It has been over three weeks since the Government requested that we stay at home and observe social distancing rules. Those of us who can, work from home and are adjusting to the new working practices.
Most of the banks and specialist lenders, whilst continuing to make new loans and/or refinancing existing loans, are adapting to the fact that valuers are not able to undertake internal inspection of residential properties (whether owner-occupied or let out to tenants). One bridging lender said that it currently does not require valuation reports for new loans at all. Other lenders are using automated valuations based on Rightmove data/comparables etc. We are currently working on a new loan where the bank agreed that in respect of the initial valuation (which is required as a condition precedent to the loan facility) the valuer is only required to undertake an external inspection to complete his valuation report prior to drawdown and that the internal inspection is to be carried out by the valuer at some point prior to the first anniversary from the drawdown. In another transaction (a refinance of the existing loan), the bank has agreed that a valuation report is to be provided by the valuer to the bank within 6 months following completion of the refinance. Life goes on!
It is also encouraging to see that lenders are helping customers who may be struggling to service their loans due to their tenants not paying rent. We see more and more lenders agreeing to suspend borrowers’ payment obligations (in respect of interest and/or capital) for up to 6 months. This is advantageous to the, struggling with cash-flow, borrower, as well as to the lender who might be facing a risk of a shortfall in recovery (after paying all the fees associated with the enforcement) and losing an otherwise good customer/borrower in these difficult times.
The pandemic will eventually end. Business will go back to normal and borrowers will be able to resume servicing their debt. When times are better, any act of help during the crisis will be remembered. They will ensure that the relationship between parties will continue. Continue and strengthen too, based on mutual respect forged during our shared response to a crisis no one could have imagined.
If you have any questions on this article or anything related, please contact Aselle Djumabaeva-Wood.
Visit Hamlins’ COVID-19 Hub for more updates on issues affecting your business.