Valuations and Property Information Guide
VersionNovember 2015
Guide Owner: / Mark Tugwell
Author: / Trevor Brown
Implementation Date: / 16th November2015
Doc Ref: / November 2015Final Document

Last Reviewed: November 2015

Next review due November 2016

Company Confidential

This guide is designed specifically for use by Barclays Group personnel. Copies must not be provided to applicants or Mortgage Intermediaries.

Distribution and Approval List

Function / Name / Date
Required Approvals
Head of Secured Portfolio Management / Neil Hornsby / 29.10.2015
PCB Consumer Lending / Tony Fullbrook/Drew Nienhuis/Chris Wade / 26.10.2015
Mortgage Services / Retail Lending Change Engagement/Sharon JenkinsonPettigrew/Julie Torrance-Gale / 26.10.2015
Fraud Prevention / Neil Scriven / 27.10.2015
Business Stakeholder Awareness
PCB Compliance / Tony Marek/UKBCompliance, Sign Offs. / N/A
Legal / Peter Sudbury/Brendan Farren / N/A
Financial Crime – AML & Sanctions / AML Policy Team : UK RBB Compliance/Philip Triggs / N/A
PCB Control & Prudential Risk / Neil Bromley / N/A
Data Privacy / Email: Privacy,approvals & queries:UKRB / N/A
Distribution Excellence & Support – Change Acceptance / Claire Smith/Kath McManus / N/A
Distribution Intermediary Channel / Nicky Borloch/Christine Oldham / N/A
Product & Propositions / Tim Shepherd/Marie Thomas/Marlene Wander/Rebecca Wynne / N/A
Barclays Wealth International / Stephen Moroukian/Tony Major/Donatella Bartin/Jill Bentley/Gavin Hamilton / N/A
Senior Portfolio Manager / Mark Tugwell / N/A
PCB Consumer Policy and Governance / Kirsty Fitzgerald/Sheena White / N/A
Customer Network Performance / Tom Gorman/Tim Chapman/Helen Stott / N/A
Business Design / Karen Mackay/Chris Shawcross / N/A
Ekins / David Booth / N/A
Voice of the Customer / Lynne Schoneville/Jackie Maddocks / N/A
Home Solutions Direct – Customer Relations / Lorraine Jeffries / N/A
RBB Learning Solutions / Louise Leonard/Helen Radcliffe / N/A

Document Control Page

Version Number / Date Issued / Status / Owner / Reason for Change
November 2015
Draft V1.1 / 26.10.2015 / Draft / Mark Tugwell / S1 Introduction. Where a valuation is instructed on a Buy To Let property we require there to be owner occupation demand on any development as well as rental demand.
S2 Valuation Types. Introduction ofMortgage Valuation to replace Woolwich Valuation and Non-Disclosed Property Risk Assessment.
S2.5 Building Insurance. Re-drafted as emphasis is on applicant to ensure adequate level of cover is held.
S2.12 Valuations in Scotland. Approved valuer details updated following merger of Allied Surveyors Scotland and Murray & Muir.
S3.5 Deck Access (also “High Rise Blocks of Flats” & “Flats and Maisonettes”. Ex-Local Authority restriction removed where valuer considers there is no impact on mortgageability/saleability.
S3.11 Japanese Knotweed. Category 4 requirements updated.PCA registered or similarly qualified firm reports are acceptable.
S3.14 Mixed Use Properties. Where the commercial use is incidental to the residential purpose of the property it is not considered to be mixed use.
S3.15 NewBuy. Scheme closed to new applicants.
S3.17 Property Concentration BTL. Fraud referral process removed as no longer applicable.
S3.20 Solar Panel Lease Providers. Details of information required in order to consider approval for lease providers in N Ireland.

Version Control

Version Number / Date Issued / Reason for Change
November 2015
Draft V1.0 / 19.10.2015 / Initial Draft
Draft V1.1 / 26.10.2015 / Appendix A – Valuation Information Guide re-introduced (deleted from initial draft)
Final Doc / 13.10.2015 / Final Document Distributed

Table of Contents

1INTRODUCTION

1.1Scope

2VALUATIONS

2.1Introduction

2.2Survey and Valuation Reports

2.2.1Mortgage Valuation

2.2.2Updated Valuations

2.2.3Re-Inspection

2.2.4Automated Valuation Models (AVMs)

2.3Direct Valuation Instructions

2.4Valuation Validity

2.5Building Insurance

2.6Buying Property at Auction

2.7Contaminated Land

2.8Environmental Reports/Searches

2.9Specialist Reports

2.10Valuation Appeals (Residential and Buy To Let)

2.11Valuation Re-types

2.12Valuations in Scotland

2.13Packagers

3PROPERTY INFORMATION

3.1Introduction

3.2A

ADJOINING FLATS (GRANNY ANNEXE)

AGRICULTURAL RESTRICTIONS (Including occupancy restrictions in National Parks & Areas of Outstanding Beauty)

3.3B

BIOMASS BOILERS

3.4C

CHANCEL REPAIR LIABILITY

COB CONSTRUCTION

COMMONHOLD

CONSTRUCTION TYPES

3.5D

DECK ACCESS

DEMOLISH AND REBUILDS

3.6E

EASIFORM CAVITY WALLED CONCRETE

3.7F

FLAT CONVERSIONS

FLATS AND MAISONETTES – GENERAL

FLATS OVER SHOPS/COMMERCIAL PREMISES RESIDENTIAL

FLATS OVER SHOPS/COMMERCIAL PREMISES BTL

FLYING FREEHOLD

FREEHOLD FLATS

3.8G

3.9H

HELP TO BUY SCHEMES

HIGH ALUMINA CEMENT CONCRETE (HACC)

HIGH RISE BLOCKS OF FLATS

House in Multiple Occupation

3.10I

INSUBSTANTIAL MATERIAL / SINGLE SKIN BRICK

3.11J

Japanese Knotweed

3.12K

3.13L

LARGE PANEL SYSTEM DWELLINGS

LEASEHOLD PROPERTIES

LETTING TYPES (UNACCEPTABLE)

LIVE-WORK UNITS

3.14M

MANORIAL RIGHTS

MIXED USE PROPERTIES

MODERN METHODS OF CONSTRUCTION (since 2006)

MUNDIC BLOCK CONSTRUCTION

3.15N

NEW BUILD PROPERTIES

NEW BUILD SCHEMES

NEW HOUSE GUARANTEES

NEWBUY PROPERTIES

3.16O

OCCUPANCY

3.17P

PRE-FABRICATED REINFORCED CONCRETE DWELLINGS

PROPERTY CONCENTRATION BTL

PROPERTY CONVERSION BTL ONLY

3.18Q

3.19R

3.20S

SECTION 106 AGREEMENTS

SELF BUILD MORTGAGES AND STAGE PAYMENTS

SOLAR PANEL LEASES

STEEL FRAMED CONSTRUCTION

3.21T

THATCH ROOF / WATTLE AND DAUB / CEDAR SHINGLE

TIMBER FRAMED CONSTRUCTION

3.22U

3.23V

3.24W

WIMPY NO-FINES

4Appendix A – Valuation Instruction Guide

5Appendix B – Schedule of Acceptable Solar Panel Lease Providers

Company Confidential Page 1 of 67

© Copyright Barclays Bank PLC

1INTRODUCTION

This Valuations and Property Information Guide outlines the valuation requirements and acceptable property construction types for all Residential and Buy To Let mortgage lending within the Barclays Group. The manual will help assess whether a property is considered suitable security for lending purposes and which valuation should be instructed for each lending proposition.

If during the life of the mortgage information is received, "other than due to a customer’s request for further credit", that the market value of a particular property or type of property has declined relative to the general market for that type of property then Barclays preferred valuation provider must be instructed to carry out a Mortgage Valuation as a minimum requirement.

Where a valuation is instructed on a Buy To Let property it is a requirement that there is owner occupation on any development as well as rental in order to ensure that any property can be fully marketed on the open-market with no restriction in demand.

A Buy to Let (BTL) mortgage property must be ready to let on, or within 1 month of completion, or is let already.

The manual is split into the following two distinct sections:

  • Valuations
  • Property Information.

There is no discretion relating to these Valuation and Property Construction requirements, unless specifically detailed in the individual sections.

Further details relating to Barclays Group Mortgages can be found in the Residential Mortgages Credit StandardsBuy To Let Credit Standardsand Mortgage Account ManagementStandards.

1.1Scope

These requirements apply to the Retail “Residential” and “Buy to Let” portfolios.

2VALUATIONS

2.1Introduction

A valuation of ALL properties must be carried out on ALL mortgage lending.

Retail Operations will instruct the relevant valuation type depending on the proposition and the type of loan required. There are several valuation types: -

Survey and Valuation Reports

-Mortgage Valuation (Disclosed and Non-Disclosed)

-Updated Valuations

-Re - Inspections

-Automated Valuation Models (AVM)

The following sections provide an overview of the valuation types that are carried out by a Barclays preferred supplier and the circumstances when they must be requested.

In addition this section also details the requirements on the following;

-Direct Valuations

-Valuation Validity

-Building Insurance

-Buying a Property at Auction

-Contaminated land

-Environmental reports

-Specialist Reports

-Valuation Appeals

-Valuation Re-types

-Valuations in Scotland

-Packagers

2.2Survey and Valuation Reports

This section highlights the types of Survey or Valuation Report available together with circumstances when they are required and/or must be obtained.

The applicant must pay the full cost associated with the valuation required (Please see Tariff of Charges for details of current valuation costs).

2.2.1Mortgage Valuation

MORTGAGEVALUATION
Overview / As a minimum a Mortgage Valuation must be carried out on ALL new Residential and Buy to Let house purchases regardless of the loan to value ratio.
The Mortgage Valuation is suitable for properties of conventional type and construction and apparently in reasonable condition.
Requirements / The Mortgage Valuation report provides:
  • A general description of the property, including its type, age, construction, accommodation, services and location;
  • An opinion on the property’s market valuation, which is valid for six months from the date the mortgage application is received by Mortgage Services;
  • Insurance reinstatement costs for the property;
  • If used for a Buy To Let application, the report will also include an opinion on rental value.
Unlike many other forms of valuation, a complimentary copy of the MortgageValuation Report will be sent to the applicants on purchase cases only. The report must not be sent to applicants for re-mortgage cases.
The valuation figure obtained may be disclosed to a third party, such as a conveyancer, on a confidential basis. The third party should be made aware that the valuation figure must not be disclosed by them to the applicant.
A Mortgage Valuation must be carried out where information is received, “other than due to a customer request for further credit”, that the market value of a particular property or type of property has declined due to the general market for that type of property regardless of the loan to value.
Residential Mortgages
For re-mortgages and additional borrowing an Automated Valuation Model (AVM) can be used where these requirements allow – See Section 2.2.2 below.
A Mortgage Valuation should be requested in ALL further advances and increased borrowing cases where the latest valuation is an AVM and/or external valuation.
Buy to Let Mortgages
A Buy to Let Mortgage Valuation will provide:
A property valuation (Market Value) assuming vacant possession (it will NOT be based on capitalised rental income).
The anticipated market rent of the property as a single household (not room by room basis) confirmed by the valuer based on continued demand and sustainability in line with local market conditions.
The following requirements apply in all cases:
  • If, for any reason, the valuation report does not include an assessment of rental income the case must not proceed until a written assessment has been received from the valuer. The case MUST NOT be underwritten on the basis of the anticipated rental income detailed on the application.
  • Where the valuer reports the following, the application must be declined:
  • The property is not considered suitable for private renting
  • There is no satisfactory tenant demand (based on type of property and/or location)
  • The letting type that the property is suitable for is not acceptable – See “Letting Types (Unacceptable) Section
  • The property is not reasonably lettable in present condition
  • There is any non-residential usage of the property to be mortgaged
Note:In such circumstances any further reports or works should not be instructed.
The valuation report is valid for six months from date the mortgage application is received by Mortgage Services. If the mortgage has not completed within this timescale an updated valuation MUST be carried out.
See Also / Flats over Shops/Commercial Premises BTL, Freehold Flats, Letting Types (Unacceptable), Updated Valuations.
Discretion / No Discretion can be applied to the contents of this section

2.2.2Updated Valuations

UPDATED VALUATIONS
Overview / An Updated Valuation is a basic report. The report acts as a review of the original valuation. The report is for our purposes only and confirms current market value and any significant structural defects.
Requirements / The Updated Valuation should be requested in the following circumstances;
  • Residential and Buy To Let New Build properties -The initial valuation is dated more than 6 months older than the date of receipt of the mortgage application by Mortgage Services and completion of the advance has not taken place. The applicant must cover the cost of any updated valuation.Any other offer that does not complete within this period must be re-submitted as a new application;
  • Where contracts have been exchanged and a firm completion date within 2 weeks (1 month BTL) of the original offer expiry is confirmed then an exception to the above may be agreed by Mortgage Services in extending the completion date whereby a resubmission is not required.
  • Any transfer of equity unless the use of AVM is allowed.
  • Additional Borrowing where the total borrowing will be above 80% LTV;
  • Existing Barclays Group re-mortgages to an Open Plan Flexible mortgage where the total borrowing will be above 80% LTV;
  • In any of the circumstances above where the total borrowing will be below 80% LTV and an AVM is not available;
  • Where no re-inspection for a new build has been undertaken – See note referred to below;
  • ALL BTL further advances.
Notes: It is not acceptable for AVMs to be used for BTL under any circumstances.
The fee payable for an Updated Valuation is incorporated in either the Further Advance or Reserve fee. However, in the case of existing customers remortgaging to an Open Plan Flexible mortgage, where the total borrowing will be above 80% LTV, this fee is incorporated within the current product tariff.
The BTL Updated Valuation Report will provide:
  • The property valuation of a single dwelling (Market Value) assuming vacant possession (It will NOT be based on capitalised rental income)
  • The anticipated market rent of the property as a single household (not room by room basis) confirmed by the valuer.
The results of any Updated Valuation are not disclosed to the customer.
See Also / Mortgage Valuation, Re-Inspections, Automated Valuation Models (AVM), Freehold Flats, Property Conversions BTL.
Discretion / No discretion can be applied to the contents of this section

2.2.3Re-Inspection

RE-INSPECTION
Overview / A Re-Inspection is only required for the Barclays Group’s purposes and will not be disclosed to the applicant and will normally involve an internal and external inspection.
Requirements / This report should be requested in the following instances:
  • Recently purchased property where works have been carried out.
  • New build properties which are not fully complete on initial inspection to ensure the property is constructed to a satisfactory standard and to check that it is in a habitable condition and that the property has reached Practical Completion.
Notes:
  • The applicant must cover the cost of any re-inspection.
  • The requirement for a re-inspection can be waived where the new build property is built with the benefit of 10 year warranty cover provided by any of the approved providers as stated in the New House Guarantees section – See “New Build Schemes” section.

See Also / New Build Properties, New Build Schemes, Specialist Reports and Repairs
Discretion / No discretion can be applied to the contents of this section

2.2.4Automated Valuation Models (AVMs)

AUTOMATED VALUATION MODELS (AVM)
Overview / The Automated valuation model (AVM) produces a valuation based on data received from a number of sources, including previous physical valuations and actual sale, building cost information and insurance company records and other data records.
The Automated valuation models (AVM) is instructed by Mortgage Services via Hometrack and is required for the Barclays Group’s purposes only and will not be disclosed to the applicant.
Requirements / Hometrack:
An AVM should only be returned in the following situations;
  • All Re mortgages - up to 80% Loan to Value for properties between£100,000 and £500,000 inclusive. For properties valued above £500,000 up to £1,000,000 an AVM can be used but the maximum LTV allowable is 60%.
  • Additional Borrowing application (including Further Advances and Increase to reserves) up to 80% Loan to Value for properties valued between £100,000 and £500,000 inclusive. For properties valued at above £500,000 up to £1,000,000 an AVM can be used but the maximum LTV allowable is 60%. This only applies where the latest valuation held is a physical valuation i.e. not an AVM.
  • Minimum confidence level of 2 within Hometrack rules is required to validate an AVM with the following exceptions applying:
  • Maximum LTV for confidence level between 2 & 4 must be 60%.
  • Minimum confidence level of 4 is required for properties valued at £100,000 to less than £150,000 and for properties valued at above £500,000 up to £1,000,000
  • Minimum confidence level of 5 is required for flats.
Note: An AVM will not be returned where the above confidence levels are not met.
Exclusions:
1) Any AVM that does not meet the above criteria.
2) AVMs cannot be used for properties in Northern Ireland,
3) Properties in rural locations
4) Non-standard property scenarios.
Where an AVM cannot be applied to the property a Non-Disclosed Mortgage Valuation or Non-Disclosed Updated Valuation should be instructed as outlined in Appendix A.
Non-standard property scenarios are defined as:
  • Flats with less than the minimum term of 25 years outstanding at the end of the mortgage on the lease
  • Flats over shops/commercial premises
  • High Rise Blocks of Flats (more than 7 storeys)
  • Flying Freeholds
  • Freehold Flats
  • Mixed Use Properties i.e. element of business use
  • New Build Schemes/Sites/Properties i.e. first registration was 2years or less ago
NOTES:
  • After an AVM has been returned, if Retail Operations become aware at any stage of the underwriting process that a property scenario should be classed as non- standard (as defined above) then a Non-Disclosed Mortgage Valuation or Non-Disclosed Updated Valuation should be instructed as outlined in Appendix A
  • AVM cannot be used on properties valued at under £100,000.
  • AVM is only suitable for further borrowing where the latest valuation is a physical valuation i.e. not an AVM.The next level of valuation as outlined in Appendix A must be requested where the latest valuation held is an AVM.
AVM’s cannot be used for Buy To Let.
Discretion / No discretion can be applied to the contents of this section

2.3Direct Valuation Instructions

DIRECT VALUATION INSTRUCTIONS
Overview / Direct Valuation Instruction is where a mortgage intermediary has a specific arrangement in place to instruct the valuation, via a Barclays preferred valuation supplier, before submission of the application to the Retail Operations processing team.
Criteria / No Mortgage Intermediary has been approved to instruct Valuations directly for BTL or Residential.
Discretion / No discretion may be applied to the contents of this section

2.4Valuation Validity

VALUATION VALIDITY
Overview / All valuations have an expiry date, and in normal circumstances an application will not be able to proceed where the valuation has expired.