Borrowing for off-the-plan apartments is getting tougher as lenders crackdown on property valuations for loan approvals.
With off-the-plan apartments already a challenging investment option in Melbourne amid current oversupply, valuers and brokers say this latest tightening makes it even more important that buyers and investors shop around and get professional advice before jumping into an off-the-plan apartment deal.
One of the big four banks – Westpac – are introducing new mandatory apartment inspections by qualified valuers to ensure off-the-plan deals aren’t over-valued.
Due in part to OH&S issues, the valuations are going to take place at a time when the valuer can actually go on and walk through the site, which will obviously be close to the completion date.
The tightening will make sure off-the-plan apartments are no longer valued based on building plans or desktop valuations based on similar properties.
The apartments will again be valued on completion, and the aim of the tougher inspections is to guarantee quality and raise industry standards.
Christopher Foster-Ramsay from Foster Ramsay Finance spoke to the Australian Financial Review.
“These new valuations are going to get tougher to mitigate any risk from the original plans,” he said.
“It is getting more and more complicated for property buyers seeking funding. It is important that a property finance professional is involved in the deal to avoid the pitfalls and maximise benefits.”