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What Is The CML Disclosure Of Incentives Form?

Posted on 4th May 2020

In our blog, last week, our Preston solicitors discussed all you needed to know about new build incentives. If you missed it, catch up here. This week, we are discussing what these incentives mean for your property solicitor, and how they may affect your conveyancing transaction.

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Firstly, what is the CML?

The CML, also known as the Council of Mortgage Lenders Handbook, is a trusty handbook providing lender specific guidance to your solicitor, to assist with your conveyance. The Handbook comprises a standard set of comprehensive instructions, that provide guidance on a range of issues, used throughout the conveyancing process.

The Handbook, which can be viewed here, is split into three parts:

- Part 1:

Part 1 of the Handbook sets out general instructions which are standardised, across the board, and give guidance on important items such as indemnity insurance, property valuations and proposed occupiers, for example.

- Part 2:

Part 2 of the Handbook is where matters become more specific. The Handbook allows you to search for the Lender involved in the transaction, and then takes you to their specific requirements. This Part gives your conveyancer detailed guidance on the particular lender’s instructions on matters such as identification of clients, the methods of reporting for risks in environmental and contaminated land reports, requirements for planning permission and building regulation consents and lending on flying freehold properties (see more, here) as a handful of examples. As you will see, this Part of the Handbook covers a variety of issues, that can vary lender to lender. This makes this Part of the Handbook extremely useful to your conveyancing solicitor and allows them to check your lender’s individual requirements.

- Part 3:

Part 3 of the Handbook is used by our conveyancing solicitors less frequently, as it provides for occasions in which the conveyancer is representing the lender, but not the borrower.

The Handbook, as outlined above, discusses a range of topics and provides your Preston solicitors with valuable information that may be key to your conveyance. One provision of the CML requires any incentives being offered, as part of your purchase, to be disclosed to your mortgage lender.

So, what is the CML Disclosure of Incentives Form?

The Disclosure of Incentives Form, as it says on the tin, requires any incentives being provided, to be disclosed to the lender. Introduced in 2008, the real aim of this provision is to ensure that there is transparency throughout the transaction, and that the lender is supplied with all relevant financial information. The Form applies not only to newly built properties, but to those that have been converted and are to be occupied for the first time, in their new state.

A specimen of the Form can be found, here.

The seller, usually the developer, is required to complete the Form and to provide a copy to both the valuer, and the solicitor acting on behalf of the purchaser of the property. When provided, your conveyancing solicitor will confirm that the incentives noted are correct with you, before forwarding the same to your lender, for their consideration.

The main concern of the lender is that their security over the property is protected and, therefore, need to ensure that any incentives being offered will not compromise this. The providing of the form aids them in doing so, as there is crucial information pertaining to tenure type, method of construction, any new homes warranty and, importantly, the incentives and/or discounts being offered.

The lender then has the opportunity to acknowledge the Form and confirm that they are still happy to proceed with lending funds on such basis, or indeed to request further information.

As you can see, the Form not only allows the free flow of important information, but can have major impacts in terms of your mortgage lender agreeing to loan the funds offered, as a result. It is, therefore, an extremely important document, making it imperative that you advise your solicitor of any incentives being offered to you, from the outset of your conveyance.

If, therefore, you are purchasing a property with the assistance of incentives, get in touch with our Preston solicitors today, here, or via email at property@mglegal.co.uk, who can guide you smoothly through the process.

Alternatively, if you have any other conveyancing query, our local solicitors are on hand to assist you with honest and friendly advice, available seven days a week. Contact us today, by submitting an online enquiry via the link, here.