Keying guide 51

12 Construction Types & Licenced Prc Repair Schemes

Appendix 1 - List 1 52Appendix 2 - List 2 Licenced Repair Schemes 52

Section 1 - Introduction1.0 Purpose of Manual

This manual is for the guidance of the valuer on specific issues. The Society, however, relies upon the valuer’s skill and judgement for the appropriate professional advice in each case. Even where a security is within the guidelines and would normally be regarded as a suitable security for mortgage if the market is, in the valuers’ professional opinion, unduly

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restricted then the property may be declined/regarded as an unsuitable security (see third paragraph below).

The valuer is required to provide a market value (unless stating the property is an unsuitable security, see the paragraph below), defined as: The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

The valuer is not expected to make or recommend lending decisions. The question ‘Is the property a suitable security for the Society?’ on Nationwide’s valuation reports is referring to the suitability in respect to the instructions that are contained in this manual. Accordingly, the question should be read as ‘Does the property meet the requirements documented in the Society’s valuers’ manual and there is a ready market for such properties in the area?’ Where the answer is no, do not provide a value for the property.

References to Nationwide/the Society/NBS refer to Nationwide Group though specific instructions regarding TMW are contained in their guidance notes.

Appendices appear at the end of the section in which they are mentioned.

1.1 General Enquiries

Please refer all initial enquiries to your own Technical Departments who will, if answers cannot be satisfactorily provided, forward the query to Property Risk Valuation Services: If the query relates to a query prior to valuation, email panel.maintenance@nationwide.co.uk Tel No. 0800 4643028 Option 1If the query relates to a post valuation query, emailNBS.PVQ@nationwide.co.uk Tel No. 0800 4643028 Option 2

1.2 Reports and Service Levels

Distribution of Reports: Instructions will only be electronically distributed and returned by “Quest” or “Valuation Exchange” systems.

Progress Reports: Appointment dates and any delays in obtaining them are to be notified immediately to Property Risk Valuation Services. Contact details are:

Telephone: 0800 4643028 Option 1Email: Panel.Maintenance@nationwide.co.uk

Service levels are documented in Countrywide Surveyors, e.surv and Panel Valuers’ contracts.

Please see Appendix 1 - Mortgage Valuation Report form (MVR), and Appendix 2 - Further Advance Revaluation Report form (FARR).

These forms are used in the majority of instructions; however occasionally older forms are issued on some cases. Questions asked within the forms, Appendix 1 and 2 should be self-explanatory nonetheless advise on completing these forms are to be found in the relevant sections of this manual; Section 7 Mortgage Valuation Reports and Section 9 Further Advance Revaluation Report. Advice is also contained in the relevant section on completing the older forms.

Where essential works are required or major improvement works are planned please refer to Section 3.8 Retentions and Section 5.10 Shared Ownership for specific instructions.

Where any concerns exist relating to the completion of a report please contact Property Risk Valuation Services. Telephone: 0800 464 3028 Option 1; email: Panel.Maintenance@nationwide.co.uk

Appendix 1 - Mortgage Valuation Report (MVR)

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Appendix 2 - Further Advance Revaluation Report form (FARR)

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Section 2 - General Requirements

2.0 Valuer Qualifications

A valuer must be either FRICS/MRICS/Assoc RICS qualified, be part of the valuers registration scheme (VRS), have appropriate experience in providing residential valuations for the area the security is located and have 2 years post qualifications experience. Valuers with less than 2 years post qualification experience must refer to Appendix 1 of this section for the limits on reports we will accept. The valuer must be fully covered by your professional indemnity insurance for the report prepared for us. (Refer to contract for full details).

Please note Appendix 1 refers to the first RICS qualification obtained. Where a valuer upgrades their qualification there is no requirement to have another 2 years experience at the upgraded level.

2.1 Valuer Requirements and Contract Details

Valuers must adhere to the terms of their contract with Nationwide, including this manual, and be able to value the property in accordance with the latest version of RICS Valuation Standards (Red Book guidelines) or relevant special assumption as instructed by Nationwide.

Valuers generally need only answer the questions asked on the report forms, no further information is required for the report; however, valuers are expected to make and retain clear and detailed site notes. On receipt of any report Nationwide assume the valuer has full knowledge of this manual and has completed the report as required by the Society. Where a valuer is precluded from valuing a property he must return the instruction.

If fraud is suspected or for a new build purchase an assignable contract situation may be in existence, please refer details to ValuationsQualityAssurance@nationwide.co.uk The various sections of this manual detail our requirements in specific circumstances and a valuer should check details prior to submission of any report.

2.2 Panel Appointments

The Group Valuation Panel is appointed by Nationwide only and is administered by the Panel Manager. Firms are appointed solely in response to business needs.

2.3 Type of transaction - Mortgage Valuation Report (MVR)

When instructed to carry out a Mortgage Valuation Report (see Section 8, Mortgage Valuation Reports, MVR’s), please ascertain if the property is being purchased or re-mortgaged and if shared ownership. This information is important when recommending retentions; see Section 3.8, Retentions and 5.10 Shared Ownerships.

2.4 Ownership type – Further Advance Revaluation Report (FARR)

When instructed to carry out a Further Advance Revaluation Report, see Section 9, Further Advance Revaluation Reports

Appendix 1 - Post First RICS Qualification Nationwide Acceptance Criteria

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Section 3 - Policy Matters and Standards, Services and Insurance3.0 Roof and Basement Inspections

In accordance with RICS ‘Red Book’ Guidance a head and shoulders inspection is not required of roof voids.

However, if an inspection (head and shoulders only) is required to ascertain the type of construction or a defect with the roof is observed an inspection should be undertaken and/or an appropriate additional report requested.

Basements with staircases must be inspected where access allows. (Sub floor voids need not be inspected).

3.1 Instructions to Panel Valuers Scotland on Transcriptions

Home ReportsWhere a property is marketed with a Home Report and all three reports are available (single survey, energy report and the property questionnaire) a transcript of the single survey report is acceptable to NBS subject to the criteria below – Single Survey. Transcriptions under any other circumstances are not acceptable.

Single SurveyThe Single Survey and Generic Mortgage Valuation are not suitable for the purposes of NBS. However, a transcription of the Generic Mortgage Valuation Report into the NBS format is acceptable where the valuer is on the NBS panel. The following rules apply: -

The Single Survey must have been carried out no more than 90 days before receipt of instructions from NBS. Where a transcription cannot be issued because the report is over 90 days, contact the seller to check whether the Single Survey can be replaced. If so, a Replacement Single Survey should be issued, and a transcription from this forwarded to NBS. If the seller will not permit a Replacement Single Survey, return the instructions to NBS advising a Replacement has not been authorised by the seller.

The Valuer preparing the transcription must be the one who prepared the original Single Survey or Replacement Report. However, where the valuer is absent for 5 days or longer (due to illness, holiday or is no longer with the firm) and the firm are prepared to issue a transcription prepared by a Senior Valuer, then this is acceptable. The firm will be liable for the accuracy of the report.

The valuer must have more than 3 months post qualification experience. Where post qualification experience is over 3 months but less than 2 years refer to Section 2.0, Valuer Qualifications and Appendix 1, in Section 2, Post First RICS Qualification Nationwide Acceptance Criteria.

Reject any request received where a Replacement Single Survey is required and the offer and acceptance is in place.

The Replacement Single Survey Report must include both an internal and external inspection of the property to the same standard as the original Single Survey inspection.

The transcriptions will be provided free to NBS. A copy of the Home Report may subsequently be requested as part of a QA/audit review of

certain cases. This should be supplied, although Nationwide accepts this may require the permission of the vendor. If this permission is not forthcoming then this should be communicated to ValuationsQualityAssurance@nationwide.co.uk

Where a Homebuyers Report already exists, Nationwide or its panel manager may request a copy which must be supplied immediately.

Properties that are for sale or offered to Nationwide as security for a loan without the benefit of a Home Report (including a Single Survey Report)

No transcriptions should be provided for NBS if a Home Report, which includes a Single Survey and Generic Mortgage Valuation, energy report and property questionnaire has not been previously prepared for the property e.g. Right to Buy, private sales (property has not been marketed), inter family sales or transfers, properties marketed prior to the introduction of the relevant legislation, new builds and remortgages. For the definition of new builds please refer to Section 5.1 New Dwellings.

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Nationwide do audit transcriptions and where it finds valuers not adhering strictly to the criteria detailed above it reserves the right to take appropriate action against the panel firm. This includes, but is not limited to, suspending or removing the panel firm from the Nationwide Panel.

3.2 Applicant Produced Reports England Wales and Northern Ireland

No transcriptions should be provided to NBS.

3.3 Negligence Claims

The Society's pre and post valuation documentation includes disclaimer clauses; it is essential valuers do not do or say anything which could be construed by the courts as having "waived" or "overridden" the disclaimers. All Mortgage Valuation Reports (MVR’s), see Section 7, must be addressed to the Society.

The following expressions must not be used: -"the Applicant" should note, etc.""the Applicant's" attention is drawn, etc."

For their own protection all valuers must: -

Familiarise themselves with the Society's documentation relating to their work.

3.4 Valuation and Recommendation

Valuers’ recommendations as to the suitability, valuation, retention and other matters in the report must not be influenced by the amount of the advance; as this may be increased subsequently.

"Market Value for Mortgage Purposes" is required as the RICS Valuation Standards definition. When repair or improvement works are necessary, valuations are required "unimproved" and "improved".

3.5 Declining Unsuitable Securities

Mortgage Valuation Report - In declining an unsuitable property the report form wording should be tactful. Properties which are already in mortgage can pose severe problems to the Society and cause anguish to the existing borrower if declined for a new applicant.

HBR and Building Survey Reports - Whilst the contract is between the valuer and the applicant it is recommended if the property is not, or may not, be a suitable security to Nationwide, that the client is advised. It is further recommended instructions should be taken from the client as to whether a full report is required. If not, a fee refund dependent upon the amount of work involved (e.g. whether the property was at first glance unsuitable, or only deemed unsuitable after careful inspection) should be considered.

3.6 Defects, Potential Hazards and Concerns

Valuers must identify any defect, potential hazard or other concerns detected within the scope of the inspection for mortgage purposes and make appropriate site notes. Where appropriate a retention should be made, see Section 3.8 Retentions.

If a retention is not appropriate/required and there is no scope on the form to note such matters complete the form without mentioning details.

If clarification is required on any issues which might in the future adversely affect marketability advise the property is not suitable security, do not value and request additional information. On receipt of any additional information either continue to decline the property or accept it by issuing a revised report.

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For the avoidance of doubt full, or whole, retentions (retentions equal to the estimated value of the property when fully repaired) are not permissible. See Section 3.8, Retentions for further guidance.

Where a basic structural defect is present, such that renovation ceases to be possible or economic, the property is not a suitable security for Nationwide and no valuation should be provided.

Where the property is run down and in need of total renovation and/or it is likely that due to its construction and state of repair (or lack off) it is probable that any purchaser is likely to demolish the property and rebuild, the property is not a suitable security and no value should be provided. Where an applicant advises you they intend to fully refurbish, demolish and rebuild or it is known there is planning permission to demolish and rebuild, the property is not a suitable security. Please do not review any plans or proposals provided by the applicant.

The following policy should be implemented: -

Active Structural Movement - See guidelines in Section 4, Structural Movement and Reporting.

If the structural movement affects outbuildings only please see Section 3.19, Property Insurance and the subsection on Outbuildings.

Dry Rot - (diagnosed or suspected) - In all cases the property is not a suitable security for the Society, do not provide any valuation figure at all. The property may be reconsidered on receipt of a timber specialist’s report and estimate. If an acceptable report is received the property may be regarded as a suitable security and you should issue a revised report with appropriate current and with works values and retention details.

Dampness/Wet Rot/Woodworm – The amount of retention is at the valuer's discretion taking into account the extent of the defect, and the risk of consequential damage. Where damp is present request a report covering the whole property.

Japanese Knotweed – see Section 6.12 Japanese Knotweed.

Previous Specialists Work - of which the valuer becomes aware:

a) Underpinning

Refer to Section 4.3, Underpinned Properties.

b) Other Defects –

Retention at valuer's discretion.

Please refer to Section 3.8, Retentions.

3.7 Specialists Reports

Specialists’ Report Referrals - Specialists reports and estimates called for in the valuation report and subject to a retention will be referred to the original valuer for vetting.

The valuer will be expected to advise the Society's Processing Unit whether or not the report is acceptable in connection with previously identified problems. Comment will not be expected on other matters, particularly those going beyond the scope of the original mortgage valuation inspection.

Acceptable Reports - Reports are only acceptable from suitably qualified firms and professions and where a proper detailed inspection has been made. Ideally the report should be addressed to the applicant and this is a requirement for structural reports. If a structural engineers report is not addressed to the applicant the valuer must advise Nationwide to make a request to the applicant to obtain the author’s permission for the applicants and their advisors to rely on its contents. Other reports such as damp and

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timber reviews are often addressed to the current vendor. Providing the reports cover the issues required and are from an appropriate firm they can be accepted even if not addressed to the applicant.

Any report must adequately deal with the whole matter which was in doubt rather than be confined to a particular item mentioned in the mortgage valuation report. (e.g., with damp reports all walls should be checked even where the valuation report only refers to damp in a particular room). Where a structural report is received it must contain a comment that the property is either stable, or will be stable (after completion of the works), and is/will be acceptable for mortgage purposes.

Unacceptable Reports - Poorly presented reports, or those with hedged opinion requiring further detailed investigation (for example opening up of foundations), must be tactfully rejected. Where a report is not recent the valuer should call for a new report where appropriate.

Final Inspection - The specialist’s report, any guarantee and borrower's letter of satisfactory completion should be vetted by the original valuer. The valuer must check that ancillary work specified by the specialist has been satisfactorily carried out, where this can be done without opening up the structure (e.g., in conjunction with specialist DPC installation, hacking off rendering, lowering ground level, etc).

Work done by a firm other than the one previously approved - All documentation must be vetted to ensure the same extent/quality of work.

Specialists Qualifications - Nationwide cannot insist on trades people having specific qualifications except where matters relate to safety (gas and electricity) or structural stability matters; as this may cause problems with local Trading Standards officers. The following general guidance is given on the most common forms of reports requested: -

a) Timber Preservation – Reports should be professionally produced covering the whole property. Ideally the firm should be a member of the Property Care Association or National Register of Property Preservation Specialists or other similar trade body and offer an insurance backed guarantee. Professionally produced reports from firms without the required professional membership can be accepted but please advise us of the short comings. An insurance backed warranty is required. Unprofessional, incomplete reports should be rejected.

Whenever possible the same timber specialist should execute all related and consequential work. This will avoid dispute as to the cause of and liability for any failure. A long-term guarantee must be offered.

b) Chemical Damp Proofing - Reports should be professionally produced covering the whole property. Ideally the firm should be a member of the Property Care Association or a "Registered Firm" under the BSI Registered Firm Scheme or similar trade body and should offer an insurance backed guarantee. Professionally produced reports from firms without the required professional membership can be accepted but please advise us of the short comings. An insurance backed guarantee is required. Unprofessional, incomplete reports should be rejected.

Whenever possible the same damp specialist should execute all related and consequential work. This will avoid dispute as to the cause of and liability for any failure. A long-term guarantee must be offered.

c) Structural Stability Matters - Insurers require sight of a report on the property from a qualified Structural Engineer (with qualification M.I.C.E, F.I.C.E, A.M.I Struct E, M.I. Struct E or F.I Struct E.) or a Chartered Building Surveyor, M.R.I.C.S. or F.R.I.C.S., Corporate Building/Corporate Structural Engineer, M.A.S.I., F.A.S.I,, M.C.A.B.E, F.C.A.B.E, M.C.I.O.B. or F.C.I.O.B.

d) Roofing - Trade specialists. Reports must state the life expectancy when repaired and the desirability of a new covering now rather than later.

e) Japanese Knotweed - Please refer to Section 6.12 Japanese Knotweed – an insurance backed guarantee is required.

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3.8 RetentionsRetentions should not be recommended for sums less than £1,000. In addition, retentions should only be recommended where essential works are required to the property. There are two categories of essential works:

1) Works required to the property which if not dealt with immediately will materially affect the value of the security. These are regarded by the Society as ‘essential remedial works’. Applicable to purchases, remortgages and further advances.2) Proposed improvement works to the property. Any work that adds value to the property, regarded as ‘improvement works’ (e.g. an extension, double glazing). Applicable to remortgages and further advance applications. If an applicant advises of improvements to be made on a purchase ignore the planned improvements.

Maintenance items of a general nature are not to be subject of a retention.

Items subject to a retention must be listed and clear as to what work is required as they are, on the majority of cases (main mortgages and further advances), copied directly from the valuation report onto the offer.

For cases where essential remedial works are required ascertain on remortgages and further advances if the works are to be undertaken by the applicant. If the applicant has no plans to undertake the work the property is not a suitable security and no value should be stated in the report. Detail the essential remedial works required in the retentions section.

For remortgages and further advances where the applicant is to undertake the works and purchases, subject to normal criteria, the property can be classed as a suitable security and an appropriate retention recommended.

For improvement works recommend a retention for the costs to complete the work and include a current value and improved value.

When you recommend a retention in Section 10 of the Valuation Report, please also answer ‘no’ to the question “Is the property readily saleable at or above the valuation figure” in Section 9 (other matters that may materially affect marketability). This process allows the case to proceed, but creates a flag to our processing teams that a retention has been recommended.

Where a current value cannot be given until specialist reports have been received detailing the extent and cost of works required, the property is not a suitable security. No value should be stated and no retention made. Advise what reports are required in order to reconsider the property.

For the avoidance of doubt full, or whole, retentions (retentions equal to the estimated value of the property when fully repaired) are not permissible. Do not under any circumstances provide a current value of zero, with a retention equal to the improved value and an improved value. This may lead to an incorrect offer being issued.

For shared ownership cases refer to Section 5.10, Shared Ownerships. It is essential reference is made to this section as some properties are not suitable securities.

For new builds please refer to Section 5.1, New Dwellings and the subsection on reporting policy on builders (not self builds).

3.9 Duplicated/Simultaneous Applications

Where a firm receives a request for a Mortgage Valuation Report or External Inspection Report on a property visited by them within the last 30 days and the original inspection was for a mortgage valuation, or more detailed, report the original valuer may issue a report without a further visit. The valuation figure supplied should represent the current market. The standard fee for the report type requested can be charged even though a new visit/inspection has not taken place.

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Where a firm receive a request for a Mortgage Valuation Report on a property visited by them more than 30 days ago a new visit/inspection is required and the standard fee charged. The original valuer does not have to be given the instructions.

3.10 Leasehold Tenure

Minimum Lease:

NBS have a requirement that the lease term must have a minimum of 55 years remaining (50 years for Northern Ireland and Scotland).

Even if the lease term is greater than 55 years remaining, if there is limited demand for such properties in the area the property is not a suitable security. (See Table below)

Lease Terms:

Nationwide expect valuers to make every reasonable endeavour to obtain lease information at the point of inspection, either by exhaustive enquiry, or by reference to the actual lease document via Land Registry (it follows that this premise must apply both in respect of the subject and comparables).

Valuers need to be particularly vigilant where the property may be subject to a ‘modern lease’ (and as such, susceptible to onerous terms); valuers should therefore consider the type of property/location, date of construction and the original developer (history/reputation) etc. Reliance upon assumptions where the Lease may be ‘modern’ is inappropriate.

The table below defines the parameters of what we consider to comprise acceptable/unacceptable lease terms in the second-hand and New Build market place.

Where lease details sit within the ‘Valuer Consideration’ section, Nationwide will expect the Valuer to consider the impact on saleability and provide a valuation that reflects the lease terms as advised. At all times Valuers must consider the prevailing market place in which they operate and in certain extreme circumstances, there may be grounds to decline/return a nil valuation where it is perceived there is no demand as a result of the lease terms for the specific property type. However, the precept must be, everything has a value, and it is therefore expected that in the majority of these referred cases, a valuation reflecting the terms will be provided.

Where lease terms are referred for Valuer consideration and where the valuation is changed, the rationale relating to any adjustments in value, including comment on the basis of (re)assessment, should be added to the original SCT.

When considering an ‘onerous’ lease, valuers would be advised to reference the recently published ‘Leaseholder Pledge’ document where named freeholders have agreed to make good onerous lease terms by a deed of variation. Whilst clearly only impacting certain properties, if the freeholder can be identified, this may be an appropriate avenue to explore before providing valuation advice.

Ground rent review mechanisms vary considerably, and it is not the intent of this guidance to comment on each and every type. Underpinning any assessment however should cross reference RPI which in general terms is an accepted methodology (assuming frequency of reviews meet our criteria).

Second Hand Property Lease TermsAcceptable Value by normal methodology

Valuer Consideration Where marketability will be severely affected - decline. In all other instances reflect any

Unacceptable Decline

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‘onerous’ terms in the mortgage valuation figure

Unexpired Lease Term >85 years 55 – 85 years <55 years

Ground Rent % of property value

≤0.1% >0.1 to ≤0.5% >0.5%

Ground Rent review period

≥10 years Between 5 and 10 years ≤5 years

Ground Rent Escalation

RPI or less Linked to value of building*

Linked to any indices greater than RPI

Doubling <20 years (e.g. every 5, 10 or 15 years)

Compounded RPI

Other Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc

Estate Rent Charges >£500 p/a**

Service Charges >0.5% of the property value p/a**

Anything that appears onerous, unusual or out of the ordinary.

New Build Property Lease TermsAcceptable

Value by normal methodology

Valuer Consideration Where marketability will be

severely affected - decline. In all other instances reflect any

‘onerous’ terms in the mortgage valuation figure

Unacceptable Decline

Unexpired Lease Term (doesn’t apply to Shared Ownership)

≥125 years flats≥250 years houses

N/A <125 years flats<250 years houses

Ground Rent % of property value

≤0.1% N/A >0.1%

Ground Rent review period

>5 years N/A ≤5 years

Ground Rent Escalation

RPI or less Linked to value of building*

Linked to any indices greater than RPI

Doubling <20 years (e.g. every 5, 10 or 15 years)

Compounded RPI

Other Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc

Estate Rent Charges >£500 p/a**

Service Charges >0.5% of the property value p/a**

Anything that appears onerous, unusual or out of the ordinary.

*Conveyancers will be asked to include the following information when referring the lease terms (which we

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expect to be reasonable and transparent): How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is

the GR calculated/apportioned per property? Provide the current valuation and ground rent for each unit What is the mechanism for future valuations of the block and how is the GR calculated/apportioned? What is the right of appeal? And is this a documented process within the lease? Who bears the cost of the valuation (and appeal) process The review period is not less than twenty years

**Conveyancers will be asked to confirm what the Estate Rent Charges and Service Charges cover.

New Build Note: Apart from unexpired lease term, Ground Rent criteria applies to all New Build property types including Office Conversions and Shared Ownership. For Shared Ownership 0.1% of 100% value is acceptable, the Ground Rent isn’t limited to 0.1% of the value of the share.

3.11 Roads

Where a property is serviced by an unmade road this should be taken into account in the valuation figure provided. There is no requirement to highlight details in the report.

3.12 Rights of Way

There is no requirement to comment on shared access details.

3.13 Services/District Heating

Electricity – mains electricity must be supplied to the property.

General - The type of water supply, sewage disposal and other services must be ascertained by investigation and enquiry. This particularly applies in the case of Ministry of Defence or similar dwellings and country type properties away from main conurbations where private services are common.

Natural Water Supplies are acceptable. Where raised from the ground this should be by electric pump and a retention imposed if not. (No retention is required if less then £1,000).

Septic tanks, private sewage systems, reed beds etc are acceptable subject to being accepted locally by the market and other lenders.

The Society does not wish to mortgage properties with un-adopted sewers where there are known functional and/or legal problems. Where there are know problems the property is not a suitable security. Request further reports to clarify the situation and if acceptable issue a revised report stating the property is a suitable security and place a suitable retention on the case if appropriate. If the situation is not acceptable confirm the property is still unsuitable, there is no requirement to issue a revised report.

District Heating Systems - Are acceptable providing there are no known problems with the system or disputes between tenants/customers and Landlord/suppliers. Additionally, other major lenders must also be prepared to lend.

3.14 “Hope” or “Development” Value

Properties having large gardens or adjoining building plots with “hope” or development” value must be valued excluding the potential benefit, as planning approvals are of limited duration.

Overage agreementsAn overage agreement is where the seller is entitled to a payment if the new owner (or subsequent successor in title) seeks planning permission to develop or develops the land or the building.

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Where a property is subject to an overage agreement relating to development of commercial or residential units on the land this can be ignored. The situation is acceptable.

Where a property is subject to an overage agreement relating to development of the building (for example payment of a sum if a conservatory or extension is added to the property) the existence of the overage agreement should be taken into consideration when considering the current value and marketability. Generally such an overage agreement will be acceptable. However, if it is felt the agreement severely adversely affects the demand for the property locally then consideration should be given to advising the property is unsuitable for mortgage purposes.

3.15 Alterations and Extensions Recently Carried Out

Valuers need only report on building works that from inspection, or enquiry, have been completed in the last 12 months and contraventions are clearly evident. Make a retention and list details - no further action is required.

3.16 Flying Freeholds

Partial flying freeholds are acceptable. There is no maximum floor area; however, where the property comprises a partial flying freehold it is only acceptable where the marketability and value of the property are not adversely affected. Special consideration may be given to coach house flats. Please refer to Section 5.7, Flats/Maisonettes – for owner occupation and the subsection on Legal Title and freehold.

3.17 Release of Part Security

Full details will be given with each instruction.

Where a building is to be split, a new mortgage valuation report will be required on the remaining security.

A site inspection should be undertaken in all cases.

3.18 Property Insurance

RICS Guidance states that a reinstatement Cost need not be provided. Nationwide does require a figure to be provided.

Reinstatement Cost - The insurance figure required is the full cost of "reinstatement" of all buildings to their existing style, including basements, attics, paths, drives, terraces, boundary walls, retaining walls, outbuildings, fences, swimming pools, etc, plus an allowance for demolition and professional fees and any special foundations known to be required.

The correct figure is essential as future revisions may be index-linked.

In a very few cases the property may be of such complex style, size or construction that a rebuilding cost cannot be calculated within the scope of the ABI/BCIS House Rebuilding Cost Index. These properties must not be classed as special insurance risks (unless other risks have been identified which require such a referral e.g. structural movement) and the Valuer should, nevertheless, provide a figure for insurance purposes sufficient to cover basic reconstruction.

If the report has a General Comments section (Section 10) an appropriate version of the following should be added:

Due to its [construction/size/character/period style] * this property lies outside the parameters of standard calculations for insurance purposes. An estimate is given which we believe will provide for the basic reconstruction of the security for the purposes of a lender. A more detailed assessment of the reinstatement cost of the [more elaborate features/fittings/architectural detail] * should be obtained by the Applicant to ensure that any necessary additional cover is arranged in due course.”

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[* Apply as appropriate]

If there is no General Comments section on the form, there is no requirement to include the comment above in the report.

The basis for calculations must be as follows: -

Residential Properties - BCIS "Guide to House Rebuilding Costs for Insurance Valuation" prepared for the Association of British Insurers (ABI) including VAT on fees only. (Published annually).

Floor Area/Qualifications - The "gross floor area" to be stated on the report must include the thickness of external walls and integral garages but exclude uninhabitable buildings, cellars* and attics*. The latter items* should be included if they are approached by permanent staircases and have lined walls, ceilings and natural lighting. Unusual features included or excluded must be reported.

Notification of Material Facts - When re-inspecting a property, say for a further advance, the valuer must report to the Society, but not the borrower, any evidence of subsidence or other risk which has materialised and advise whether an insurance claim should be made together with further investigations. Please contact Nationwide, see Section 1.1, for advice on how to complete the report.

Flats/Maisonettes - An insurance figure is required for the unit only.

Please refer to Section 4 – Structural Movement Reporting and Mining.

The following guidance is given relating to the questions asked on the Mortgage Valuation Report.

Structural MovementAll forms ask the question: “Has the property ever been affected by structural movement caused by subsidence, settlement, landslip or heave?” This question also relates to an attached out building or a separate out building showing active signs of movement, the cause of which may influence the main building in the future.

One form asks “If yes, is this movement considered to be long-standing in nature and the risk of further movement taking place acceptable?” If answered yes no further action is required. If answered no the next question is: “If not acceptable, could the property be reconsidered if a structural report is produced by an appropriately qualified Engineer/Surveyor.”

The other form asks: “Is the risk of further movement one the Society can accept” If answered yes no further information is required. If answered no the question: “Does this property need to be referred due to special insurance risks?” must be answered yes and details recorded in Section 10 General Remarks.

Property UnderpinnedOne form asks: “Is there any indication that the property has been previously underpinned?” This question must be answered yes or no and no further action is required. If the question is not asked the question: Does this property need to be referred due to special insurance risks?” must be answered yes. See 4.3, Underpinned Properties for details to be recorded/requested in Section 10 General Remarks in the form.

TreesOne form asks: “Is there a significant risk of structural movement requiring an arboriculturalist report?” Answer yes or no, no further information is required.

If the form does not ask the above question refer to Section 11, Trees and Buildings.

DrainsOne form asks: “Is there a significant risk of structural movement requiring a drains test?” Answer yes or no, no further information is required.

If the form does not ask the question above refer to Section 4.5, Drains Test.

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Other factors affecting insurance including: property in poor state of repair*, walls showing signs of damage from floors (sulphate/chemical attack or settlement) and signs of movement in adjoining properties/others in a terrace, Japanese Knotweed.The next question is: “Are there any other factors that create a significant risk of future structural movement?” Answer yes for the following scenarios, and any other factors that are considered appropriate, and detail the issues:

a) The property is in a poor state of repair.b) The property walls are showing signs of damage from sulphate/chemical

attack or settlement. See 4.10, Floors – Sulphate/Chemical Attack and 4.11, Floors – Settlement.

c) There are active signs of movement in adjoining dwellings and others in a terraced block, where it is possible the dwelling being reported on could in the future be adversely affected. See 4.6, General Subsidence, etc in Locality.

d) Japanese Knotweed where the plant is causing or has caused damage to the property in the past.

If the question is not asked answer yes to the question: “Does this property need to be referred due to special insurance risks” and record details in Section 10 General Comments.

* Please refer to Section 3.6 Defects, Potential Hazards and Concerns regarding properties requiring refurbishment and 3.21, Uninhabitable Properties.

FloodingOne form asks: “Are you aware if the property (including gardens and outbuildings) has flooded in the past?” Answer yes or no, no further information is required.

If the question is not asked answer yes to the question “Does this property need to be referred due to special insurance risks” if the property (including gardens and outbuildings) have flooded in the last five years.

Insurance ClaimOne form asks: “Is there any evidence of an insurance claim in progress relating to the subject property?” If the answered yes, provide further details.

If the question is not asked answer yes to the question: “Does this property need to be referred due to special insurance risks?” and include details in the Section 10 General Remarks.

Outbuildings to be excluded from coverPlease note outbuildings attached to the main buildings are treated as being the main building not an outbuilding. Additionally if a detached outbuilding is suffering from active movement the cause of which may influence the main building in the future treat the outbuilding as attached and refer to structural movement above.

Where detached outbuildings, subject to paragraph above, are unsound and not suitable for cover against all insurance perils they should be excluded from cover.

Where any outbuilding is excluded from cover it should also not be included in the valuation figure. The property can be accepted as a suitable security.

One form asks: “Does any part of the property (including any outbuildings) need to be excluded for insurance?” If answered yes detail what part(s) of the property need to be excluded and the reasons for exclusion.

If the property is accessed over a private road or drive over land not part of the security this must be excluded from cover and details as required above recorded.

If the question is not asked answer yes to the question “Does this property need to be referred due to special insurance risks?” and include details in the Section 10 General Remarks.

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3.19 Restrictive Covenants - Breaches

Where a valuer is aware of restrictive covenants which are being breached answer no to the question: ‘Is the property readily saleable at or about the valuation figure?’ and include details in the comments box.

3.20 Blight

Valuers are expected to know about major public/private schemes of work, e.g. roads, buildings, etc, or other factors which might blight a proposed security. Any information revealed in the searches will be referred to the valuer for comment.

The HS2 project has been gaining significant exposure and whilst it is too early for definitive valuation or lending policy decisions to be made at a letterbox level, it is clear that some Communities and types of home are being impacted to different extents. Although longer term impacts are often far less severe than those perceived or anticipated, we rely on the Valuer to assess the impact today of any proposed security.

Hence, Nationwide/TMW will assume all Valuers will keep in close contact with the affected areas and will be able to advise accordingly. For the avoidance of doubt, this means that if a property cannot be easily marketed at a fair price due to the potential of the scheme at the time of valuation, this should be reflected in the Valuation and or the property declined if the extent to which the market is affected is to blight the security.

3.21 Uninhabitable Properties

In respect to the following grid where improvement works required are less than £1,000 accept the property as a suitable security and provide a present valuation figure only.

Current status Examples MVR (both purchases and remortgages)

FARR(Further Advance Revaluation Report

Currently HABITABLE but will be temporarily uninhabitable during the course of MINOR work.

e.g. Proposed kitchen/Bathroom refit.

Suitable security. Provide a present condition value and a completion of works value and include retention details – amount and list works required. If insufficient detail is known regarding the proposed works provide a present condition value only.

Suitable security. Provide a present condition value and a completion of works value and include retention details – amount and list works required. If insufficient detail is known regarding the proposed works provide a present condition value only.

Currently HABITABLE but will be uninhabitable during the course of MAJOR work

Loft extension, additional floor, or significant extension rendering existing accommodation unusable

Unsuitable security. Suitable security. Provide a present condition value and a completion of works value and include retention details – amount and list works required.

Currently, UNINHABITABLE due to

e.g. no bathroom or kitchen

Suitable security. Provide a present

Suitable security. Provide a present

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MINOR works in progress.

(partially stripped property; owners in process of refitting kitchen/bathroom).

condition value and a completion of works value and include retention details – amount and list works required.

condition value and a completion of works value and include retention details – amount and list works required.

Currently, UNINHABITABLE due to MAJOR works needed/in progress.

e.g. completely stripped out property requiring MAJOR work including kitchen/bathroom, new services, total redecoration, and possibly rewiring, re-plumbing etc. (multiple trades will be involved). Development finance in any other guise.

Unsuitable security. Suitable security. Provide a present condition value and a completion of works value and include retention details – amount and list works required.

Property requires total refurbishment or to be demolished and rebuilt or applicant is planning to totally refurbish or demolish and rebuild the property. See Section 3.7 Defect, Potential Hazards and Concerns.

Knock down and rebuild project

Unsuitable security. Unsuitable security.

Section 4 - Structural Movement Reporting and Mining4.0 Valuers Guidelines - Structural Movement and Reporting

This section details standard approaches to be applied when dealing with structural movement, the reporting of defects relating thereto and associated recommendations. It refers to completion of the Mortgage Valuation Report forms.

All Key Statements referred to in this section are listed in appendix 1.

For Remortgages and Further advances please see Section 7.3. The property must not have suffered from subsidence, heave or landslip.

For Further Advance Revaluation Report (FARR) please refer to Section 1.1, General Enquiries for advice on how to complete the form.

4.1 Mortgage Valuation Report Questions

Please refer to the following sections for guidance:4.2, On receipt of engineer/surveyor report; 4.3, Underpinned Properties;4.4, Outbuildings.

The following guidance is given relating to the questions asked on the Mortgage Valuation Report (MVR).

The property has not been affected by structural movement caused by subsidence, settlement, landslip or heave:

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Answer no to the question: “Has the property ever been affected by structural movement caused by subsidence, settlement, landslip or heave?” This question appears on both forms and there are no further concerns.

The property has been affected by structural movement caused by subsidence, settlement, landslip or heave however the movement is considered to be long standing and the risk of further movement taking place is acceptable:

If the answer to the question in the subsection above is yes:On one form the next question is: “If yes, is the movement considered to be long standing in nature and the risk of further movement taking place acceptable?” Answer yes, there are no further concerns.

On the other form: “Is the risk of further movement one the Society can accept? (If no decline the property). Answer yes and include key statement 1 in Section 10 General Remarks, there are no further concerns.

Where the property has been affected by structural movement caused by subsidence, settlement, landslip or heave and the risk of further movement taking place is not acceptable and the property cannot be reconsidered even if a report is produced by an appropriately qualified engineer/surveyor:

On one form the following question is asked: “If not acceptable, could the property be reconsidered if a structural report is produced by an appropriately qualified Engineer/Surveyor?” If the property is clearly unstable or unsuitable for mortgage for other reasons (for example construction type), state no and note the property is not suitable security, do not provide a value. The property will not be considered further.

If the form does not ask the above question answer yes to the question: “Does the property need to be referred due to special insurance risks?” and in Section 10 General Remarks include key statement 2. The property is not a suitable security, do not provide a value. The property will not be considered further. (The following question: Has the property ever been affected by structural movement caused be subsidence, settlement, landslip or heave?” must be answered yes. And the following question: “If yes, is the movement considered to be long standing in nature and the risk of further movement taking place?” must be answered no.

Where the property has been affected by structural movement caused by subsidence, settlement, landslip and heave and the property can be reconsidered if a report is produced by an appropriately qualified engineer/surveyor:

If the form asks: “If not acceptable, could the property be reconsidered if a structural report is produced by an appropriately qualified Engineer/Surveyor?” Answer yes. The property is still an unsuitable security and valuation figure should not be provided.

If the form does not ask the above question answer yes to the question: “Does the property need to be referred due to special insurance risks?” and in Section 10 General Remarks include key statement 3. The property is not a suitable security, do not provide a value. (The following question: Has the property ever been affected by structural movement caused be subsidence, settlement, landslip or heave?” must be answered yes. And the following question: “If yes, is the movement considered to be long standing in nature and the risk of further movement taking place?” must be answered no.

4.2 On receipt of engineer/surveyor report

Refer to Section 3.8 for engineer/surveyor qualifications deemed acceptable to Nationwide.

If the report concludes the movement is historic issue a new report as required, referring to Section 4.1 advising:

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The property has been affected by structural movement caused by subsidence, settlement, landslip or heave however the movement is considered to be long standing and the risk of further movement taking place is acceptable

If the engineer/surveyor’s report is inconclusive or advises further monitoring and/or investigations are required, the situation is not acceptable. The property remains an unsuitable security.

If the report advises the property is suffering from ongoing movement the property is unsuitable for mortgage and will not be reconsidered by Nationwide until all the works have been completed and supervised as required. The exception is where movement is to a porch, garage, outbuilding or small extension if no monitoring is required and the works recommended will ensure the property is stable. Recommend an appropriate retention. If monitoring is required prior to ascertaining the amount of works required, the property remains an unsuitable security.

Where the property remains an unsuitable security there is no requirement to issue a new report. Merely confirm the property remains unsuitable.

Where the property is now considered suitable a new report is required.

The form must still be completed stating the property has been affected by structural movement caused by subsidence, settlement, landslip and heave. Continue to answer no to the following question if asked: “If yes, Is this movement considered to be long standing in nature and the risk of further movement taking place acceptable?” Then answer yes to: If not acceptable, could the property be reconsidered if a structural report is produced by an appropriately qualified Engineer/Surveyor?” On receipt of the report Nationwide’s processing system will register this as a subsequent report and process accordingly. The property is a suitable security.

Where the report does not have the above questions continue to answer yes to the questions: “Does the property need to be referred due to special insurance risks?” and “Has the property ever been affected by structural movement caused by subsidence, settlement, landslip and heave?” Answer yes to the question: “Is the risk of further movement one the Society can accept?” and include details in Section 10 General Remarks.

4.3 Underpinned Properties

Answer yes to the following question where it appears on the report: “Is there any indication that the property has previously been underpinned?” No further information is required. If the property is still considered to be marketable, mortgageable etc then it may be treated as a suitable security. The Society will request details regarding the underpinning prior to proceeding to offer.

If the above question is not asked on the report, answer yes to the question: “Does this property need to be referred due to special insurance risks?” In Section 10, General Remarks report fully on the movement and the repairs undertaken. Make a retention equal to the full value of the property for provision of the following information:

a) Name of contractor.b) Plans and specifications.c) Name of owner at time.d) Name and address of any insurance company which dealt with a claim.e) Engineer's report and supervision certificate.f) Any guarantees.

The current value should be £0.00 or £1.00

On receipt of the above information, if satisfied that underpinning works have arrested the movement, issue a report accepting the property with no retention. If the underpinning works took place over three years ago use Key Statement 1. If works took place less than three years ago do not use key statement 1; recommend existing insurers be retained stating it is assumed they paid for the repairs or are aware of the works undertaken.

In some cases it may be prudent only to accept underpinned terraced or semi-detached

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dwellings if the abutting ones have been similarly repaired, or where it is proved that the proposed security is unaffected by a local or inherent individual problem.

4.4 Outbuildings

Please refer to Section 3.18, Property Insurance and the sub section on Outbuildings.

4.5 Drains Test

One form asks: “Is there a significant risk of structural movement requiring a drains test?” Answer yes or no, no further information is required.

If the form does not ask the question in Section 10 General Remarks use key statement 7 (see Appendix 1) where a drains test is recommended and key statement 6 (see Appendix 1) if it is mandatory as a condition of the offer.

4.6 General Subsidence, etc in Locality

Each property should be taken on its merits.

In respect to any active signs of movement in adjoining dwellings and others in a terraced block, where it is possible the dwelling being reported on could in the future be adversely affected, it must be reported. See Section 3.18, Property Insurance, the item on Referral due to Special Insurance Risks.

4.7 Tie Bars, Straps

Minor structural movement (such as may be caused by lack of adequate lateral restraint to walls) which has adequately been arrested by steel straps and/or tie bars will be acceptable if the presence of the latter is from the Valuer’s past experience acceptable to purchasers in the locality. Structures which are held together with numerous unsightly straps, etc, are unsuitable securities.

4.8 Cavity Wall Tie Failure

The following policy must be adopted: -

a) Where the valuer is confident that cracking and other symptoms indicate a problem of purely tie failure:

Make a retention for a specialist report and remedial work.

b) Where wall tie failure may be a problem but cracking and other symptoms may be indicative of compound problems, of say, inadequate lateral restraint, subsidence, heave, etc:

Treat the property has having been affected by structural movement caused by subsidence, settlement, landslip and heave and refer to Section 4.1, Mortgage Valuation Report Questions above to ensure an appropriate engineer/surveyor’s report is requested.

4.9 Trees and Buildings

One form asks: “Is there a significant risk of structural movement requiring an arboriculturalist report?” Answer yes or no, no further information is required.

If the form does not ask the above question use key statement 4 or 5 (see Appendix 1) as appropriate in Section 10 General Remarks.

4.10 Floors - Sulphate/Chemical Attack

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When sulphate bearing hardcore/fill is known to exist, (as in many British Coal Corporation dwellings), but no problems are evident, a warning must be given as to its presence and possible future problems in Section 10 General Remarks (where this section exists in the report) which may extend to the walls. If this section does not appear in the report no comment is required but details site notes should be made. Properties must not be rejected just because of the presence of sulphate.

Where sulphate/chemical attack of floor concrete is evidenced by cracking, disintegration, heave and/or expansion treat the property as unsuitable and request an appropriate report.

Where the walls are showing signs of damage from the floor defects see Section 3.18, Property Insurance.

4.11 Floors - Settlement

"Severe" and "widespread" problems must be rectified and a suitable retention applied. "Slight" problems, where the risk of significant further movement seems unlikely, may be dealt with by a warning only in Section 10 General Remarks where this section appears on the report. If this section is not present on the report no comment is required; please ensure full site notes are made.

Where the walls are showing signs of damage from the floors see Section 3.18, Property Insurance.

4.12 Mining Reports

In areas of past mining activity conveyancers, will as a matter of course, undertake a mining search appropriate for the area. There is no requirement to request a report unless there are specific concerns relating to the property.

4.13 Mining Subsidence Damage/Activity/Suitability - Policy

a) Properties affected by old subsidence: Accept unless any of the following apply to the property: i) Damage is so bad that there is an extremely limited market.ii) Structurally unsound.

b) Properties which will be undermined in the future: Accept irrespective of when workings proposed unless the latter will be shallow (i.e., below 100 metres and the risk of severe movement is high).

c) Properties currently affected by ground movement i) In coal mining areas where movement is in the British Coal Corporations (BCC) damage category:Slight - Accept. Normal retention procedures apply.More than slight – see Section 4.14, Mining Damage or Possible Future Damage.

ii) In non-coal mining areas:See Section 4.14, Mining Damage or Possible Future Damage.

.4.14 Mining Damage or Possible Future Damage

Please refer to Section 4.12 Mining Reports.

Where there is a possibility mining subsidence has caused, or may in the future cause damage, the following action is required:

a) Decline the property by advising it is not a suitable security (do not give a valuation) Request for the following to be referred to consider the case further: -

i) An appropriate mining report (for example a mining report from BCC)ii) Historical details or damage and claims in respect of the property

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iii) Where appropriate written confirmation from the BCC that the property has been inspected and a claim will be met for damage now evident (if recent/active).iv) Confirmation that the applicant will benefit from outstanding claims.

b) Upon receipt of the additional information the property can be accepted with suitable retention subject to:

i) Property suffered from mining subsidence but compensation/repairs agreed and benefits to be transferred to the applicant.ii) The property is not likely to be influenced by future mining activity.iii) There is likely to be a ready market for the property.iv) Other major lenders will also lend.

c) Property suffering from movement which is not mining related. Refer to Section 4.1, Mortgage Valuation Report Questions and Section 4.2, On Receipt of Engineer/Surveyor report.

4.15 Old Mine Shafts

a) Old mine shaft located within influencing distance of the property State the property is not a suitable security (do not give a valuation) and request further detailed information (e.g. capping arrangements) and a mining report. If the dwelling and site show no signs of movement, and the subsequent reports are acceptable the property may be accepted as a security subject to the property being readily saleable and marketable and other major lenders accept such properties as security.

b) Evidence of past movement in the proposed security or others close by The property must be declined unless remedial works have been subsequently undertaken which address the problem, in which case consideration must also be given to marketability and the attitude of other lenders as detailed above.

4.16 Mining Reports Referred after Valuation

Where a valuer issues a Mortgage Valuation Report accepting the property, and subsequently receives a copy of a mining report or search, he should review the contents and:

a) Accept if there are no concerns.b) Request further reports if the report and/or search is inconclusive.c) Decline (if from the original report/search and/or additional details) it is not clear that the property will comply with all three of the following:

i) Be unlikely to suffer from mining subsidence. ii) Be readily saleable and marketable.iii) Other major lenders accept such properties as security.

Appendix 1 – List of Key Statements

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Section 5 - Security Types5.0 Introduction

The notes in this section are intended to clarify the Society's requirements for specific security types.

Refer to Section 6, Construction and Environmental Issues for details on construction.

Where Nationwide requests a valuation it is seeking assurance that each security:a) is readily marketable and will remain so;b) will maintain or increase its value in relation to similar properties in the region;c) will not require abnormal expenditure or maintenance.

A Valuation Instruction does not imply that the Society has established the property is a suitable security in all respects, subject to valuation.

5.1 New Dwellings

The policy on new build valuations covers all security types. Please also see Section 3.10 Leasehold Tenure regarding acceptable lease terms on New Build leasehold properties.

We consider it essential that the UK Finance Disclosure of Incentives Form is obtained prior to providing a valuation. In addition, Valuers must also obtain information regarding the new build lease terms, ground rent and escalation pattern and not rely on assumptions that they are reasonable. If the UK Finance DIF or lease information is not available within 48 hours of the inspection date, you can return the report with a nil valuation figure pending receipt.

Help to Buy: Shared Equity Schemes

Nationwide participates in these schemes in England, Scotland and Wales. Nationwide will not agree a builder cash back or deposit paid but will accept other incentives; for example legal fees paid or the provision of white goods so long as the total value does not exceed 5% of the property value. Part exchange of the buyers existing property is not acceptable. All incentives must appear on the Disclosure of Incentives Form.

Assignable contracts

Nationwide do not lend on new build properties where the seller has contracted to purchase the property but before completion sells the property/contract to purchase on. In these circumstances please complete the valuation report as normal (advise the property is a suitable security) and report the assignable contract details separately to ValuationsQualityAssurance@nationwide.co.uk

Warranty required

Cover under one of the following warranty schemes is required: NHBC LABC New Home Warranty Premier Guarantee Architect/Surveyor (Professional Consultant) Certificate - acceptable qualifications

and indemnity cover are checked by the solicitor in accordance with the UK Finance Mortgage Lenders’ Handbook

BLP formerly known as Building Life Plan (excluding self builds under construction). These policies are underwritten by Allianz Global but written by BLP

Build Assure (New Homes Structural Defects Insurance) Build Zone Checkmate's Castle 10 (where out buildings such as a detached garage are also

being constructed an endorsement to include these in cover is required). Global Home Warranties (Structural Defects Insurance) Q policy for residential properties Q policy for bespoke properties (detached only)

25 12 June 2019

Protek Advantage – there must be no more than 10 units in any continuous structure. International Construction Warranties (ICW) Ark Residential New Build Latent Defects Insurance: Where a detached

garage/outbuilding has been constructed at the same time as the main building the policy must include an endorsement confirming cover for the detached garage/outbuilding

Aedis: There must be no more than 20 units in the structure CRL new build 10 year structural defects insurance policy for residential property:

o New properties where Ark have underwritten the policy. Please see the final paragraph on the final certificate which will confirm Ark details. Acceptable.o New build properties underwritten by Alpha. Not acceptable.o Second hand properties being sold by first or subsequent owner and property is under two years old, with the warranty underwritten by Alpha. Unacceptable.o Second hand properties over two years old. Acceptable.

Reporting policy

Any valuation report submitted to Nationwide must include a valuation figure based on the standard valuation approach explained within the current RICS Valuation Standards and RICS Guidance Note for valuation of new build homes.

The following apply:

i) The definition of a "New Build" is a property that has been newly constructed or converted/refurbished (involving major alterations to the fabric of the building, its internal fixtures and fittings and probably its use) and has not been purchased (even if it has been occupied) within two years of its completion.  

Please note alterations to a property described as "refurbished" including the replacement of kitchens, bathrooms, services and windows etc does not fall within the definition of "New Build".

ii) The following Key Statement must be used:

Where the report form asks the following question: “The property is newly constructed/refurbished/converted, and I confirm the valuation figure provided is for the property as new. It may not be possible to obtain the valuation figure if the property is resold as second hand, especially if comparable new property is on offer at the same time.” Mark the box accordingly.

If the above question is not asked include the flowing statement in Section 10 General Remarks:

The property is newly constructed/refurbished/converted and I confirm the valuation figure provided is for the property as new. It may not be possible to obtain the valuation figure if the property is resold as second-hand, especially if comparable new property is on offer at the same time.

iii) The policy applies to ownership of the property. Therefore if the original developer is selling it is regarded as new build even if it is or has previously been occupied. Where a Housing Association is selling within two years of the property being constructed refurbished or converted this may also be regarded as a new build.

iv) The condition of the property will still be a major factor in arriving at the valuation figure.

Reporting policy on new build properties

A) Do not recommend a retention as Nationwide no longer re-inspects new builds on completion.

B) Only one valuation figure must be provided: a valuation in present condition or a

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valuation upon completion of works but not both. Please refer to Appendix 1 (Table 1) for instructions on what figures must be inserted.*

C) For completeness and transparency obtain a copy of the developer’s incentive form. Do not submit a report until you are in receipt of this form. If delays are experienced in submitting your report please report details to Panel Management. Please see Section 1.1, General Enquiries for contact details.

D) Nationwide will control exposure on any given site in accordance with our risk appetite on a phase by phase basis. Any exposure concerns should be reported to Nationwide Property Risk (please see Section 1.1 General Enquiries for contact details) who will advise whether to proceed with the valuation.

* For shared ownership new builds see appendix 1 table 1a shared ownership for new build keying instructions.

Self builds

Nationwide do not lend to self-builders to build or convert a property. However, once a property has been completed and is: occupied by the self-builder, all relevant consents (e.g. building regulations) have been signed off and an appropriate building guarantee is available, we can allow a re-mortgage to proceed to pay off the debts incurred by the self-builder. The property should be regarded as a second hand property, not a new build, and the report completed accordingly.

Self-Build incomplete – fill in S7 (property complete - no/self-build - yes). Do not provide a valuation and decline for mortgage.Self-Build complete and occupied - Leave S7 blank i.e. not applicable. Valuation and recommendations as per any other second hand dwellings.

Where the self-builder is selling after occupying the property the instructions in ‘self-build complete and occupied’ above should be followed.

5.2 Second-Hand Dwellings without Guarantees/Certificates

Ideally, all properties less than 10 years old should have certificates complying with the requirements detailed in Section 5.1, New Dwellings, above in “Warranty required”. When these are not available, the following apply: -

a) Less than 2 years old - decline.b) More than 2 years old - acceptable.

5.3 Rural Properties, those with large acreage and isolated properties with limited demand

a) Nationwide will not accept properties with agricultural tenancies on any part of the security.

b) Where the property is subject to an Agricultural Occupancy Restriction, refer to Section 5.11, Resale Price and Occupancy Restrictions.

c) Properties which include land other than garden, should be valued accordingly, until such a point at which the land is considered to be a significant deterrent to the demand and marketability of the home. Under these circumstances the property should be reported as an unsuitable security.

a) Isolated properties that are likely to have very limited demand will not be a suitable security for Nationwide. For example an isolated rural property that is surrounded by a farm where the only likely demand to purchase and live in the property is from the owner of the farm or worker on the farm.

e) There will also be examples of homes that may not be suitable because although they are not individually isolated, they are in locations in which there is insufficient evidence of a housing market or transactions on which to base a safe property valuation.

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f) Properties on the following Scottish Islands: Eigg, Rum, Muck, Canna and Colonsay fall into the category of unsuitability because of the remote nature and lack of viable transaction market associated with those islands.

5.4 Large Properties

Properties with 8 or more bedrooms must be treated with caution.

Where such a property is recommended as a security, the valuer is confirming that, despite its size, the property will be suitable for single occupation and will remain in good demand. Where a property is considered an unsuitable security the reason must be clearly stated including: size, construction, high costs of upkeep, heating etc, or other factors that would seriously affect demand.

Please see Section 5.6, Properties in or Previously in Multiple Occupation.

5.5 Part Possession Dwellings

Properties with an annex: The Society will accept properties with an annex. There must be no more than two units in total (main residence and the annex). Each unit must have its own living and sleeping areas, kitchen and bathroom.

Annexes adjoining/part of the main building can be entirely self-contained or an integral part of the main building.

Shared driveways, septic tanks and other services (for example one water, gas or electric meter serving both properties) are acceptable.

The annex may be let (including holiday lets through Airbnb and similar platforms) and the valuation must be on the assumption of vacant possession of the main residence and on the appropriate possession status of the annex. That is the annex may be vacant/used by family, or tenanted under a shorthold tenancy agreement.

Where the annex is occupied by a protected tenant the security should be declined.

Please see Section 5.14, Commercial Properties.

Report any details of tenancies is Section 3 of the Mortgage Valuation Report.

Freehold of a building subject to long leases on other flats in the building: Please see Section 5.7, Flats/Maisonettes – for Owner Occupation sub section Legal Title.

5.6 Properties in or Previously in Multiple Occupation

These may be considered as a single residential security only.

Where this applies, the Society's experience has shown that many large properties remain or fall back into multiple occupation once a mortgage is granted. Recommend a suitable retention for the completion of necessary work including removal of separate services, sinks, cookers, etc.If the tendency in an area is for large properties to fall into multiple occupation and demand for single occupation is very limited, the property must be declined.

5.7 Flats/Maisonettes - for Owner OccupationIn principle, the Society will consider applications on units in purpose built or converted blocks including those over shopping parades, commercial premises or in multi-storey blocks.

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Where the word/s flat/s appear in this Section, 5.7, details will also apply to maisonettes.

Instructions relevant to all flat types: new/newly converted, purpose built, converted, flats above shops and those in multi-storey blocks, are contained in the ‘General Criteria’ section below.

In addition the ‘Additional Criteria/Guidance’ section contains details relating to:

Construction type Legal title New flats/recently refurbished/newly converted Flats in a block containing commercial premises. Flats in Multi-Storey Blocks

General Criteria

a) Accommodation must be self-contained.

b) Planned and regular maintenance must be apparent. Where this is the case there is no limit on the number of units in the block. Where the building is a converted house and is less well maintained and managed it can still be accepted as security, provided that there are no more than four flats in the block and there is likely to be a continuing ready market for these units.

c) Lifts must be present in blocks over 4 storeys in height, even where the subject flat is located on a lower floor, unless the units are readily saleable without lifts.

d) Owner occupation does not need to predominate within the block or area but there nonetheless must be a reasonable demand for the unit for owner occupation. Where there is a concern that the presence of tenants will result in further reductions in the value or marketability of the properties in the future, report that flats in the block are not suitable security.

e) The locality must be a residential or mixed area (flats in areas where only a few residential properties are present are not acceptable) and the property must be in reasonable demand for owner occupation.

f) Design, layout, access and approach must be reasonable and natural day lighting must exist for the majority of habitable rooms unless of exceptional merit.

g) Entrance lobbies and landings must be constructed of permanent materials and be large enough so as not to cause obstruction or a fire hazard.

h) Access to the flat must be clearly defined, well lit and well maintained. Access through covered shopping centres is not acceptable.

i) There must be an adequate means of escape in the event of fire.

j) Deck access is acceptable.

k) Studio flats are acceptable and there is no minimum area. Subject to m) below. Please report as one bedroom, one habitable room.

l) Party walls must be of 9 inch (230 mm) brickwork or other suitable construction which conforms to building regulations.

m) Other major high street lenders must also be willing to lend on flats in the block.

Additional criteria/guidance

Construction type

Construction should be traditional for flats which will include:

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traditional build types for houses and bungalows;

reinforced concrete and steel frames with brick, block or otherappropriate infill.

Modern Methods of Construction – see Section 6.0, Construction and Environmental Issues.

Legal Title

Scotland

Most flats will be ‘Scottish Ownership’ which is acceptable. There are some leasehold flats in Scotland; these are acceptable if the lease term exceeds the mortgage term by 50 years.

England, Wales and Northern Ireland

Leasehold:England & Wales - the leasehold term must exceed the proposed mortgage term by 30 years and there must currently be a minimum lease term of 55 years remaining.

Northern Ireland – the leasehold term must exceed the proposed mortgage term by 50 years.

Commonhold:Acceptable.

Freehold:True freehold flats, two or more flats in a block where each unit owner owns their own freehold, are not suitable securities.

However, whilst in general freehold flats are unacceptable the following situations are acceptable to us:

Where a flat owner will hold the freehold of the vertical whole of a block on no more than four flats and the other flats are subject to long leases;

Where there is a block of two leasehold flats and each leaseholder owns the freehold of the other flat;

Where there is one flat with access at ground floor and living accommodation built above several garages and/or an access way this may be considered subject to marketability and the value of the dwelling not being adversely affected. Where the flat owner will not be the freeholder of the garage(s) and/or the access way the valuer must consider the effect of the amount of flying freehold on the marketability and saleability within the area. If these are thought to be limiting the property should be declined. (This type of property is often referred to as a coach house flat – report as a flat).

New flats/recently refurbished/newly converted

Please refer to Section 5.1, New dwellings for valuation reporting policy.

Flats in a block containing commercial premises.

The acceptability of a flat in the same block as commercial premises will depend on three main factors and their affect on demand for owner occupation, in addition to the usual construction and marketability criteria:

Nearby commercial activities. If any of the commercial activities in the block are likely to cause a nuisance by virtue of noise, smell or unsociable hours, and demand for owner occupation is seriously adversely affected report the property as an unsuitable security.

Access. Some flats in the same block as commercial premises have unsatisfactory access which may involve passing through business areas, yards containing commercial refuse, or using poorly maintained external stairs. If any of these

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factors apply and demand for owner occupation is seriously adversely affected report the property as an unsuitable security.

The Valuer must consider the majority of the flats in the block to be suitable securities.

Whilst the commercial user may change, the Society need only consider the existing use at the time of inspection unless it is obvious that this may change.

Flats in Multi-Storey Blocks

Local or ex local authority flats over 5 storeys outside Greater London* - are outside lending policy and should be declined.

All other multi-storey flats, (including local or ex local authority flats over 5 storeys in Greater London*);

Valuers should use discretion and value such properties on their merits. In all instances (including for remortgage and further advance transactions) Valuers should explicitly consider whether there is a clear demand for the property in an open market at the point of inspection, and reflect this in the valuation figure. Where demand is poor or does not exist, they should decline the property.

Nationwide will accept units in good quality blocks. Specifically take the following into account when deciding whether a high rise is suitable security for Nationwide:

1. Construction type must be acceptable2. Proactive Management/maintenance must be evident3. No evidence of crime/vandalism4. Lift over 4 floors unless all flats on all floors in the block are readily saleable5. Demonstrable demand in the form of sales – the flat should be readily saleable6. Mortgageable with some other mainstream lenders7. Owner occupation/private rented represented in block.8. All requirements under ‘General Criteria’ of Section 5.7 of this manual must be

complied with. Please check all details.9. Also see Fire-Safety - ‘High-rise flats’ and ‘Low-rise blocks’ below

If prior to valuation you are aware that the block is not suitable for lending purposes please return the instructions, advising Nationwide accordingly. No fee should be charged.

* Greater London includes the City of London under the Corporation of London and the following Boroughs: - Barking & Dagenham, Barnet, Bexley, Brent, Bromley, Camden, Croydon, Ealing, Enfield, Greenwich, Hackney, Hammersmith & Fulham, Haringey, Harrow, Havering, Hillingdon, Hounslow, Islington, Kensington & Chelsea, Kingston upon Thames, Lambeth, Lewisham, Merton, Newham, Redbridge, Richmond upon Thames, Southwark, Sutton, Tower Hamlets, Waltham Forest, Wandsworth, Westminster. Any other local authority area is not in Greater London.

Fire Safety

High-rise flatsValuers should express general caution around fire safety in high rise flats ie those buildings over x18m/x6 storeys, but specifically (post Grenfell) in relation to cladding where concerns were raised around the safety of ACM (aluminium composite material). Latest Government investigations and research however has extended the scope of concern to include other claddings systems, not just ACM, and MHCLG Advice Note 14 now requires the building owner, or their agent (‘responsible person’ as defined by the Regulatory Reform (Fire Safety) Order 2005), to check that the ‘external wall systems’ on their buildings are safe and to provide a statement (from a suitably qualified person), that a review of the building has taken place and that the requirements of Advice Note 14 have been met. Consequently, where a Valuer has any concerns surrounding the makeup/construction of the cladding system (in relation to combustibility/fire safety), they must decline the property until this statement has been

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received, ‘but’ provide an estimated value in S11 of the valuation report (to assist Nationwide processing), on the assumption that compliance is confirmed.

Low-rise blocksThe current Government advice only relates to high-rise blocks and so flats forming part of a low-rise building should be treated in the normal way ‘unless’ there is incontrovertible evidence suggesting significant market resistance (in relation to the type of cladding material) and in such circumstances it would be prudent to decline pending receipt of specialist advice. NB be aware that some service charge arrangements may be such that a low-rise block connected to a high-rise building would be subject to shared remediation costs. In these instances, such low rise units should be treated in the same way as a flat in a high-rise block pending legal confirmation that flats in the low rise section would not be required to contribute to any costs that might be required to remediate cladding in the high rise element in the event Advice Note 14 compliance is not forthcoming.

NB See Valuer Advice note dated 12 June 2019 for background detail/reporting advice.

5.8 Over and Under Dwellings (Hebden Royd in West Yorkshire only)

This section relates only to properties in the parish of Hebden Royd in the Metropolitan Borough of Calderdale.

Under normal circumstances full flying freehold properties, which is essentially what under and over dwellings are, would be unacceptable securities.

Nationwide will make an exception and accept under and over dwellings strictly on the following criteria: -

a) Only the better type of property will be considered, where there is a proven demand.

b) The general condition of the terrace block must be good. If structural movement exists in the block, the property must be declined, even where it is not individually affected.

5.9 Low Cost Home Ownership Schemes

Introduction

There are many schemes whereby a purchaser does not pay the full open market value of the property. There are three general types of scheme:

a) shared ownership - see 5.10, Share Ownership;b) resale price and occupancy restrictions – see 5.11 Resale Price and Occupancy

Restrictions;c) equity share – see 5.12, Equity Shares.

5.10 Shared Ownership

Standard Shared Ownership

The Society will make advances to purchasers wishing to buy an interest in a property under a shared ownership scheme. We will consider re-mortgage applications too.

Important note: - all Shared Ownership properties are leasehold tenure except in Scotland, with one exception - if the applicant is purchasing the final share, see mortgage valuation reports (details on remortgages) and further advance revaluation reports below, whilst the case must still be reported as shared ownership the tenure may be freehold for bungalows and houses.

Price Premiums/Valuations

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All valuations must be of the share in direct proportion to the market value of the whole property. The value of the percentage share being purchased must be given in ‘If shared ownership, value of share being purchased’.

Premiums for shares must not be included in the valuation figure. (Please see Section 5.1, New Dwellings for new builds).

Mortgage Valuation ReportsIn Section 2 of the Mortgage Valuation Report indicate the percentage of shared ownership the applicant will own. For remortgages the applicant may be purchasing additional shares so please include the new percentage the applicant will own. If the applicant is purchasing the final share then still treat as shared ownership and indicate the share to be purchased as 100%.

For the forms where there is no Section 10 General Remarks provide the full market value of the property to the question: “If yes, Valuation in present condition”. And then provide the value of the share in answer to the question: “If shared ownership, value of the share owned by the borrower following completion of this transaction.” This value must be the value of the share in direct proportion to the market value of the property. If the application is a remortgage and the borrower is purchasing the final share this figure will be the same as the answer to the question “If yes, valuation in present condition.”

Answer no to the question: Are there any restrictions on the property (e.g. Resale or agricultural restrictions)?

If the form has a Section 10 General Remarks section then include details of the full value of the property in that section. To the question: “If shared ownership, value of share being purchased” place the value of the share being purchased. This value must be the value of the share in direct proportion to the market value of the property.

RetentionsPlease refer to Section 5.1 New Dwellings for new builds. No retentions are to be recommended.

Please refer to Appendix 2 for instructions on completing reports on shared ownership cases. This is important as some properties must be reported as unsuitable securities as the Society does not wish to lend on them.

Further Advance Revaluation ReportsWhere the form in Section 2 asks: “For shared ownership, the % which the property will be owned by the borrower following this transaction”, include details of the percentage of the property to be owned. If the borrower is purchasing the final share please treat as shared ownership and state 100%.

Where Section 5 asks: “If yes, Valuation in present condition (If shared ownership, value of share owned on completion of this transaction)”, provide the appropriate figure, that is the value of the share to be owned in direct proportion to the market value of the property. Where the applicant is purchasing the final share this will be the full value of the property in the present condition. Supply figures to the questions: “Valuation upon completion of any works required under Section 4 (If shared ownership, 100% share)” and “If shared ownership, value of share owned by the borrower following completion of this transaction including any works required in Section 4.” Where the borrower is purchasing the final share and there are no works required in Section 4 (essential remedial works or major works – planned improvements) the value provided for all three questions will be the same.

Where the form does not ask the above questions provide the share value for the valuation figure in Section 11. Include a without works figure in 11) a) and with works (if applicable) in 11) b). You may clarify the open market values and share assessed in Section 8, general remarks.

Please refer to Appendix 2 for instructions on completing reports on shared ownership cases. This is important as some properties must be reported as unsuitable securities as the Society does not wish to lend on them.

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5.11 Resale Price and Occupancy Restrictions

Where properties include restrictions on who can purchase/occupy the property and/or restrictions on any sale price these should be taken into consideration in deciding if there is a sufficient market to ensure the property is suitable for mortgage purposes. The valuation figure must reflect any restriction in price and/or restriction in purchasers/occupiers. A valuation without the restriction must not be given, even if the restrictions do not apply to a mortgagee selling in possession.

Please refer to Section 5.13 Second Homes/Holiday Accommodation. This is important as these properties are likely to be unsuitable.

Mortgage Valuation ReportsThe value figure for: “If yes, valuation in present condition” should be for the figure including any restriction.

The value figure for: “Valuation upon completion of any works required under Section 7 or 10” should be for the figure including any restriction.

Do not include a value figure for the question “If shared ownership, value of share owed by the borrower following completion of this transaction” or “If shared ownership, value of share being purchased” whichever question is asked.

If the form asks the question: “Are there any restrictions on the property (e.g. Resale or agricultural restrictions)?” Answer yes and include details. If this question is not asked include details in Section 10 General Remarks.

Further Advance Revaluation ReportAnswer yes if the following question is present on the form: “Are there any other factors that prevent the property being readily saleable on the open market?” and detail the restrictions. If the question is not asked include details in the general remarks.

Any valuations provided must take into account the restriction. No open market value should be provided or any shared ownership value.

5.12 Equity Shares

Equity Share Schemes

Builders, Housing Associations and local/National Governments (the equity share holder) sometimes adopt Equity Sharing Schemes. Two scheme types have evolved:-

a) Standard Equity Share (e.g Help to Buy)

A percentage of the purchase price is left outstanding, or is paid by the equity share holder, and on resale or an earlier date agreed the equity loan is repayable.

The equity share holders interest is secured by a second charge.These schemes are sometimes referred to as "Deferred Purchase".

Valuation for mortgage purposes will be of the full property.

Do not include a shared ownership valuation.

Answer no to the following question on the valuation report: Are there any restrictions on the property (e.g. Resale or agricultural restrictions)?

b) Fixed Equity Share

Fixed equity share schemes have been operated by very few Housing Associations. The purchaser and Housing Association become "Tenants in common", with both being party to the Society's mortgage deed.

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A fixed share only can be purchased and subsequently resold. There are no "staircasing" arrangements to acquire the full equity. No rent is payable on the share retained by the Housing Association.

Nationwide no longer accepts these schemes.

5.13 Second Homes/Holiday Accommodation

The Society does not lend on properties that are primarily designed/marketed as second homes or holiday accommodation. Often some restriction of title (e.g. lease) or planning limits residence to less than 12 months per year, but even if no restriction exists, the properties are not suitable for mortgage purposes.

5.14 Commercial Properties

Nationwide will lend on the following part commercial properties:

i) Bed & Breakfast (no more than 2 bedrooms allocated to paying guests including rooms – but not the whole property - being let through Airbnb and similar platforms). Please refer to Section 5.4 Large Properties, above.

ii) Live/Work Units. Acceptable where the unit is/will be used by a professional (for example accountant, architect) or craft manufacture (for example producing jewellery). Unacceptable where units include: retail trades (shop, garage – petrol and/or car sales – post office, public house, club, restaurant, takeaway and café) or industrial units (including warehouses, storage yards, manufacturing, workshops) or working farms or multi-occupancy units (hotel, hostel, caravan park, kennels/cattery, holiday lets greater than 18 weeks per year, office unit).

iii) One room used as an office/consulting room (with a second room used as a waiting room if necessary).

iv) Properties that have an annexe used for non-commercial purposes. (If the annexe is let on a short term assured tenancy basis or as a holiday let this is acceptable). Please refer to 5.5 Part Possession Dwellings, see “properties with an annex”.

Nationwide will not lend on any other type of commercial property.

5.15 Developments Developed Under Permitted Developments Rights (PDRs)

Office (and other commercial buildings) which are in the process of, or have been, converted to residential accommodation warrant specific and very careful consideration. Consequently, we have drawn up a separate appendix to this Valuer Guidance manual (see Appendix 1 – Office to Residential Conversions below), which covers in some detail our concerns and specific requirements. Before reporting on this type of potential security, Valuers should have a clear understanding of our requirements (which are not common amongst most other lenders).

By way of brief resume, the following covers some of the key specifics (but Valuers are expected to read the whole of ‘Appendix 1 – Office to Residential Conversions’ before submitting any report): Location – the scheme must be associated with a predominantly residential

environment etc; specifically conversions forming part of Business/commercial parks etc are excluded. City centre conversions may be acceptable where there is a demonstrable demand and no significant adverse impact as a result of adjacent commercial/retail/leisure uses.

Construction – a specialist Structural Engineer’s report must be provided (by the Developer) confirming suitability for conversion, remediation (as appropriate) of any deleterious materials, confirmation of life expectancy of key elements eg roof, claddings etc

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Marketability – there should be evidence of sustainable demand from all market sectors (owner occupier and investors)

Lease Terms/Service Charges – Lease terms must comply with current criteria and care should be exercised around adequacy of service charge

Access – at the time of valuation, you must be provided with sufficient information and access to the building/development/show home to enable you to adequately assess what is being offered for sale

UK Finance DIF – existing Nationwide criteria applies Warranty - existing Nationwide criteria applies Resale/remortgage situations – similar criteria applies

Appendix 1 – Office to Residential Conversions

Appendix 2 - New build keying guide

Appendix 3 - Retentions for Shared Ownership

Please refer to Section 3.8 for definitions of essential works, essential remedial works and major works. Where essential remedial works are required the property is an unsuitable security so no value must be provided where: the property is being purchased or the property is being remortgaged and no additional borrowing is being applied for by the applicant.

For remortgages with additional borrowing or further advance requests, ascertain if the essential remedial works are to be undertaken. If not the property is not suitable for mortgage purposes. Do not provide a value and list the works required. If the essential remedial works are to be completed the property is a suitable security. Recommend an appropriate retention for all essential works and list the works required. This list must include all the essential remedial works required and any major works being undertaken.

Section 6 – Construction and Environmental Issues6.0 Introduction

For details of non-traditional structures please refer to Sections: 6.1 Timber Framed Structures, 6.2 PRC and LPS, 6.3 Insulated Concrete Formwork (ICF) and 12 list 1 for a list of named construction types and details as to whether or not NBS classify the construction type as a suitable security.

When appropriate the valuer should contact the local authority and other appropriate bodies who may be able to give information as to hidden construction details, age, manufacturers/system name etc. Roof void inspections are particularly useful in establishing some details of constructions.

Modern Methods of Construction are generally acceptable; however please refer to the list of construction types in Section 12 list 1. If the construction type is not listed it may be regarded as a suitable security unless known defects with the building or similar buildings in the locality are known which adversely affects marketability, demand and value of such properties and other lenders do not lend.

6.1 Timber Framed Structures

Refer to the Section 12 list 1 for specific construction types.

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The list also details policy relating to general timber framed construction with no specific construction type. For semis and terraced properties consideration must be given to the overall condition of the whole structure and if problems are apparent the property is an unsuitable security.

Consideration must be given to the overall condition of the whole structure (that is neighbouring properties within the same structure/block) and if problems are apparent the property is an unsuitable security.

6.2 PRC and LPS

Properties designated as defective

The following construction types were classified as defective in The Housing Defects Act 1984 consolidated in the Housing Act 1985:

Airey, Boot Pier and Panel,, Boswell, Cornish, Dorran (1 storey PRC and 2 storey PRC), Dyke, Gregory, Myton (1 storey PRC and 2 storey PRC), Newland (1 storey PRC and 2 storey PRC), Orlit, Parkinson, Reema Hollow Panel, Schindler and Hawksley SGS, Smith, Stent, Stonecrete, Tarran (1 storey PRC and 2 storey PRC), Underdown, Unity and Butterley (1 storey PRC and 2 storey PRC), Waller, Wates, Wessex (1 storey PRC and 2 storey PRC), Winget and Woolaway.

Scottish legislation noted the following as defective:

Ayrshire County Council, Council (Lindsay), Blackburn Orlit, Boot Pier and Panel, Dorran, Myton Clyde, Tee Beam, Unitroy, Whitson Fairhurst and Winget.

All property types in their original condition are not suitable securities. To be regarded as a suitable security the property must have been improved using one of the following repair schemes and appropriate certification must be available prior to or when inspecting the property. If certificates (to prove an approved repair scheme has been used) are not available prior to or on inspection note the property as an unsuitable security and do not value. Request certification relating to the improvements undertaken. Other repair schemes and properties without appropriate certification remain unsuitable securities: NTHAS repaired to category 5. A certificate confirming the whole block has been

repaired is required. PRC (Homes) limited licenced repair scheme listed in Section 13 list 2. Leeds schemes 1 and 2 for Airey properties. Commercial General Union 2000 plus licences 6095, 6096 and 6097 for Airey, Unity

and Cornish properties. Boswell properties located on the Pinehurst Estate in Liverpool using the

Structherm scheme for the estate – HAPM certificate required. Woolaway houses in South Somerset subject to the councils certificate stating that

the scheme is similar to PRC licence number 025. Winget properties in Cartyne, Glasgow improved under the Adams improvement

scheme. The following certification is required: a certificate from Adams the individual property has been repaired.

It is no longer necessary for the whole block to be improved/repaired using an approved scheme.

Please note NTHAS repairs in categories 1 to 4 inclusive are not acceptable and the properties remain unsuitable securities.

No other repair scheme is acceptable. Duplicates of lost certificates for properties repaired under a PRC (Homes) Ltd licenced repair scheme can often be issued by the supervising firm. It is the responsibility of the applicant to obtain the certificate and pay any fee.

A structural engineer’s report confirming a property has been repaired is not acceptable.

Other systemsRefer to Section 12 list 1.

6.3 Insulated Concrete Formwork (ICF)

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Suitable securities.

6.4 Construction of Walls and Roofs

Roofs - If defects are suspected which can only be fully identified by a detailed inspection advise the property is an unsuitable security and request an appropriate report.

Bituminous Felted Flat RoofsAcceptable.Where the Mortgage Valuation Reports (MVR) asks: “Is the roof of standard construction?” answer no and include a warning where repairs or renewal seem imminent, particularly when the roof surface has not been inspected.

If the MVR does not ask the above question the warning should be given in Section 10 General Remarks where repairs or renewal seem imminent, particularly when the roof surface has not been inspected.

Sprayed Foam Under Pitched CoveringsWhilst an inspection of the roof space is generally not required (see Section 3.0, Roof and Basement Inspections), where a head and shoulders inspection is undertaken and sprayed foam under pitched covering is observed, it will be acceptable providing the structural timbers are not enclosed in foam. If they are the case must be declined.

Main roofs of Corrugated asbestosUnacceptable – decline the property.

Roof typesWhere the MVR asks if the property is of standard construction the following are standard:a) Pitched, timber frame work and clad in slate or tiles.b) Thatched

All other roof types are non-standard.

WallsWhere the MVR asks: “Is the Property (excluding roof) of Standard Construction?”The following are to be classed as standard construction:

a) Cavity outer walls of brick/reconstituted stone/block (including rendered walls) with inner walls of brick or block. b) Timber framed property with outer walls of brick/reconstituted stone/block (including rendered walls), built 1970 or after.c) Solid Brick or Solid Stone (e.g. limestone, granite).

All other walls types must be classed as non standard.

6.5 Thermal Insulation

Timber Frame, Steel Frame and Structurally Insulated Panel Systems (SIP’s) Dwellings with Cavity Fill

Not acceptable unless part of the initial design.

6.6 Single Skin 115mm/4.5 inch Brick Walls (previously referred to as Half Brick Walls)

Acceptable without improvement

Where there is no detrimental affect on marketability and demand, and other major lenders are prepared to lend the following may be considered: -a) Small annexes/outriggers up to two storeys in height where such structures are

common in the area.b) Wall abutting a covered passage/entry.

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If condensation is a problem an appropriate scheme of improvement is required; but there is no requirement for a second skin to be added.Acceptable with improvement

Apart from those above, all other sub-standard walls must be improved by provision of another skin comprising:-

a) Concrete insulating block or brick; orb) Tanalised, thermally insulated, ventilated timber framed inner skin.

In either case built off adequate foundations, tied to the existing wall and other parts of the structure and treated externally to prevent damp penetration.The valuation should include a with works and without works figure. An appropriate retention should be made.Where a wall cannot be improved without acquisition of adjoining land (for example where a gable wall on the boundary cannot be thickened internally because of a stairwell) the property should be declined.

6.7 Sub-Standard Annexes/Structures

Where kitchens are formed in conservatory type or temporary structure make a retention for either: -

a) Bringing the structure up to building regulations standards either by proper adaptation or rebuilding.

orb) Re-site the kitchen into the main building.

6.8 High Alumina Cement (HAC)

a) HAC possibly present but no defects evident Accept. If there is a general Comments Remarks section (Section 10) in the report make a comment regarding HAC; but if no General Remarks section there is no requirement to comment.

b) HAC possibly present and defects evident Decline.

6.9 Hazardous Materials/Circumstances

Over recent years, various materials/circumstances have hit the headlines as being hazardous to health and safety, including:-

Asbestos Radon Gas Glass Fibre Insulation Filled and Contaminated Land - Methane Gas (Explosive), heavy metals, chemical

waste, etc. Foam Cavity Fills Fibreboard Linings (Fire Spread) Chemicals (used in timber/damp treatment) Electric overhead power cables - Electromagnetic Fields and Sub-stations.

Surveyors/Valuers must adopt the policy below: -

a) Where a retention is deemed appropriate recommend a suitable retention. Report any obvious major hazards and the need for any detailed investigations/advice and whether values and saleability have or have not been adversely affected. If there is no requirement for a retention details may be recorded in the General Remarks section

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(Section 10) if present in the report but if there is no General Remarks section no comment is required.

b) Accept properties as securities unless there is clear market resistance to buy.

c) Make a retention for major remedial or protective work, e.g.:- Asbestos - removing or protecting from damage.

6.10 Mundic

Whilst valuers must follow the guidance notes issued by RICS on this issue, Nationwide will accept an old report on the property not addressed or assigned to the applicants.

Where a mundic report is required decline the property pending receipt of a report.

Whilst classifications have changed in recent years no matter what age the report is properties classed as A (irrespective of number if present e.g. A1, A2) will be acceptable.

Properties classed as A/B (old classification) are acceptable unless the valuer has specific concerns.

If the mundic report is acceptable produce a new valuation report accepting the property.

Properties classed as B or C must be declined.

When commenting on screening reports do not insist on the reports being assigned to the applicants/Nationwide.

6.11 Solar Panels

This section covers photovoltaic panels. Such panels can be fitted to the walls or roof of a property and may be owned by the vendor (who may or may not sell any electricity produced) or by a solar panel provider who leases the air space above the roof of the property.

In Northern Ireland the solar panel provider is granted a Lease of Rights rather than a lease.

For air space leases (and Lease of Rights in Northern Ireland) the panel provider receives payment for all the electricity produced and the vendor may use freely any electricity produced by the panels.

The ownership of the panels should not materially affect the marketability and or value, so value as seen. There is no requirement to note their presence or ownership criteria in the report; however, where the aesthetic impact is detrimental this should be reflected in the value.

The Society’s conveyancer will check the details of any air space lease/Lease of Rights to ensure it complies with our requirements. (Leases are not acceptable in Northern Ireland however it is the conveyancer’s responsibility to check details not the valuer’s). Accordingly, there is no requirement to note on the report any lease/Lease of Rights has to be checked.

6.12 Japanese Knotweed (JK) – Nationwide Valuation Policy

For this section the description ‘property’ is to be taken as the insurance definition of ‘property’ which is the following: the main property/habitable space (including integral garages), services, garages, outbuildings, patios, garden walls, retaining walls and fences.

Additionally, ‘property’ in respect to flats relates to the block not the individual unit. For semi-detached properties and terraces ‘property’ relates to the individual unit.

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Distance of the JK from the property (at closest point)

Reporting instructions

Any distance where:

(a) the property has been previously damaged by JK and/or

(b) there is current damage occurring to the property caused by JK.

(1) Decline property pending receipt of: (a) a specialist report which must detail the extent of the outbreak and treatment recommended or (b) details of treatment already undertaken and warranties already in place. Also request reports on repairs to the property and (c) if applicable request reports for repairing current damage to the property.

(2) On receipt of the specialist reports/warranties check:(a) an insurance backed 5 year warranty* against re-appearance of the plant is included and(b) that it is from a reputable company who is preferably an accredited member of a recognised trade association such as the PCA (Property Care Association) and(c) (if applicable) includes details for repairing all current damage.(3) If the reports are satisfactory issue a new MVR/FARR with a suitable retention.

Where there is current damage to the property, list the damage and include costs of repair in the retention amount.

Where damage is currently occurring, or has previously occurred when completing a Mortgage Valuation Report answer yes to the question: “are there any other factors that create a significant risk of future structural movement” and list current and/or past damage confirming the presence/past occurrence of JK. If the foregoing question is not asked on the report the property must be regarded as a special insurance risk. Answer ‘yes’ to the question: “Does the property nee d to be referred due to a special insurance risks?”

When completing a Further Advance Revaluation Report because the property is already in mortgage no details regarding insurance are required.

7 metres or less and there is:

(a) no current damage, and

(b) no previous damage to the property.

(1) Decline property pending receipt of a specialist report which must detail the extent of the outbreak and treatment recommended. (2) On receipt of the specialist report check:(a) an insurance backed 5 year warranty* against re-appearance of the plant is included and(b) that it is from a reputable company who is preferably an accredited member of a recognised trade association such as the PCA (Property Care Association)(3) If the report is satisfactory issue a new MVR/FARR with a suitable retention.

Over 7 metres and there is no current and no previous damage to the property.

Initially decline property stating the situation can be reviewed on receipt of confirmation from Nationwide that the applicant has been advised of the presence of JK. On receipt of confirmation the property may be regarded as a suitable security - issue a new MVR/FARR.

*Where a body with statutory duties (e.g. Network Rail, a Council) are undertaking the work a warranty is not required.

Japanese Knotweed on Neighbouring Land

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The valuer is not expected to inspect neighbouring land. However, where the valuer notices JK on neighbouring land during the inspection or obtains information relating to the presence of JK the valuer should report details as required – see table above.

Note - where the valuer has noticed an outbreak of JK on neighbouring land and has received an appropriate specialist report that includes treatment of the neighbouring land, the valuer can assume the management programme required by any neighbour will be adhered to.

Where there is or has been previous damage to the property or the JK is 7 metres or less from the property and there is no evidence that the JK on the neighbouring land will be treated, including where a property is next to waste ground, it must be declined i.e. don't follow the processes in the table above.

New Build

On referrals involving new build properties, after the reports have been seen and are deemed satisfactory, do not recommend a retention as it will be assumed the developers/builders will complete the works.

Please note whilst some new build warranties cover damage caused by Japanese Knotweed, if it was not removed successfully from site, others exclude such damage. However, even where a new build warranty covers damage caused by the re-occurrence of Japanese Knotweed it does not include removal/treatment of the plant if the plant doesn’t cause damage to the property. Accordingly, an insurance backed guarantee regarding treatment against Japanese Knotweed re-appearance is required.

Section 7 - Mortgage Valuation Reports (MVR’s)7.0 Introduction

Instructions will emanate from Nationwide via ‘Quest’ or ‘Valuation Exchange’. If you receive Nationwide instructions from another source please contact Nationwide immediately.

7.1 Terms and Conditions of Engagement

The terms and conditions of engagement together with the Society's expectations are detailed within the RICS valuation standards.

7.2 Site Notes

Valuers must make adequate site notes of all relevant matters. These may be called in for audit purposes, together with the comparable evidence used in the preparation of the report.

7.3 Report Form

Report number (XX......) to be shown.

Inspection Date to be inserted.

Mortgage Details The full correct postcode and address must be inserted.

TenureIndicate whether Freehold, Scottish Ownership, Commonhold or Leasehold. If Leasehold indicate the remaining term of lease. Additionally, if the form requests, include details of: Ground/Chief/Feu rent, detail amounts and whether fixed/escalating in the appropriate box, and maintenance charge.

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If the form does not request the items above there is no requirement to include details.

If shared ownership indicate share being purchased.

TenanciesIndicate details of any evident tenancies.

Property DescriptionIndicate rooms as required. No dimensions or further elaboration required.

If the form requests the number of habitable rooms these are those used for living, sleeping, recreation, eating or food preparation, whether in the main building, roof, basement or annexes/outbuildings.

Examples of what constitutes habitable rooms are: Sitting room, study, dining room, kitchen and bedrooms.

Examples of what do not constitute habitable rooms are:Bathroom, WC, en-suite, utility, hallway, landing, conservatory, porch and garage.

Outbuildings are excluded (unless they contain a habitable room).

Where two adjoining rooms are divided by a wall or partition containing an opening exceeding 6' in width and of at least normal door height, those rooms should be treated as combined into one room. If the opening is less than 6 feet then they will count as two rooms.

If the number of habitable rooms is not requested no further information is required.

Property ConstructionWalls:If the form asks: “Is the Property (excluding roof) of standard construction?” Answer appropriately. Please refer to Section 6.4, Construction of walls and roofs for details of standard construction.

If the above question is not asked indicate materials, solid, cavity. (We no longer require the wall thickness to be recorded).

Roofs:If the form asks: “Is the roof of Standard Construction”? Answer appropriately. Please refer to Section 6.4, Construction of walls and roofs for details of standard construction.

If the above question is not asked indicate whether pitched/flat, and the materials utilised to the structure/covering

Both forms request details of garage/parking space. Only one form further requests: “Is the parking space/garage offsite?” which must be answered if asked but no details are required if not asked.

For flats if the lease allows the tenant to park in the car park but there is no allocated parking space please answer no to the question regarding garage/parking space.

ServicesIn the majority of forms only the type of central heating is required. Indicate type of central heating - whether full or part. If the form includes a Section 10 General Remarks if known indicate where the septic tank/cesspool or other services are on or off the plot, or shared and the source of any non-mains water supply.

The property must have mains electricity.

Refer to Section 3.13, Services/District Heating for situations that are unacceptable to Nationwide.

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New Properties (if applicable)State name of builder if form requests it.

If form requests details of NHBC or similar/Architect Supervised, etc. establish from Builder or Selling Agent. Otherwise, report "Solicitor to check", in Section 10 General Remarks.

If the form request details indicate whether roads made/unmade and estimatedcost of making up – see Section 5, Security Types Appendix 2 for an exception to the rule.

If neither question is asked no information is required.

Building InsuranceInsurance is arranged on the "rebuilding" cost.

The RICS/ABI Guide House Rebuilding Costs must be used as a basis. Please refer to 3.18, Property Insurance, for guidance.

Other Matters that may Materially Affect the ValueRefer to Sections 3.18, Property Insurance and 4 Structural Reporting and Mining.

If movement does not relate to subsidence, settlement, landslip or heave either make an appropriate retention for the works required or if further reports are required advise the property is an unsuitable security and detail the reports required.

If there are important issues that need clarifying (for example access arrangements) to ensure the property is readily resalable at or about the valuation figure answer no to the question: Is the property readily saleable at or about the valuation figure?” Detail issues in Section 10 General Remarks or the comments box as appropriate.

Works to be Carried Out Works should be restricted to essential works, please refer to Section 3.8, Retentions. Take no account of the amount of advance and do not recommend lending terms. Do Not Recommend "Undertakings".

If the property is declined because of doubt about structural movement but could be reconsidered subject to a Structural Engineer's Report indicate all other work which requires a retention. When calling for a specialist report give an indication of value (in S11) assuming satisfactory reports are returned.

For re-mortgages please refer to Section 3.8, Retentions for instructions on how to report when essential works are required. This is important as some properties must be reported as an unsuitable security.

For shared ownership cases refer to Section 5.10, Shared Ownership. This is important as some properties must be reported as an unsuitable security.

Valuation for mortgage purposes"Hope Value" ignore.

Sitting Tenants – Often properties are sold at a discount, which can be repayable if the property is sold within a certain time period, and pre-emption clauses, which are normally at open market value – for example Right to Buys and Right to Acquires. Please value at open market value unless the Society advises you of any special circumstances.

Do not supply a valuation for any property that is regarded as an unsuitable security.

Where a valuation is required generally a valuation in present condition is required. However, please refer to Sections 3.8, Retentions; 5.1, New Dwellings and appendices 1 and 2; 5.10, Shared Ownership; 5.11, Resale Price and Occupancy Restrictions and 5.12, Equity Shares, for guidance relating to valuation details for specific circumstances (retentions) and application types.

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Valuers acting on behalf of Nationwide and TMW will be expected to value in accordance with what may be termed the ‘justifiable price range’ i.e. Valuers should select the most appropriate comparables and value within the range dictated by that evidence. If there are special attributes (or otherwise) that suggest the value should be higher (or lower) than the evidence selected then we would expect full justification for stepping outside the range to be held on file or within SCT documentation as appropriate. The range of comparable evidence will set the parameters to the valuation; we do not consider it appropriate to arrive at a reasoned assessment only to then add a notional percentage (perceived tolerance) which will place the value outside the ‘justifiable range’.

7.4 Comparable Evidence

At least three recent comparables must be included on the field sheet. All valuation ‘justifications’ should be noted. These may be called for in connection with auditing procedures.

7.5 Report Writing

Answer the questions asked and place comments where required.

At times, the standard of report writing seen by the Society is poor due to inaccurate descriptions, bad presentation, ambiguity, spelling/typing errors and non-conformity with policy or inconclusiveness.

A high standard or positive report writing is expected. Where questions are "not applicable" or answers are "no", these words must be used, rather than leaving the answer space blank or using a dash.

Where there are any concerns over the property being readily saleable at or about the valuation figure answer no to the question ‘Is the property readily saleable at or about the valuation figure?’ Detail your concerns/items that need clarification. Comments should address details to the Society not the applicants

7.6 "General Remarks" Section of MVR where present on the forma) Layout/Wording

In lengthy reports, underlined numbered headings should be adopted for ease of reference and convenience of the Society. Good report writing principles should be followed with factual phrases. The wording should be clear and non-technical.

b) Content

Matters not reported elsewhere should be dealt with in this section. A concise report is required which draws a clear picture of the property and puts defects, disabilities, nuisances, etc, into perspective.

c) Disclaimer/Exclusion Clauses

Legal advice received by the Society suggests that exclusion clauses have little value. However, it is prudent to make statements of fact, for example that particular rooms or parts of the property could not be inspected, or in the case of a leasehold property, that the valuation assumes the lease terms are acceptable, etc.

d) Warning Clauses

The Society does include a few standard warning clauses where appropriate in offers for such things as checking electrical wiring or obtaining mining subsidence details. These should not be relied upon by Surveyors/Valuers who must include

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warnings in reports where appropriate. Risks that are accepted by the Society may be unacceptable to the Applicant. Recent case law seems to confirm that it is safer to warn of assumptions and risks than rely on disclaimer/exclusion clauses.

7.7 Signing Reports

The report must be carefully checked by the Valuer.

All copies of the reports must be electronically authenticated by the inspecting valuer.

7.8 Date of Report

This must be the date on which the completed report is despatched.

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Section 8 – The Homebuyers Report8.0 Introduction

The contract for a Homebuyers report is between the applicant and the valuation firm. Nationwide requires a Mortgage Valuation Report (MVR see Section 7, Mortgage Valuation Report) which must be a stand alone report with no reference to the Homebuyers report.

If a property is an unsuitable security refer to Section 3.5, Declining Unsuitable Securities.

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Section 9 – Further Advance Re-inspection Report9.0 Introduction

This section details the Society’s requirements for a Further Advance Re-inspection Report (FARR).

9.1 The Valuation

The valuation is to be carried out in accordance with the guidelines set out in this document and the RICS valuation standards.

9.2 The Inspection

The inspection is to be carried out to the same standard as an MVR.

9.3 Report Form

All sections of the report should be self explanatory and completed as appropriate. Please refer to Section 1.1, General Enquiries if you have any problems completing any of the form.

If a property is considered unsuitable for lending purposes due to non compliance with the terms of this manual, for example construction type, please email: Panel.Maintenance@nationwide.co.uk detailing issues for further instructions. If a property is unsuitable due to other factors, for example structural movement, complete the report as an unsuitable security and do not provide any valuations. State the reasons in the appropriate section of the report. Specialist reports, details of any insurance claims etc will be obtained were appropriate and referred back to the valuer for comment. A new report will be required if the property is now considered a suitable security.

RetentionsPlease refer to Section 3.8, Retentions for specific instructions relating to categories of essential works: ‘essential remedial works’ and ‘major works’ and how to report details. This is important as some properties must be reported as unsuitable securities.

Shared OwnershipPlease refer to Section 5.10, Shared Ownerships for specific instructions relating to categories of essential works: ‘essential remedial works’ and ‘major works’ and how to report details. This is important as some properties must be reported as unsuitable securities.

9.4 Property Insurance

Refer to item 7.3, Report Form, and in particular point 8, Building Insurance. Additionally, see item 3.18 Property Insurance.

9.5 Signing Reports

The report must be carefully checked by the valuer.

All copies of the reports must be electronically authenticated by the inspecting valuer.

9.6 Date of Report

This must be the date on which the completed report is despatched.

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Section 10 - Possession Cases10.0 Management

Nationwide will instruct an Asset Management Company to administer the case on their behalf. All enquiries in connection with any instructions should be referred to the instructing Asset Management Company.

Branch offices are not normally involved other than in handling mortgages for purchasers.

10.1 Valuations for Purchasers

Panel valuers appointed by an Asset Management Company are permitted to prepare a Mortgage Valuation Report (MVR) or Homebuyers Report (HBR) for any applicant. However, where a Homebuyers report is requested the panel firm must write to the purchaser declaring their previous involvement as valuer for Nationwide as mortgagee in possession and obtain the applicants’ written permission to proceed. There is no requirement to write to Nationwide (this applies to both MVR and HBR requests) as Nationwide has granted the panel firm permission to proceed to valuation/inspection in these cases.

10.2 Possession Sales to NBS Staff, etc

The Society does not allow its staff or that of subsidiaries, Asset Management Company involved in the sale, valuation firm appointed by the instructing Asset Management Company, or staff of the selling agent or solicitor acting in the sale, to purchase possession properties. The Courts have been known to "set aside" such sales. If the panel valuer identifies such a case, the instructions must be withheld and the matter referred to the instructing Asset Management Company.

10.3 Shortfall on a borrower sale

Where a Borrower sells a house independently and there will be a loss to the Society, the acting solicitor will request the Society's consent for the sale to proceed.

Managed Shortfalls Team will request from the local Countrywide Surveyor either an External Inspection Report (EIR see Section 7) or a Mortgage Valuation Report (MVR see Section 7). A standard letter will be used by the instructor and the original report and any further advance revaluations will be enclosed wherever possible.

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Section 11 – Keying Guide

11.0 Mortgage Valuation Report (MVR) keying guide

Please see attached Keying Guide

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Section 12 - Construction Types and Licenced PRC Repair SchemesAppendix 1 – List 1

Appendix 2 – List 2 – Licensed Repair Schemes

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