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1 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Valuer Guidance Notes
November 2019
Important Notice These valuer guidance notes will be subject to updates in line with operational experience or Zephyr Homeloans lending policy changes. Please ensure that you are using the most up to date version at all times.
2 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Version control Version Date Comments/Changes Edited by 0.1 12/11/2017 Initial draft Connells
0.2 18/12/2017 Final for approval Connells/Zephyr
0.3 06/07/2017 Approved with two amendments:
• Reference 2016 RICS guidance notes for HMO valutions
• Multi-unit freehold blocks can be up to 10 (ten) units
Zephyr
0.4 11/07/2018 Updated policy in respect of minimum floor area that the measure is made against internal measurements, rather than external as per discussion on 10/07/2018. Rolled back changes in 0.3 to support contract finalization. Points to be clarified post-contract.
Raymond Briggs (Zephyr)
0.5 20/09/2019 Draft version with tracked changes. Incorporates update on combustible cladding and clarification MMCs that incorporate excluded construction features. Also a query regarding HMOs with more than one kitchen.
Adam van Lopik (Topaz)
2.0 22/10/2019 Changes accepted and issued as V2.0 following telecom with Connells
Adam van Lopik (Topaz)
3 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Contents Introduction ........................................................................................................................................................................ 5
Valuation company responsibility ............................................................................................................................. 6
Geographical Coverage ................................................................................................................................................... 6
Photographs ........................................................................................................................................................................ 6
Zephyr Homeloans valuation enquiries .................................................................................................................. 7
Valuation Report Types ................................................................................................................................................. 7
Valuation Report – section guidance ........................................................................................................................ 8
Application details ....................................................................................................................................................... 9
Property Type ............................................................................................................................................................ 10
Minimum property values ................................................................................................................................ 10
Flats and Maisonette’s ....................................................................................................................................... 10
Flats above commercial ..................................................................................................................................... 10
Ex Local Authority ............................................................................................................................................... 11
Property close to commercial (all property types) ................................................................................ 11
Lease term/Tenure ............................................................................................................................................. 11
Flying Freehold ..................................................................................................................................................... 12
Commercial use within the subject property ........................................................................................... 12
Shared Ownership ............................................................................................................................................... 12
Exposure Limits .................................................................................................................................................... 12
New build or < 10 years old. ................................................................................................................................ 13
Warranties .............................................................................................................................................................. 13
Disclosure of incentives and part exchange .............................................................................................. 13
Accommodation ........................................................................................................................................................ 14
Current occupancy ................................................................................................................................................... 14
Construction ............................................................................................................................................................... 15
Acceptable and Unacceptable construction types .................................................................................. 15
Walls .......................................................................................................................................................................... 15
Roof ............................................................................................................................................................................ 16
Combustible Cladding ........................................................................................................................................ 16
Commercial/Residential conversions ......................................................................................................... 17
Locality & Demand ................................................................................................................................................... 17
4 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Services ......................................................................................................................................................................... 17
Condition or Property ............................................................................................................................................. 18
Excluded property types ................................................................................................................................... 18
Reports .......................................................................................................................................................................... 20
Movement ............................................................................................................................................................... 20
Arboriculture/Invasive Plant Species ......................................................................................................... 20
Japanese Knotweed ............................................................................................................................................. 20
Other.......................................................................................................................................................................... 21
Essential Repairs ....................................................................................................................................................... 22
Retentions ............................................................................................................................................................... 22
Rental Information ................................................................................................................................................... 22
Standard BTL .............................................................................................................................................................. 23
High Value Tenancy ............................................................................................................................................ 23
House in Multiple Occupancy (HMO) ............................................................................................................... 24
Multi-Unit Freehold Blocks ................................................................................................................................... 26
Capital valuation................................................................................................................................................... 26
Rental valuation .................................................................................................................................................... 26
Valuation for mortgage purposes ...................................................................................................................... 27
General Remarks ....................................................................................................................................................... 27
Valuer details .............................................................................................................................................................. 27
Comparables ............................................................................................................................................................... 28
5 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Valuer Guidance Notes
Introduction
These guidance notes are intended for valuers instructed by Zephyr Homeloans via the Panel Manager,
Connells Survey and Valuation to provide a Basic Mortgage Valuation, re-types or re-inspections.
Zephyr Homeloans is a first charge mortgage provider and may request a valuation for various purposes
including;
• Buy to Let (purchase or re-mortgage)
• House in Multiple Occupancy (HMO), separate form provided, please see the dedicated HMO section
of these notes for full form completion instructions.
• Multi-Unit Freehold Blocks, separate form provided, please see the dedicated MUFB section of these
notes for full form completion instructions.
Valuers must check the instruction notes appended to the valuation instruction. These notes will detail the
purpose of the Valuation and any other relevant matters.
The various sections of the report consist mainly of tick boxes however some sections require the valuer to
make subjective comments. In order for the Underwriters at Zephyr Homeloans to obtain a full understanding
of the property and whether it is suitable security, the written content of the report must be clear and
unambiguous.
Where possible the valuer should write their comments in ‘plain English’ keeping the use of colloquialisms and
technical language to a minimum. All recommendations and assumptions must be clearly stated so that the
underwriters at Zephyr Homeloans can easily understand what the valuer is advising.
The valuer should adhere to the requirements of the current version of the RICS Valuation – Professional
Standards (Red Book) when preparing the report for Zephyr Homeloans.
The valuer must value the Property on a comparable evidence basis. Zephyr Homeloans does not accept
valuations on a rental yield basis.
In the current environment of heightened fraud and identity theft, the valuer must be extra vigilant, in order to
reduce the risk of such fraud or identity theft occurring in relation to a valuation. The valuer undertakes to advise
the client immediately of anything unusual to include suspected fraud, negligence, misrepresentation or
misstatement by any of its employees, agents, the broker, borrower of any other third party. The email address
to use when reporting such matters is; [email protected] and the SARS reporting template can be
found at the end of these notes.
6 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Valuation company responsibility
● Valuers acting for Zephyr Homeloans are our representatives and are expected to act in a
professional and competent manner.
● Valuers must advise Zephyr Homeloans or the panel manager, Connells Survey and Valuation, of any
material conflicts of interest, e.g. if the valuer has an existing relationship with the homeowner.
● It should be noted that Zephyr Homeloans still requires roof space inspections to be undertaken.
Additionally, the provision of a reinstatement cost remains a requirement.
● Each valuation company must have their own internal complaints process and comply with RICS
Requirements.
● Each valuer undertaking a valuation MUST be part of the RICS Valuer Registration Scheme.
● All valuers must either be AssocRICS, FRICS or MRICS qualified.
● The valuation report is confidential and must not be discussed with the owner/vendor of the
proposed security property or any other third party claiming to be connected to the application.
● The Valuation report must be submitted in the format provided by Zephyr Homeloans.
Geographical Coverage
Zephyr Homeloans currently lend in England and Wales only.
The area within which the valuer may carry out valuations pursuant to this agreement is defined as follows:
● No more than a 25 mile radius from the surveyor’s office or place of work (if located outside the
M25) and is subject to the valuer having expert knowledge of the area in which the property is
located.
● Restricted to a 5 mile radius from the surveyors office or place of work (if located within the
M25).
● Adjusted coverage may be applied at the absolute discretion of Connells Survey and Valuation
and Zephyr Homeloans.
Photographs
Zephyr Homeloans requires the following five (5) photographs to be attached to the form, Street view, Front,
Rear, Kitchen and Bathroom. Where an issue is identified (e.g. structural), a photo of the potential issue should
also be provided
7 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Zephyr Homeloans valuation enquiries
If you have any questions relating to the valuation you can contact the panel manager, Connells Survey and
Valuation, on the following numbers;
Valuation case progress - Call 01525 218602 between 9.00am and 5.30pm, Monday to Friday.
Post valuation enquiries - Call 01525 218647 between 9am to 5.30pm Monday to Friday.
Please have the property address and postcode, or the case reference number of the property to hand prior
to the call.
Valuation Report Types
Zephyr Homeloans will instruct a written valuation (or a re-type of the primary lender’s valuation report) to
provide independent verification of property value, condition and restrictions. The valuation and re-type
report returned will be in a format stipulated by Zephyr Homeloans. External appraisals (drive-by valuations)
are not used by Zephyr Homeloans for the purposes of loan origination.
Re-type reports are only accepted if the report related to an inspection conducted for a primary mortgage lender
for a mortgage application made simultaneously with a Zephyr Homeloans loan application subject to the
following:
• The original valuation not being a re-type direct from the applicant.
• The valuer being on Zephyr Homeloans valuation panel.
• The time period between original valuation and requested retype is no more than 28 days (except by
specific exception as instructed by Zephyr Homeloans).
• The comparable evidence underlying the re-typed valuation remains current. Confirmation from the
Valuer will be required.
8 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Valuation Report – section guidance The following section provides guidance and information on the completion of particular fields and sections
within the valuation report. It follows the same order as the valuation form templates
The valuer should complete the entirety of the valuation report wherever possible, even when it is
identified that a property would not represent suitable mortgage security for Zephyr Homeloans.
9 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Section name Guidance notes
Application
details
All fields will be pre-populated. If the address provided on the instruction is not
correct;
• If there are only minor errors in the form of the address and the valuer
is confident of the property being referenced, the valuation should be
completed and the valuer should enter the correct address details in the
General Remarks Section.
• Otherwise, Zephyr Homeloans must be contacted. The instruction will
be cancelled and a new instruction will be submitted for the correct
address.
10 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Property Type Only one of the six property type options should be selected.
Minimum property values
Standard BTL property Min valuation is £ 75,000
HMO/MUFB/Flats above commercial – min valuation is £100,000
New build property – min valuation is £75,000
If valuation is going to be less than the minimum, the valuer should mark as not
suitable security, but still provide a valuation complete with comparables.
Flats and Maisonette’s
If a flat or maisonette the valuer is to indicate which floor it is located on.
Ground floor being zero, basement being -1. The valuer is also to indicate the
number of floors in the block.
Zephyr Homeloans will not lend on flats in a block with more than three floors
above ground floor which are not serviced by a lift. Top floor and attic can be
considered as one floor where they are part of the same flat.
• Studio flats must have a minimum internal floor area of 30 sqM
• Serviced flats or apartments are not acceptable
• Flats with an occupancy restriction are not acceptable
• Flat roofs are acceptable if covering is Copper, Lead, Zinc, asphalt, single
ply elastomeric membranes or mineralized felt.
The valuer is asked to indicate whether the flat/maisonette is converted and if so
the approximate year of conversion. (If within the last 10 years a suitable
warranty is required).
The valuer is also required to provide the number of units/flats within the block.
Flats above commercial
If the valuer confirms that the subject flat is above commercial details should be
provided in the dedicated text box.
Zephyr will consider flats above commercial subject to the valuer confirming
them to be readily saleable and readily mortgageable. The following should be
used as a guide;
• If any commercial activities in the block are likely to cause a nuisance by
virtue of noise, smell or unsocial hours, and therefore in the valuers
opinion makes the subject property not readily saleable and
mortgageable, a zero value should be returned with a full explanation of
why.
• Some flats over commercial premises have unsatisfactory access which
may involve passing through the business area, through yards
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Section name Guidance notes
containing commercial refuse, or using poorly maintained external
stairs. If any of these factors apply the valuer should return a zero value
with a full explanation explaining this
Ex Local Authority
• The valuer is to indicate if the property was built by or is currently
owned by a local authority or housing association.
• If yes the valuer should indicate on a best endeavours basis the level of
privately owned or owner occupied by selecting one option from Low,
Medium or High.
• The valuer is also asked to indicate on a best endeavours basis the
approximate percentage of owner occupation or privately owned units.
(Please note, Owner Occupation on the form template should be read
as privately owned).
Property close to commercial (all property types)
Zephyr Homeloans will rely on the valuer to advise if saleability or
mortgageability is affected due to the proximity of the property to commercial
premises. If the valuer believes the value to be adversely affected to a point
where the property is not readily saleable, a zero value should be returned.
Otherwise the impact should be considered and reflected in the value provided.
A full explanation for doing so should be entered into the general remarks
section of the report.
Lease term/Tenure
If known the valuer is to indicate the remaining term of the lease. If the lease
term is unknown, a residual lease of 85 years should be assumed, and NK should
be entered into the remaining term box. A note should be added in the general
remarks stating that the lease term remaining has been assumed as 85 years.
If at a later date the residual lease is discovered to be less than 85 years, the
lease information will be referred back to the valuer who should seek suitable
comparable evidence or refer to the Beckett and Kay Mortgage Dependent
Graph of Relativity.
Freehold Flats are not acceptable. (Unless part of a Multi-Unit Freehold Block
which is being purchased by a single applicant, and has been instructed as such
specifically as an MUFB). Tyneside arrangements are also not acceptable.
Cross Tenure properties (criss cross lease) are not acceptable.
12 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Flying Freehold
Flying freehold may be considered where less than 10% of the gross floor area of
the subject property extends over/under another and the Valuer states that re-
sale ability is unaffected. If greater than 10% flying/subsumed freehold the
application should be declined.
The exception to this is Modern Coach House style properties which are
acceptable.
Commercial use within the subject property
The valuer is to indicate if any part of the subject property is in or appears to be in
commercial use and if so state the percentage. Zephyr Homeloans do not accept
Live/Work units.
Shared Ownership
Zephyr Homeloans do not accept properties subject to a Shared Ownership
deed. The valuer should select the required box if this is the case and return a
zero valuer.
Exposure Limits
This is for information purposes only as Zephyr Homeloans will be monitoring
this, however if the valuer is aware of an issue the panel manager should be
notified.
It is important to consider exposure in relation to the number of properties to
avoid excessive concentrations, which may present difficulties in the event of a
forced sale. Applicant exposures are also important for the same reason.
Property Exposure limits – Zephyr will restrict lending to a maximum of a single
unit in developments of up to 7 properties, 25% of units in developments of
between 8 and 50 properties and 15% where the development comprises of 50
properties or more. The exception would relate to Multi-Unit Freehold Blocks
(MUFBs) where we may lend on the whole unit which may comprise up to 6
individual units.
The Zephyr Homeloans product team will provide regular updates on areas and
developments where our exposure limits have been reached.
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Section name Guidance notes
New build or < 10
years old.
Zephyr Homeloans define a new build property as follows;
‘A new build property is one that has been recently constructed or converted
and is being sold for the first time as completed and ready for occupation or,
has been previously sold on this basis within the last twelve months’.
The minimum value acceptable for a new build property is £75,000
The valuer is asked to confirm if the property is under construction or complete.
If the property is under construction at the point of inspection a zero value
should be provided, with the completed value stated in the after essential
repairs box. It should also state that a reinspection is required.
Warranties
If the property has been built or converted within the last 10 years a suitable
warranty is required. The following is acceptable;
• NHBC Build mark
• NHBC Solo
• Zurich
• Castle 10 New Home Warranty
• LABC
• Premier Guarantee Certificate
• Build zone
• CRL Management Ltd
• UK Finance compliant Professional Consults Certificate’s may also be
accepted, if signed by a Qualified Architect, who is a corporate member
of the Royal Institute of British Architects, or Qualified Chartered
Building Surveyor, who is a corporate member of the Royal Institution of
Chartered Surveyors
• Evidence of appropriate valid personal indemnity insurance will be
required and the certificate must be for the benefit of the borrower(s).
The Architect/Surveyor must confirm that they have supervised the
whole project
Disclosure of incentives and part exchange
The valuer is asked to disclose if the transaction involves an element of part
exchange.
The valuer should confirm if the UK Finance Disclosure of Incentives form (DIF)
has been seen. If seen, details should be provided in the dedicated text box. If
the DIF has not been seen a value should still be provided. Zephyr Homeloans
may raise a PVQ at a later date to ask the valuer to confirm that the details on
the incentives form do not alter the valuation figures provided.
If the property is a new build the valuer should record the name of the developer
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Section name Guidance notes
in the dedicated box provided.
Accommodation In this section the valuer is to indicate the number of relevant
rooms/lifts/garages/outbuildings etc.
If outbuildings are present, details should be provided in the dedicated text box.
The valuer is asked to provide an internal floor area of the dwelling. If less than
30 sqM a zero value should be returned.
Current
occupancy
The valuer is asked to indicate if the property appears to have been previously
occupied.
On a best endeavours basis the valuer is to indicate the number of adults
appearing to live in the property. It is recognised that this will not always be
known.
The valuer is asked to indicate if the property due to its layout, location or other
factors, is like to require a mandatory or discretionary HMO licence.
The valuer should also select the box if the property appeared to be subject to an
existing tenancy at the time of inspection.
15 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Construction Property acceptability is based on a satisfactory valuation report from Zephyr
Homeloans’s appointed Valuer in accordance with the construction and valuation
policy detailed below. Non-standard construction will be assessed on individual
merit
Standard Construction can be broadly defined as masonry/timber frame clad
with masonry, under tiled or slated roofs. Non Standard construction can be
wide ranging and will be considered on individual merit. We will at all times be
guided by our Valuer as, dependent on the location and condition, we may be
prepared to lend on the property.
Modern Methods of Construction (MMC) will be considered on individual merit,
and Zephyr Homeloans will at all times be guided by the comments and
professional opinion of the valuer. As a general rule if the construction type
would be considered readily saleable and readily mortgageable it is likely to be
acceptable to Zephyr Homeloans.
Walls and roofs should be of a traditional construction and of a type that ensures
a ready future market for the property.
Acceptable and Unacceptable construction types
Walls
Solid Wall Construction Yes
Cavity Wall Construction Yes
Wall Type
Brick Yes
Natural Stone Yes
Reconstituted Stone Yes
Concrete Block Yes
Cob and Flint Yes
Concrete - Wimpey no Fines No
Concrete – Laing Easi Form No
Pre-Cast Reinforced Concrete (PRC) where the property has
been repaired under the PRC (Homes) Ltd repair scheme.
No
Large Panel Systems (LPS), no more than two storeys high
and subject to structural engineers report
Yes
Steel Framed Houses, (subject to being readily
mortgageable and saleable).
Yes
Timber framed houses, (with brick, reconstituted stone or
rendered block work)
Yes
16 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Section name Guidance notes
Timber Framed – Inner and Outer Leaf (Unless MMC and
recommended by valuer)
No
Any property where there is ongoing movement and
monitoring is required.
No
Mundic properties where the property is not graded A 1,2
or 3 following a Petrographic Test
No
Property where high alumina cement or Mundic block has
been used in the construction
No
Prefabricated building and PRC construction (Unless MMC
and recommended by valuer)
No
Property which has been underpinned No
Property suffering from progressive structural movement No
Properties with floor areas of less than 30sqM (IFA) No
Roof
Timber frame covered with either tiles or slates Yes
Reed or Straw Yes
Copper Yes
Lead Yes
Zinc Yes
Asphalt Yes
Mineralized Felt Yes
GRP & EDPM Yes
If the valuer identifies any structural alterations or extensions the should (best
endeavours basis) indicate the approximate age of the work, and whether or not
Building Regulations or planning consent would have been required.
In general property with an anticipated lifespan of less than twenty-five years
beyond the end of the mortgage term and/or where the condition significantly
affects marketability is not acceptable.
Combustible Cladding
We require the Building Owner and/or its agent, as the 'responsible person'
under the Regulatory Reform (Fire Safety ) Order 2005, to produce a written
statement, prepared by a suitably qualified independent professional advisor
who is a member of one of the professional bodies approved by the Ministry of
Housing, Communities and Local Government (MHCLG) in Information Note 1 (or
17 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Section name Guidance notes
any subsequent approved list), to confirm that the subject property meets the
requirements of the current guidance from MHCLG.
In the event that the statement identifies the presence of any aluminium
composite material (ACM), we require the Building Owner and/or agent to
produce written evidence that the external wall system complies with the testing
regime described in BS8414 and with the BR135 classification.
Commercial/Residential conversions
Zephyr Homeloans will limit exposure to inappropriate conversions and each
case will need to be judged on its individual merits.
Properties must be readily saleable, readily mortgageable and suitable for owner
occupation. This is most likely to be encountered as office to residential schemes
but also includes retail and agricultural conversions.
Conversions situated in desirable residential locations within good quality
buildings are likely to be considered acceptable but conversions situated in office
parks or where the predominant use is commercial/agricultural are unlikely to be
suitable.
The property must have the benefit of a suitable warranty.
Locality &
Demand
This section is intended to establish the mortgageability and saleability of the
subject property. The valuer is asked to give an opinion on a number of areas
including the likely market appeal of the property, taking into consideration the
sales activity in the area and potential planning applications.
If the valuer is aware of a situation where the property could be subject to a
compulsory purchase or clearance scheme details should be provided in the
dedicated text box.
Of the valuer notices boarded up or vacant properties in close proximity details
should be provided in the dedicated text box.
If there is a possibility of an occupancy restriction full details should be provided
in the box provided.
If the property is close to any high voltage electrical equipment full details should
be provided.
Services The valuer should select all boxes which are applicable to the subject property
from the following options; Water mains/private, Gas, Electricity, Central
Heating. The type of central heating should be reported in the dedicated text
box provided.
The valuer should indicate whether the property benefits from mains drainage or
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Section name Guidance notes
a private system.
The valuer should confirm if solar panels are identified on the property. Solar
panels are acceptable subject to the valuer confirming that the property is
suitable security and where confirmation is gained from the conveyancer that
the terms of the lease meet the UK Finance minimum standards.
The valuer is to confirm if the property is subject to any shared access and if the
roads appear to be adopted.
If any easements or rights of way appear to be present details should be given in
the text box provided.
If the house/property is split into separate flats (on a best endeavours basis) the
valuer should confirm whether the flats appear to be separately metered. If not
known or not necessary ‘n/a’ should be selected.
Condition or
Property
The valuer is asked if the property is considered to be suitable security for Zephyr
Homeloans. If ‘no’ full details should be provided in the dedicated text box
provided. Careful consideration should be taken to the guidance notes keeping
in mind the requirement of the subject to be readily mortgageable and readily
saleable.
The valuer is asked if there is any evidence of structural movement and if yes,
does it appear to be historic and non-progressive. If there are any signs of an
ongoing problem full details should be provided in the dedicated text box and a
recommendation of a structure engineers report should be advised.
The valuer is also asked to report on any structural modifications which have
been effective in the text box provided.
If any of the following are thought to apply the relevant boxes should be
selected; Flooding, Subsidence, Heave and Landslip. Full details should be
entered into the text box provided.
The valuer is asked to indicate if the boundaries to the property are well defined
and if the total plot is 1 acre or less.
The valuer is also asked to comment if the property is on a steeply sloping site, or
if there are any trees within influencing distance of the property.
Excluded property types
• Mobile Homes
• Commercial Property
• Landlocked property
• Houseboats
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Section name Guidance notes
• Property held on a commercial basis
• Property held on a Common hold basis
• Property with Planning Use classes Order other than C3 or C4
• Property with pre-emption clause in existence
• Property with restrictive covenants or saleability e.g. retirement
homes/houses or apartments
• Holiday Lets
• Right to Buy - unless purchased more than 5 years ago
• Property subject to a shared ownership deed
• Farms, small holdings or properties with agricultural restrictions in
place
• Studio flats and/or flats with a total floor area of less than 30 sqM
internal floor space
• Property where a Flying Freehold exists affecting more than 10% of the
gross external floor area
• Flat in a block with more than three floors above ground floor and
which does not have a lift. Note: top floor and attic can be considered as
one floor where they are part of the same flat.
• Flats or maisonettes in blocks exceeding 10 storeys are acceptable
subject to mandated approval by the funder
• Bed & Breakfast establishments
• Serviced Flats or Apartments
• Retirement Flats
• Park Homes
• Sheltered Accommodation
• Property affected by progressive Japanese Knotweed
• Property on which there is a local authority grant outstanding
• Live/work units
• Property with no kitchen or bath/shower room
• Property which has shared access where the applicant or a relative
controls the property/ies which share the access
• Property which has any shared services with any adjoining or adjacent
property which does not form part of the security
• Social Housing Schemes
• Property where material environmental hazards are present
• Property where saleability may be adversely affected by local planning
matters or by an unsatisfactory mining report
• Property which is being bought from the customer’s own limited
company
20 | P a g e Zephyr Homeloans Valuer Guidance Notes Version 2.0
Reports Zephyr Homeloans may require a specialist’s report, for example:
• Timber and damp, electrical, trees (arboriculture), drains, roof, structural,
cavity wall tie;
• Mining report or metalliferous mining report (as these are obtained by
the solicitors, a special condition is imposed at offer);
If any such reports are require a special condition will be imposed at offer stating
a report needs to be obtained and the completed report will be forwarded to
valuer for review.
Examples may include the following. However if a specific report, which is not
mentioned is required, the valuer should select other and indicate in the text box
required the recommended requirements.
Movement
If the valuer indicates that the property is suffering from progressive movement,
or has been underpinned or otherwise subject to structural repair the security
will be rejected for mortgage purposes.
Alternatively, should the applicant wish to commission a structural engineers
report on the integrity of the property the case will be reconsidered only if:
• The structural engineer is suitably qualified (i.e., MISTRUCT.E.,
FISTRUCT.E, C.ENG., MICE), and
• The report is approved by the valuer who confirms that it will not affect
saleability, and
No commitment to lend will be given until the structural engineer’s report has
been seen and approved. If the valuer states that there is structural movement
or settlement but that it is non-progressive or of a historic nature then no further
action is required. Zephyr Homeloans will not consider any property which
requires monitoring.
Arboriculture/Invasive Plant Species
Japanese Knotweed
Properties with specific issues highlighted by the surveyor, including progressive
Japanese Knotweed are not acceptable to Zephyr Homeloans.
Zephyr Homeloans will adopt the following approach if Japanese knotweed is
discovered;
Valuers are to follow the guidelines set out in the RICS Information Paper on
Japanese Knotweed and Residential Property.
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Section name Guidance notes
Properties assessed as category four (4) are not considered suitable security.
Property assessed as category three (3) or two (2) will be subject to full retention
and only considered acceptable security once a suitable management plan has
been put in place with the benefit of a long term guarantee. In addition payment
needs to be made up front and held in escrow in order that the full treatment
programme is guaranteed to be undertaken, (solicitor to confirm). The
treatment contractor must be a member of the Property Care Association
Invasive Weed Control Group.
Properties assessed as category 1 do not require further investigation.
• Trees within influencing distance should be reported.
Other
• Properties built on or near contaminated land that may affect future
saleability may not be acceptable
• Properties deemed at risk by local mining by the valuer are not
acceptable.
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Section name Guidance notes
Essential Repairs The property must be habitable, readily saleable and / or rentable, structurally
sound and be able to have unconditional buildings insurance arranged upon it that
covers full rebuilding and replacement costs to the property including all
professional fees and the costs of meeting planning and local authority
requirements.
Retentions
The mortgage advance may be wholly or partially retained pending completion of
works required bringing the property to a suitable condition for lending, subject to
recommendations made by the Surveyor.
When the valuer recommends that part of the proposed mortgage amount is
retained until specified property improvements are completed, the Mortgage
Offer will need to reflect the valuers’ comments. Once Zephyr Homeloans are
advised that the required work has been completed, they will instruct the original
valuer to re-inspect the property.
The minimum retention should be no less than £3,000. Retentions should reflect
impact on value, not cost of work.
Rental
Information
Taking into consideration the basis of the valuation e.g. Standard BTL, HMO,
MUFB, the valuer is asked if there is suitable rental demand in the area. If the
valuer answers this ‘no’ a full explanation should be provided in the dedicated text
box.
Properties considered suitable for private renting are those that show no works
required to make a property liveable and lettable.
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Section name Guidance notes
Standard BTL The valuer is asked to provide their opinion of the monthly market rent assuming
a 6 or 12 month AST is, or will be in place, with the subject property in its current
condition.
If improvements could be made to the property, or if essential repairs are required
in order to make it suitable for private renting an after works of improved
condition rental valuation should be provided.
The valuer is to confirm if their valuation is based on a furnished or unfurnished
basis.
High Value Tenancy
Where the rental income exceeds £100,000 per annum from one property, the
tenancy is considered to be a ’ Common Law Tenancy’ as opposed to an ‘Assured
Shorthold Tenancy’ . It is to be noted that the figure of £100,000 is annualized
and, therefore, if the proportional monthly rental is greater than £8,333.33 per
month for a shorter term (e.g. for 6 months) the tenancy is still not an AST. This
type of tenancy is acceptable subject to recommendation by our appointed valuer.
If there are any other matters which may impact on the ongoing demand for
residential letting, the valuer should select yes and provide full details in the
dedicated text box provided.
If the valuer considers demand for the subject property to be on an ‘investor to
investor’ basis only, full details should be provided in the dedicated text box.
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House in Multiple
Occupancy (HMO)
Property occupied by at least 3 tenants, forming more than 1 household and with
shared toilet, bathroom or kitchen facilities.
The method of calculating rental value will be on the basis of the aggregated
individual room rentals (furnished) without deduction of landlord’s costs.
Should the aggregated rental values of the above be less than what the property
would let on an unfurnished AST basis; the latter should be given, together with
supporting commentary.
The maximum number of lettable rooms should be no more than 6 (six) and the
rental figure should be supported on a comparative basis. The construction should
be considered standard as per the construction section of these notes.
Investment yield based valuations are NOT acceptable.
Comment should also be made on the requirements for any licensing and
compliance with current legislation, including the Housing Act 2004, together with
similar legislation in Wales. The valuer is also expected to have knowledge of (and
report on) any local variations such as Article 4 Directions and Discretionary
Licensing.
For HMOs, the minimum capital valuation of the property should be no less than
£100,000.
The valuer is asked to indicate whether or not the property is lettable as an HMO
in its current condition. If no is selected full details should be provided. and a zero
value returned.
The valuer is asked to confirm if there is suitable tenant demand for multiple
occupation in the area. If no is selected the final question in this section ‘Any other
matters which may have an impact on the ongoing demand’ should also be
answered yes and full details provided.
The valuer is to confirm the current passing rent (if known or as reported). The
valuer is then asked to provide their opinion on the monthly sustainable rent likely
to be achieved on a furnished basis in the properties current condition and the
likely rental if the property was presented in an improved condition.
On a best endeavours basis the valuer is asked to indicate if an HMO licence is
required, and if so which type, e.g. mandatory or discretionary.
The following circumstances are not acceptable to Zephyr Homeloans, if
applicable zero value should be returned with a full explanation of why;
• Heavily converted HMOs unless suitable comparables can be obtained
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Section name Guidance notes
and there is sustainable demand.
• Hostels
• Hotels
• Properties where any tenant has a right of tenure not determined by a
six month AST or shorter term periodic tenancy agreement. Specifically
(but without limitation) any property with one or more tenants holding
an Assured Tenancy is not acceptable
• Properties which, in the opinion of the valuer, in any part provide
accommodation which is not fit for human habitation.
• No more than one kitchen
The Valuer is to use the Zephyr Homeloans HMO form (ZH3).
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Multi-Unit
Freehold Blocks
Taking a single mortgage for a Multi-unit Freehold block (single freehold) is
acceptable providing the block comprises of a maximum of 6 (six) individual units.
They may constitute a purpose built block of flats or a house converted into
individual units. Each unit will be the subject of a separate tenancy agreement.
The units must also be physically self-contained including services and above
30sq.M. (Internal floor space). If below 30sqM a zero value should be returned
along with a full explanation of why.
Capital valuation
Where the Client is lending against a freehold block (Maximum 6 Flats), the Valuer
is to value the freehold of the property on the basis the block will be purchased by
an investor on an open market basis but discounted to reflect local market
conditions, the property is a freehold block, all units are being purchased at the
same time and assuming a single AST on each flat.
The resulting value is likely to be a figure lower than the combined market values
of the individual flats within the block. Justification should be provided if no
discount has been applied.
Rental valuation
The rental value of a freehold block will be the sum of sustainable rents achievable
in the open market for each of the flats within the block. Please note as well as
breaking down the rents which you feel each flat will achieve individually on the
form, you will need to total these up on the ‘total market rent box’.
The valuer is asked to provide the total number of units, and provide their opinion
of whether or not there is suitable rental demand for the subject units in the area.
If no is selected to the demand question a full explanation should be provided in
the dedicated free text box. If no demand is identified, a zero value should be
provided.
By individual unit the valuer is asked to specify the number of bedrooms, kitchens,
living rooms, Bath/WC/Shower. The valuer is also asked to provide the GEA for
each unit along with the individual anticipated rents. If a 6th unit is present, these
details should be provide in the over flow free text box.
The valuer is asked if the units appear to be individually metered for utilities.
If the valuer feels there are any other matters which may have an impact on the
ongoing rental demand for the security they should select yes, and provide full
details in the box provided.
Finally the valuer is required to provide the total rent which the block is expected
to achieve.
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Section name Guidance notes
Valuation for
mortgage
purposes
The valuer is asked whether or not they have previously valued the property
within the last 12 months. If yes, no further comment is required and the box can
be left blank.
If the property is considered suitable security, a current market value should be
provided on the basis specified by the instruction type/security type, as defined
within these guidance notes. The market value of the property should reflect its
present condition, taking into account recommended retentions.
If essential repairs are required, or the property is an incomplete new build the
after works/after completion valuation should be supplied in the dedicated box.
The purchase price, or value as estimated on the instruction should be added into
the dedicated box provided.
A BICS figure should be inserted into the dedicated box. If the valuer feels there is
a possibility that Buildings Insurance will not be accepted on standard terms, they
should select yes and provide full details in the dedicated text box.
General Remarks This section is for any additional comments or observations about the subject
property.
Valuer details The valuer should check that these fields are all completed and accurate. They
should also confirm that the instruction was received from/on behalf of Zephyr
Homeloans.
Due to the electronic submission of this form, a physical signature is not
required.
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Section name Guidance notes
Comparables Three comparables should be provided to support the capital valuation along with
the rental valuation which the valuer has provided. These should be in the valuer’s
opinion, the most suitable and appropriate comparables available.
With respect to the capital valuation the comparables should ideally be located
within 5 miles of the subject property and sold on the open market within the last
6 months. All should be completed sales. The comparables should also ideally be
within 10% of the valuation provided.
If three comparable properties cannot be identified within the above criteria, the
valuer must give an explanation in the additional comments boxes provide of
either (a) why fewer than 3 comparables have been provided, or (b) why it is
acceptable that the suggested/ideal criteria have not been met in all cases.
Examples of (b) may include:
• Insufficient local sales in the immediate vicinity within the last 6 months but
evidence shows that the local market has been flat and so an older
comparable has been used.
• Due to lack of comparables, one of the properties is an agreed sale price
from a local (named) estate agent which has not yet sold or been recorded
with the Land Registry/Registers of Scotland.
In the case of Multi Unit Freehold Blocks, the comparables selected should be an
appropriate snapshot of the various units which make up of the block as a whole.
E.g. if the block has four units and three of them are 2 beds, with the fourth being
a 1 bed, the comparables should be weighted towards 2 bed flats (two x 2 beds,
one x 1 bed).
The final question at the end of the comparable section relates to non-standard
construction properties. If the property is considered to be outside of standard
construction, is it likely to perform differently in a downturn when compared to
more standard properties? If yes is selected full details should be provided in the
dedicated text box provided.
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