The Australian Property Institute (API) has clarified that the inspection requirements for vacant residential land have not changed.
The clarification comes after industry confusion over the matter, which was reported by The Adviser earlier this week.
The API confirmed that it has not removed its advice to members in relation to the identification and physical inspection of unregistered and registered vacant land.
However, on 8 October, the API advised its members that member alerts on ‘pre-purchase’ valuations, sent out on 17 and 24 September, have been withdrawn effective immediately.
“While the intention behind these member alerts was to eliminate the use of valuations on the PropertyPRO product for ‘pre-purchase’ purposes, the unintended consequence has been that legitimate mortgage security valuations have been detrimentally affected by the previous alerts,” the API said in a statement.
The API wishes to clarify that the ‘pre-purchase’ announcement is a completely separate issue to the inspection requirements for vacant residential land.
Speaking to The Adviser, the API’s national manager of professional standards, Kevin Thompson, said that the API sent out an alert to members regarding a change to the inspection requirements for vacant land that became effective on 28 September.
“Purchasers buy off-the-plan, and quite often it is site unseen. But the industry can’t allow valuers to value off-the-plan site unseen. So the latest instruction has made it clear that the valuer must physically identify and inspect the land,” he said. “That has always been the case.”
Mr Thompson said that in the past there has been some ‘professional judgement’ exercised by valuers because of time pressures to complete a valuation quickly.
“They may have then said in their report that, possibly because of construction works or other obstacles, they could not access the site, but made a valuation anyway,” he said. “The lender would then make a decision based on that.”
However, Mr Thompson said there have been some instances where valuers have missed things like transmission lines or a feature of the surrounding land that had an effect on value when identification and physical inspection hasn’t been undertaken.
“A few lenders decided they weren’t willing to take that risk anymore,” he said. "As a result, valuers are still required to physically inspect vacant residential land.”
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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