In keeping with the current climate of responsible property lending, it is about to become harder to buy a block of land or house off the plan.
Australia’s biggest bank, the Commonwealth, has made changes to how it finances people looking to buy off the plan after it gave a confidential presentation to mortgage brokers outlining the new moves.
The bank said it won’t provide finance to buyers hoping to buy in new developments until all necessary work to make lots ready for development has been completed.
The Australian Financial Review says the confidential presentation told brokers that they won’t rely on a development plan to decide on committing to a loan, but will now wait and will need to see an external, physical valuation inspection of the lot.
“We believe a more accurate measurement in getting a valuation on unregistered land at an appropriate time should instead be based on the valuer having access to the estate and being able to physically identify the allotment,” the bank’s presentation read, according to Brokernews.com.
The Commonwealth Bank should introduce the move in the next few weeks and gave a statement to the Australian Financial Review that defended the move as a way of improving and maintaining responsible lending habits.
In line with our responsible lending commitments, we constantly review and monitor our lending standards to ensure we are maintaining our prudent lending standards and meeting our customers’ financial needs,” the statement read.
The move from the bank could create controversy by contributing to the lack of supply already driving up house prices and causing problems for first-home buyers trying to enter the market.