The Australian Property Institute has withdrawn its recently introduced standing instructions for off-the-plan property valuations following “unintended consequences” and an industry “kerfuffle”.
On 28 September the API alerted its members about the new standing instructions for residential valuations, which insisted that all valuers must physically visit and identify a site.
At the time the API confirmed that its decision to introduce the new rules was made in consultation with lenders, mortgage insurers, valuers and property groups.
The Adviser reported on the matter on 9 October after Queensland mortgage broker Xavier Quenon, from Go Mortgage Corporation, expressed his shock that the new guidelines had been dropped on the industry “like a bombshell”. A number of Mr Quenon’s mortgage deals were effectively left in limbo after he was told the properties could not be valued under the new rules.
However, the API confirmed yesterday that new rules have now been withdrawn.
Speaking to The Adviser, API chief executive Mike Zissler explained that “there was a kerfuffle” once the new guidelines were introduced.
“We put the guidelines out and they were largely consulted [on] with the industry,” Mr Zissler said. “However, there was a kerfuffle. So we withdrew them and we are reviewing them. There were some unintended consequences, and I believe they were overstated, but we did agree that we will be having a look at those.”
Mr Zissler said that, prior to the API’s decision to withdraw the new guidelines, there had been a broad agreement with lenders that it is critical for valuers to actually visit the site for those properties that are off-the-plan.
“That was agreed, but obviously it did have some unintended consequences and we have withdrawn it but we are looking at it again,” he said. “It has just reverted for the moment but we will come out with a statement at a later date.”
Mr Quenon said that when he first heard the new rules had been introduced he knew they would create havoc.
“I reached out to people in the industry, other brokers and a few developers, and they had heard nothing about it,” Mr Quenon said. “It was never going to be productive, particularly when the banking system required pre-sales.”
Following The Adviser’s report last month, Mr Quenon started to field calls from worried developers.
“I have had heaps of calls from builders, developers and other people I deal with who were worried about having to change the whole development process,” he said, adding that the new rules created blockages in his broking business that are yet to be relieved.
“I’ve still got thirteen contracts on my desk that are in limbo, waiting for the day that we can value the land.”
The API is expected to provide a statement in due course.