Lender calls Brexit valuation clause ‘absolutely unacceptable’

Lender calls Brexit valuation clause 'absolutely unacceptable'



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At last week's London Property Finance Conference 2016, a panel of specialist lenders was divided over whether they would still use a valuer that puts Brexit clauses into their valuations.

The debate followed last week’s comments from Arwel Griffith, partner at Robert Sterling Surveyors, who told Bridging & Commercial’s (B&C) sister site Bridging & Commercial Distributor that ignoring the Brexit clause was “not an option”.

The event, held by UK Property Professionals (UKPP), explored the capital’s funding market post-Brexit, where B&C quizzed the panel on whether they would lend with a valuation that warned it may not match future sale prices.

James Bloom, managing director of development finance at Masthaven, quickly responded that the clause was unacceptable.

“We were approached by a couple of our valuers straight away to talk about putting Brexit clauses in.

“We told [them] they could put Brexit clauses in, but it would be the last valuation they did for us."

James explained that in terms of the type of lending that Masthaven does, it would be “unacceptable” to accept it.

“Otherwise, you have got a caveat for saying: ‘I think it’s worth this, but if I’m wrong, too bad.’ [It’s] just not acceptable at all.”

Tomer Aboody, director at MTF, disagreed, stating that if the lending was done sensibly, there shouldn’t be an issue.

“I actually totally disagree with James on that point. I don’t think a caveat would actually make too much of a difference.

“All the lenders around this table are sensible lenders, so it [isn’t] something that they should be [afraid of].”

However, Keith Aldridge, founder and managing director of Amicus Property Finance, agreed with James.

“…If [valuers] make a mistake, you don’t want to give them the opportunity to have a clause in there which gives them a viable exit.

“More than that, all of us as short-term lenders here are all funded it in different ways … Masthaven’s going to be a bank soon taking retail deposits, but certainly any of the people putting deposits into Masthaven in the future wouldn’t like to think that Masthaven are accepting a clause where they could [notably] lose some of their money.”

 

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