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									                           Santander

                           Residential

                            Valuation

                         Policy Document

                                 2010

                            Guidance for Valuers
                                 Version 1.0.10




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                                 Page 1 of 73
CONTENTS


INTRODUCTION



SECTION 1                -   SANTANDER’S REQUIREMENTS OF VALUERS




SECTION 2                -   PROPERTY TYPES – Acceptable and Unacceptable

                         -   HOW TO REPORT


SECTION 3                -   PROCEDURES
                             SPECIFIC REPORTING REQUIREMENTS



SECTION 4                -   REPORT FORMATS




SECTION 5                -   QUALITY OF SERVICE




SECTION 6                -   GUIDANCE NOTES




SECTION 7                -    PANEL FIRM ISSUES



SECTION 8                -   APPENDICES




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INTRODUCTION
Important Information

This document sets out the main policies, procedures and requirements that valuers are expected to
follow when completing residential mortgage valuation reports on behalf of Santander. This includes
valuation reports that show the names of Abbey and Alliance & Leicester.

It is intended as a guide for valuers and aims to address the main queries that they may have when
completing such reports. Whilst this document provides guidance on the completion of reports, the
individual skills and judgement of valuers are paramount with regard to the appropriate professional
advice that they provide.

Valuers should be aware that the Bank is unlikely to have specific details of a property at the mortgage
application stage. It therefore relies on valuers to inform it of all relevant factors that may become
apparent before, during and after the inspection of the property so that a correct lending decision can be
made. Valuers must not assume that the Bank considers a property to be a suitable mortgage security
simply because it has instructed a valuation to be carried out.

Santander reports are processed automatically and may not be read by staff in the mortgage centres
unless the process identifies that a report has highlighted matters of concern. It is therefore essential that
the reports are completed correctly. Specifically, care must be taken to ensure that the appropriate
boxes are marked (crossed) within the report and that mandatory standard phrases are used where
appropriate.

A list of preferred standard phrases is provided within this document and this shows the style of reporting
that the Bank wishes to see within the reports. This also indicates those (relatively few) mandatory
phrases which must be used without alteration where they are appropriate.

Compliance with the relevant practice statements of the RICS Appraisal and Valuation Standards (The
Red Book) is mandatory. Regard may be paid to guidance notes within the Red Book to the extent that
they do not differ from Santander’s specific guidance. If there is such conflict, Santander’s policy must be
followed. There is a requirement that reports will be completed and signed off by suitably qualified
valuers, i.e. FRICS or MRICS Chartered Surveyors. This also includes members qualified via the Tech
RICS and Assoc RICS schemes.

This document is the property of Santander and its contents should not be released, copied or divulged
to third parties without prior written approval from the Chief Surveyor of Santander.


Property Risk
Santander House (AHM147)
Grafton Gate East
Milton Keynes MK9 1AN
Telephone: 01908 347040




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SECTION 1 – SANTANDERS’ REQUIREMENTS OF VALUERS



     INTRODUCTION …………………………………………………………………..               P5


    RESTRICTIONS ON VALUERS’ AREAS OF OPERATION …………………     P5


    SITE NOTES ……………………………………………………………………….                 P5


     COMPARABLE EVIDENCE ……………………………………………………… P5


    REPORTING IN ACCORDANCE WITH SANTANDER LENDING POLICY … P5


    MORTGAGE FRAUD ……………………………………………………………… P6


    SPEED OF SERVICE ……………………………………………………. ………. P6


    CONFLICTS OF INTEREST ……………………………………………………….. P6


    USING UP TO DATE VALUATION FORMS …….……………………………… P6




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SECTION 1 – SANTANDER’S REQUIREMENTS OF VALUERS

INTRODUCTION

              Accurate valuation advice

              Valuations that are fully supported by evidence of sales of comparable properties

              Recommendations to accept or decline properties for mortgage in accordance with
               Santander’s lending policy (set out in this document)


RESTRICTIONS ON VALUERS’ AREAS OF OPERATION

Santander permits valuers to only work from one office within a limited radius as follows:

Outside M25

Maximum distance from base postcode is 25 miles. The only exceptions are remote areas of Scotland
and the Scottish Islands.

Inside M25

Maximum distance from base postcode is 5 miles. In addition, valuers are not permitted to cross the
River Thames in central London.

Isle of Wight

Only valuers based on the Isle of Wight are permitted to undertake valuations on the island.

SITE NOTES

Santander expects valuers to make and retain legible notes regarding the inspection and valuation and,
particularly, the limits of the inspection and the circumstances in which it was carried out. Legible notes
are a requirement of the Red Book.

Santander will require a copy of these site notes when carrying out audit checks.

COMPARABLE EVIDENCE

The valuers should keep a record of the comparable transactions and valuations to which they have had
regard in arriving at a valuation. This record should include the valuer’s reasoning in making use of a
comparable i.e. how it differs or compares to the property to be valued. Santander will require a copy of
these valuation justifications when carrying out audit checks.

REPORTING IN ACCORDANCE WITH SANTANDER’S LENDING POLICY

Valuers are expected to report in accordance with Santander’s lending policy set out in this document.




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MORTGAGE FRAUD

Valuers should inform Property Risk Team (e-mail - Panelintel@Santander.co.uk) of any suspicious
circumstances which they may encounter. Such circumstances may include, or be a combination of:

- Undeclared buy to let
- Private sales at inflated purchase prices especially in a depressed market.
- Applicants or brokers who arrange access to properties.
- Several applications on the same property in succession.
- Houses currently in multiple occupation apparently being purchased for owner occupation.
- Multiple applications on one block/ site, especially ones with a previously poor sales record.
- Applications by builders or property developers.
- Name of vendor/applicant recurring frequently, often in similar areas.
- Inconsistencies between agreed price/loan/valuation.
- Tenanted properties- Remortgages where the applicant does not live at the property
Unknown agent or agent from out of area

There is also a fax facility to a new shared mailbox. The fax number is 01908 338272.

Once the case has been brought to Santander’s attention by the valuer, further investigations will be
undertaken and the case will be allowed to proceed or be declined based on these findings. The
applicant/broker/vendor will not be informed that the valuer has raised any suspicions with the Bank.

SPEED OF SERVICE

The normal speed of service requirement is for reports to be despatched back to Santander within four
working days of receipt of instructions. However, certain report formats have tighter service standards
e.g. the External Inspection Valuation.

Instructions are issued by E.surv Administration Office, Kettering. If instructions are received directly
from any other source, do not proceed, and contact E.surv for clarification.

Appointments to inspect should be made, whenever possible, on the day of receipt of instructions or, for
those arriving late in the day, by 12 noon on the next working day.

Access or other unavoidable delays that will exceed the four working day standard should be notified to
E.surv.

Regular contacts with E.surv are encouraged to control work flows and avoid overloads. The inability to
provide speed of service requirements due to holidays, or other planned absences, must be notified to
E.surv at least three days in advance.

CONFLICTS OF INTEREST

Valuers are expected to inform Santander immediately when there is, or might be, a conflict of interest
that would preclude them from carrying out the work. Inability to proceed with the instructions must be
reported immediately to the instructing survey centre to enable instructions to be redirected without
delay.

USING UP TO DATE VALUATION FORMS

Valuers are required to ensure that they always download the up to date versions of Santander’s
valuation report forms:

Valuation for Mortgage Purposes (VMP)                         Rev.R 01/10
External Inspection (EIV)                                     Rev.F 01/10
Revaluation                                                   Rev.M 01/10
Re-Inspection                                                 Rev.K 01/10
Buy to Let Supplementary Sheet                                Rev.C 01/10


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SECTION 2 – PROPERTY TYPES AND HOW TO REPORT TO SANTANDER


INTRODUCTION

     Introduction to Santander Lending Policy…………………..…………..            P9


GENERAL ISSUES

     Age                                                                P10
     Marketability                                                      P10
     Planning and Occupation Restrictions                               P10
     Planning Permission/Development Value ………………………..……                P12
     Commercial Uses…………………………………………………………                              P12
     Property to be demolished and rebuilt …………………………………                P12
     More than one dwelling within the curtilage of the property …………   P12
     Subdivided properties or HMOs…………………….…………………...                   P13
     Properties which are not fully self contained…………………………...         P13
     Uninhabitable Properties………………………………….………………                       P13
     Tenanted Properties ………………………………………………………                          P13
     Tenure…………………………………………………………………..….                                P13
     Commonhold……………………………………………………………....                              P14
     Freehold flats…………………………………………………………..….                           P14
     Full Value retentions………………………………………………………                         P14
     How to Decline a Property………………………………………………..                      P15
     Amended Reports ………………………………………………………..                            P15


TYPES OF CONSTRUCTION

Conventional Construction ………………………………………………..                          P16

Non Conventional Construction ………………………………………….                         P16

     Pre 1960 Timber Frame ………………………………………………..                         P16
     Concrete Construction
        In situ concrete construction ……………………………………….                  P16
        PRC (designated) ……………………………………………………                           P17
        LPS ……………………………………………………………………                                  P18
        PRC Houses and Bungalows not designated or LPS …………..           P19
        PRC Flats and Maisonettes ………………………………………..                     P19
     Steel Frame ……………………………………………………………….                              P20
     Unclassified Non-Conventional Construction/
     Modern Methods of Construction ……………………………………….                    P20


FLATS AND MAISONETTES

     Definitions
     Local Authority …………………………………………………………….                           P20
     Converted Flats/Maisonettes …………………………………………….                     P21
     Flats/Maisonettes above Commercial Premises ……………………….             P21
     Flats in mixed use areas…………………………………………………..                      P21
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NEW BUILD OR NEWLY CONVERTED PROPERTIES


     Recently built/converted properties (may be occupied)………………..   P22
     Building Warranties and Professional Supervision …………………….      P23
     Re-inspections of new build property ……………………………………             P23
     New Build Valuations ……………………………………………………..                     P24
     How to report new build property ………………………………………..              P24
     How to report newly converted property ……………………………..…           P25
     Retentions…………………………………………………………………..                           P25
     Incomplete new build/conversions……………………………………… .               P25
     CML Disclosure of incentives form………………………………………                P25

OTHER REPORTING MATTERS

     Properties with land ………………………………………………………..                    P27
     Park Homes …………………………………………………………………                            P27
     Listed Buildings ……………………………………………………………..                      P27
     Flying Freeholds ……………………………………………………………                        P27
     Right to Buy …………………………………………………………………                          P27
     Buy to Let ……………………………………………………………………                           P28




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INTRODUCTION TO SANTANDER LENDING POLICY

This section considers Santander’s lending policy in respect of the types of property most commonly
offered as security. Santander wishes to ensure that valuers only recommend properties for mortgage
that comply with its lending policy. If this is not the case the properties must be declined. Properties
may be declined for various reasons, including marketability, construction and how the property is
occupied. More detail about when a property should be declined is given under the appropriate
headings below.

Whilst Santander’s lending policy is not determined by other lenders, if most other lending institutions are
not prepared to lend on a particular type of property, the valuer may consider that this affects
marketability to such an extent, that it is not possible to recommend the property for mortgage to
Santander.

THE BANK’S LENDING REQUIREMENTS

Santander’s policy is to lend on single dwellings for owner occupation (except where the applicant has
made a Buy to Let application).

All properties recommended for mortgage must be:

                            Habitable
                            Insurable
                            Fully self contained
                            Single dwelling houses/flats (not sub-divided into more than one unit or with more
                             than one unit within the demise)
                            Used only for residential purposes
                            Be marketable
                            Have a reasonable demand for owner occupation

Valuers must only recommend property for mortgage where there is a demonstrable demand for the
property from owner occupiers. This condition applies even if the application is a valid buy to let case.
A property is not acceptable for mortgage if the demand is restricted to investors buying for the rental
sector.

Santander only lends to owner occupiers, which includes applications for 2nd homes, unless a BTL
application has been made (this will be clearly shown on the instruction sheet).

By providing a ‘Market Value at time of inspection’, the valuer is confirming to the Bank that the property
is acceptable for mortgage in its condition at time of inspection. If the property does not meet Santander
lending policy then the property should be declined.

If a present condition valuation is provided within the report, the valuer is advising Santander
that it can lend on the property in its current condition.




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GENERAL

Age of Property

Santander does not impose any age restrictions on property that it will consider for mortgage.

Marketability

All properties recommended for mortgage must be habitable and readily saleable for owner occupation.
Where the only demand for a property is from investors, then the property is not acceptable to Santander
for a residential mortgage and should be declined. This applies to both new build and second hand
properties.

The decision regarding the acceptability of a property should not be influenced by buoyant market
conditions. The lending criteria should be applied and if a property has restricted marketability it should
be declined.

Normally it would not be appropriate to decline a property solely because of its poor physical condition if
it is acceptable in all other respects. Valuers should give consideration to whether the property is
capable of economic repair. If so, a list of the required repairs should be recommended as a condition of
the mortgage (in the appropriate report section – Section 11 for Abbey’s VMP, Section 9.2 of the Alliance
and Leicester Valuation for Mortgage Loan) and a suggested retention figure must be provided. If the
present condition is such that the property is not habitable then the property should be declined and a
present condition valuation must not be provided. If the property is not capable of economic repair it
should also be declined.

When considering new build properties, valuers must be sure that there will be adequate demand for the
properties, from owner occupiers on the second hand market. A new build property where the demand
has only been stimulated by incentives, which will not able available in the second hand market, should
be declined.

Planning and Occupation Restrictions:

The most commonly encountered restrictions are those relating to:

         Agricultural restriction on occupation
         Sheltered housing schemes.
         Low cost housing schemes
         Holiday homes
         Live Work units

If valuers believe that an occupation restriction exists, this should be reported in sections 14a, b and d.
Santander will then be able to carry out further investigations and provide details to the valuer should the
valuation need to be confirmed/ amended.

Agricultural Restriction on Occupation

Santander will not consider properties subject to an agricultural restriction on occupation.
This is a policy change

Sheltered Housing Schemes

Santander will not consider properties subject to an age restriction on occupation.
This is a policy change




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Low Cost Housing Schemes

Santander will consider shared ownership schemes on their merits, usually in conjunction with a housing
association. However, Santander will not consider shared equity schemes, eg those where the
developer retains a share of the property.

Shared Ownership

Shared ownership schemes are where the retained share is owned by a housing association. All shared
ownership property should be valued on the basis of a 100% share with full vacant possession,
disregarding any premium associated with the shared tenure or shared ownership arrangements.

Reporting of Shared Ownership properties:

Section 1           Tenure: The leasehold box must be ticked.

Section 14b The percentage of the property being bought by the applicant should be stated
            together with the source of the valuer’s information. (See standard
            Phrase 122)

Section 14d If occupation is restricted to ‘essential workers’ or similar, then it is appropriate to say ‘yes’.

Holiday Homes

Santander will not consider properties where there is a restriction on occupation to use as a second
home or holiday home, nor will it consider properties where there is a restriction on the period of
occupation, eg restricted to 11 months of the year.

Live Work Units

Not withstanding Santander’s policy regarding commercial uses within a residential property, (see later),
Santander is prepared to consider granting mortgages on official live work units.

Santander will grant mortgages on live work units provided that there is sufficient market demand in the
locality from owner occupiers to occupy the property in accordance with the planning consent. Where
there are marketability issues, the application should be declined.

The original planning consent granted on a live work unit may permit use of the whole as either
residential or commercial (B1) or be more specific about the percentage split between the uses. Valuers
should be aware of the attitude of the local planning authority as regards enforcing these consents and
the affect this may have on marketability. Santander will want to ensure that the property will be
occupied in accordance with this planning condition.

Reporting Live Work Units

Complete Section 2a ‘Property Type’ as ‘Other’ providing an explanation in Section 14b.

In Section 14b valuers should ask the conveyancer to ensure that the unit holds B1 (see below) planning
consent and to ascertain whether the planning consent states a specific split of the uses within the
building.

In section 14d the answer to whether there is an occupation restriction, should always be ‘Yes’.

For remortgages, confirm in Section 14b that the existing work use complies with B1 consent.




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Definition of B1 Planning Consent:

Use for all or any of the following purposes—

(a) as an office other than a use within class A2 (financial and professional services)
(b) for research and development of products or processes, or
(c) for any industrial process, being a use which can be carried out in any residential area without
detriment to the amenity of that area by reason of noise, vibration, smell, fumes, smoke, soot, ash, dust
or grit.

Planning permission/development value

Any development value, with or without planning consent, must be ignored for the purpose of the
mortgage valuation since it is considered too speculative and uncertain to provide adequate security for
a mortgage. For example where a house has a very large garden with sufficient space for the
construction of an additional dwelling, any development value attributable to this must be excluded and
the property merely valued as a residence with a large garden.

Commercial uses

Santander does not wish to lend if any part of a property is being used for commercial purposes. If a
valuer discovers on inspection that part of a property is being used commercially, the property should be
declined. The valuer will need to make a distinction if the non residential use is comparatively minor,
e.g. if the occupier uses a room or outbuilding as an office/study in connection with his employment. In
such cases the property would be acceptable.

However, if there have been physical adaptations that require planning consent, and/or where the use of
part of a property falls within a different planning use class to residential, and/or if members of the public
are invited on to the property as customers or clients, then the property should be declined. Santander
may wish to reconsider the mortgage application and may require further advice from the valuer at a
later date. Valuers should therefore complete the inspection of the property as normal and keep the
usual site notes and property details on file.

An explanation of why the case is being declined should be provided in Section 14b and no valuation
provided. Section 14c, ‘Is the property recommended for mortgage’ should be answered ‘No’ and the
valuation fields should be completed as ‘Not applicable’.

Some examples of properties not acceptable for mortgage due to the commercial use include:

          Commercial farm
          House with cattery or kennels
          House with Equestrian business
          House with garage and yard used for repairing vehicles
          Domestic garage converted to office with signage and visiting members of public

Property to be demolished and rebuilt

Where a valuer is made aware that the applicant is to demolish and rebuild a property, the property
should be declined for mortgage as this represents a very high lending risk to Santander.

More than one dwelling within the curtilage of the property

As a general rule valuers should not recommend properties as acceptable to Santander if they are
obviously set out for multiple occupation. Santander only wishes to lend on normal residential terms on
properties capable of single owner occupation by close members of the same family.

Care must be exercised when dealing with properties that have more than one dwelling within the
curtilage, whether or not the different structures are occupied separately at the time of inspection. In
such cases it usually appropriate to decline the property.

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However, Santander is prepared to lend on properties with annexe accommodation if that facility is
appropriate to the type of property and its locality and provided this additional accommodation is suited
primarily to occupation by members of the same family as the occupiers of the main accommodation.
The annexe may be self contained and with or without separate kitchen and bathroom facilities.

Rarely, valuers may be instructed to inspect large country estates comprising a main residence and with
an ancillary cottage(s) designed for staff occupation. Such properties can be accepted in principle and
considered on their individual merits. This arrangement would not be acceptable with more modest
properties/locations.

Subdivided Properties or houses in Multiple Occupation

Santander does not wish to lend on properties in multiple occupation and/or any property which is split
into several units until restored to a single dwelling and completion of essential works.

Where signs of multiple occupation are evident at the time of inspection and only minor works are
required to return to a single dwelling (eg removal of internal locks) then a full retention should be
provided with only a ‘when finished’ value provided. If however, the works required are more significant
(see list below), then the property must be declined for mortgage.

          1         the removal of partitioning and doorways separating flats within a single dwelling
          2         the removal of kitchen fittings from the upper storeys of a house
          3         the provision of a single metered supply for both gas and electricity within a single
                    dwelling

This is a change in reporting requirements.

Properties which are not fully self contained

Santander does not wish to lend on properties that are not fully self contained and they should be
declined. It is unacceptable for properties to have shared services (water, gas, electric).

This is a change in reporting requirements.

Uninhabitable properties

Properties considered uninhabitable, for example without hot water, a bathroom, internal walls or kitchen
are not suitable for mortgage in their present condition and should be declined. For incomplete new
build properties refer to New Build section.

This is a change in reporting requirements.

Tenanted Properties

Valuers must report any property that is tenanted by answering ‘Yes’ to the question ‘Was the property
tenanted at the time of inspection?’ Please clarify in Section 14b how you know the property is tenanted.
Valuers should also tick the tenanted box if the property is occupied by occupied by the applicant’s
family members and the valuer is aware that these are not close family members (father, mother,
grandparents, son, daughter, grand children).

This is a change in guidance.

Tenure

Freehold and long leasehold tenure are acceptable. In Scotland, the new form of absolute tenure, which
has superseded feudal, is also acceptable. Santander’s lending policy dictates that leases must have an
unexpired term of at least 30 years beyond the repayment period of the mortgage subject to a minimum
of 55 years unexpired. Although this is the company’s policy, the valuer may advise that even if the
lease is in excess of 55 years the time remaining on the lease adversely affects the marketability of the


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property to the extent that it is not acceptable for mortgage. In addition to this policy backstop,
conveyancers are asked to refer back to valuers for clarification of value whenever they discover that a
lease has less than 70 years unexpired which is not already mentioned in the valuation report. (If a lease
has less than 70 years unexpired valuers should consider the effect on marketability and decline if the
term of the lease makes the property unmarketable (see definition above), otherwise an appropriate
warning should be given in Section 14a of the Valuation Report.)

Parts of a property, which do not comply, should be excluded from the valuation. For example part of the
garden or garage located on a separate site and held on a short-term tenancy should be excluded even
though it may be part of the transaction. Any parts of the property excluded from the valuation should be
clearly stated within the report.

Potential rights to purchase the freehold or extend the lease under leasehold reform legislation should
not be assumed for the purposes of valuation i.e. mortgage applicants are expected to exercise such
rights prior to making an application if the short unexpired term significantly affects value and
marketability.

Flats (with the exception of Scotland and Northern Ireland) will normally be leasehold. No lease with an
unexpired term less than 55 years will be considered acceptable unless the property is located in Central
London, i.e. W1, W2, W8, W11, WC2, SW1, SW3, SW5, SW7, NW1, NW3, NW8.

Unacceptable lease term

Where the property does not have an acceptable lease, the property should be declined.

This is a change in reporting requirements.

Commonhold is an unacceptable title under Santander policy.

Freehold flats are not normally acceptable securities unless the freehold is in respect of the whole
building subject to leases/tenancies of the remainder of the block. Exceptions may be made when the
local market accepts freehold flats, eg in Scarborough, and adequate repairing covenants are in place
subject to legal approval or modern coach-houses/flats where ground floor access is included.

Full Value Retentions

Full value retentions should be used when a valuer cannot confirm at time of inspection that a property
meets Santander’s lending requirements, but would be able to do so with the provision of further
information/ specialist advice, eg full value retentions should be used when

         A structural engineer’s report is required
         Information is required to confirm the repair to the PRC property is acceptable to Santander
         A Mundic report is required
         A report on Japanese Knotweed is required

This is not an exhaustive list of circumstances.

All retentions must be numeric (not text) otherwise this will not be recognised by Santander’s automated
lending systems. When a ‘full retention’ is required, this should be equal to the estimated ‘when finished’
value of the property, rather than the loan amount.

A present condition valuation is confirmation that the property meets all Santander’s
lending requirements and is mortgageable in its condition at the date of inspection.




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When and How to Decline a Property

Where a property does not meet Santander lending policy, eg

It is uninhabitable
It is subdivided into more than 1 dwelling
It is used for commercial purposes
It has an unacceptable lease term
It is a new build property without an appropriate building warranty
The title deeds need to be split for the property to be acceptable (eg to hive off area of commercial use)
It is of unacceptable construction (eg unrepaired PRC)

Then the property must be declined for mortgage and valuations must not be provided.

This is a change in reporting requirements.

If a property is to be declined, a reinstatement figure is not required, nor should works be listed in
Section 11. Section 14c ‘Is the property recommended for mortgage’ should be answered ‘No’.
Valuations should not be provided and the valuation fields should be completed ‘Not Applicable’. An
explanation why the property has been declined should be provided in Section 14.

Amended Reports

Valuers may submit amended reports, however, they should be aware that each report signed off is sent
to the customer with a new mortgage offer. If an amended report is submitted, an explanation of the
reason for the amended report must be provided in Section 14b.

If the valuer wishes to make any changes to the original report, then an amended report must be
submitted. Any changes to valuations must be confirmed with an amended report, mortgage offers
cannot be made on the basis of an e-mail/fax which confirms a different value to that in the valuation
report.




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TYPES OF CONSTRUCTION

Conventional Construction

Properties of conventional construction / modern timber frame are accepted on their merits.
Conventional is defined as follows:-

Main Walls:- Masonry (i.e. brick, block or stone) or post 1960 timber frame generally not less than
             225mm thick.

Roof :              If pitched - slated, tiled or thatched.

                    If flat - felted, asphalt or metal sheeting.

Note :           A property constructed entirely of 120mm single skin brick/block walls will be
                 unacceptable. Where part of the property is built in 120mm single skin
                 brickwork/blockwork the case should be treated on its merits. Single skin/120mm
                 brick/block construction on two storeys or more is potentially unstable and will not
                 be acceptable if this forms all or a major part of the property.

Non-conventional Construction

Pre 1960 Timber Frame Construction

Pre 1960 (and post 1960 timber clad) timber framed dwellings should be considered on the
construction/marketability merits of the individual unit.

The following is a list of known timber system built dwelling types:

       Aberdeen Corp.        Heath               Scottwood
       Blackburn             Lanark CC           Solid Clear
       Carmyle               London CC           Spooners
       Caspon                McAlpine            Swedish Timber
       Colt                  Newcastle Corp.     Thornwall
       Cowieson              Perren              Weir
       Guildway              Scottish Special Housing
                             Association types

This list should not be regarded as exhaustive.

Concrete Construction

Santander’s lending policy will depend on the classification into which the property falls. It is therefore
important that valuers ensure so far as is reasonably possible that they correctly identify and classify the
construction type.

Property of concrete construction normally falls into one of five classifications:

1    In-situ cast concrete.
2    Precast reinforced concrete (PRC) construction designated defective by the Housing Act
     1985/Housing (Scotland) Act 1987.
3    PRC systems generally referred to as Large Panel Systems.
4    PRC houses/bungalows not designated or LPS types.
5    PRC flats and maisonettes

1.   In-situ Cast Concrete
     Santander considers this type of construction as being acceptable.              The most commonly
     encountered types are Wimpey No-Fines and Laing Easiform.



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2.   Precast Reinforced Concrete Construction Designated Defective by the Housing Act
     1985/1987 (Scotland) (Houses and Bungalows)
     Santander will only lend on PRC houses and bungalows (PRC flats/maisonettes are unacceptable)
     provided they are repaired under one of the following repair schemes:

     i. The PRC Homes Ltd Repair Scheme

     The Company is prepared to accept a detached, semi detached or terraced property that has been,
     or is to be repaired, with a repair equivalent to a PRC Homes Ltd licensed repair scheme with the
     adjoining property or properties remaining in an un-repaired condition. Marketability will be a key
     issue.

     All other matters being satisfactory Santander will be prepared:-

        - To grant mortgages on designated types already repaired in accordance with a system that was
          approved by PRC Homes Ltd prior to its demise in September 1996. Guarantees, warranties or
          defect insurance are not required but the applicant must supply supporting evidence that the
          repairs conform to the standard of a PRC Homes Ltd licence.

     ii. The Non Traditional Homes Appraisal Scheme

     Santander will accept properties repaired to an NTHAS Category 3, 4 or 5, however the Company is
     not prepared to accept a property that has been repaired singly, with the adjoining property or
     properties remaining in an un-repaired condition unless the repair is to NTHAS Category 5. This is
     equivalent to a PRC Homes Limited repair scheme. For avoidance of doubt where a property is
     repaired to a NTHAS Category 3 or 4, the whole terrace must have been repaired.

     Properties repaired to NTHAS repair categories 3, 4 and 5 (as confirmed by a NTHAS structural
     engineer) are acceptable subject to normal valuation principles. Guarantees or defects insurance are
     not required.

     The following property types were designated as defective:-

     Airey                       Schindler (Hawkesley SGS)     Scotland
     Boot Beaucrete              Smith                         Lindsay (Ayrshire CC)
     Boot Pier & Panel           Stent                         Blackburn-Orlit
     Boswell                     Stonecrete                    Boot
     Cornish Unit (types1 & 2)   Stour                         Dorran
     Dorran                      Tarran                        Myton-Clyde
     Dyke                        Ulster Cottage                Orlit (types 1 and 2)
     Gregory                     Underdown                     Tarran
     Morrell K                   Unity (Butterly)              Tarranclyde
     Myton                       Waller                        Tee Beam
     Newland                     Wates                         Unitroy
     Orlit (types 1 and 2)       Wessex                        Whitson-Fairhurst
     Parkinson-Frame             Winget                        Winget
     Reema Hollow Panel          Woolaway (Houses)

     Reporting of PRC property types designated defective

     Even if the property has been repaired and may now appear to be of conventional construction, in
     section 4a - construction - the ‘PRC designated box’ must be ticked and the name of the system
     provided.

     If the PRC property has been repaired, the following phrase must be used in section 11 (standard
     phrase 81)

     ‘Evidence must be provided to confirm that the property has been repaired to the standard of a PRC
     Homes Ltd approved repair system as confirmed by a civil or structural engineer.’

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     A full retention amount equal to the full ‘when finished’ value of the property (using numerical
     values) must be typed in the ‘Suggested Retention’ box. Only a ‘when finished’ value should be
     provided.

     If the PRC property has NOT been repaired, then the property should be declined.

     This is a change in reporting requirements.

     Santander does not accept properties repaired under the Leeds City Council repair Scheme 1.

3.   Large Panel Systems - PRC

     Most PRC Housing, which has not been designated under the Housing Act 1985, falls within a
     category known as Large Panel Systems dwellings (LPS).

     Only LPS houses and bungalows are accepted.

     LPS flats or maisonettes are not considered as being acceptable securities

     A Structural Engineer's report will always be required to confirm that the property has been
     inspected and is considered to be in a satisfactory condition.

     If signs of significant physical damage to concrete sections are noted at the time of inspection the
     property should be declined. The specification of an acceptable repair to the concrete sections is
     unlikely to be cost effective and progression to the Structural Engineer's appraisal will thus involve
     the applicant in additional abortive expenditure.

     Comment must be made about the uncertain future marketability due to the possibility of latent
     defects and these risks should be reflected in the mortgage valuation.

     The following properties are of LPS construction:

     ANGLIA                              LARSEN & NEILSON (TWA)
     BARVIS                              LECAPLAN
     BALENCY                             METRACON
     BASINGSTOKE DEV GROUP               MFC (MOSS & SON)
     BEALE & SON                         MITCHELL CAMUS
     BELFRY                              MODUS
     BISON (1)                           NATCON
     BRS                                 NCB (2)
     BRYANT (1)                          OAKRIDGE
     CAMUS                               PAC
     CARLTON                             REEMA CONCLAD + CONTRAD
     CEBUS                               RIDGEWAY
     DARE                                SB2
     DUDLEY BC                           SKARNE (CRUDENS)
     EDLO                                SOUTHEND 3M
     FRAM                                SPACEMAKER (SHEPHERD)
     FRAM/BRS                            STUBBING IND. LOW RISE
     GERRARD `INCON'                     SUNDH
     GLE                                 TRACOBA
     GREGORY                             TRENTROX
     HARLEY HADDOW                       TWA (TAYLOR WOODROW ANGLIAN)
     HDC                                 WATES (3)
     HSSB (LINDSAY PARKINSON)            WEEDON
     INCON                               XW (SELLECK NICHOLLS)
     LAING/BRS (1)                       YDG mk 1
                                         12M JESPERSON



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     Key to the above list:

     1) Only LPS dwellings built by these builders are affected.
     2) Only LPS dwellings owned or formerly owned by NCB are affected.
     3) Not to be confused with designated PRC type.

     Reporting of LPS Properties

     Houses and bungalows

     In section 4a construction - LPS box must be ticked and the following phrase (standard phrase 78) to
     be typed in section 11:

     “The house is constructed with concrete panels and is classified as a Large Panel System. An
     engineer’s report is required confirming that the property has been inspected and is considered to be
     in satisfactory structural condition.”

     A full retention amount (equal to the ‘when finished’ value of the property - using numerical
     values) must be typed in the ‘Suggested Retention’ box. Only a ‘when finished’ value should be
     provided.

     Flats and Maisonettes

     In section 4a construction - LPS box must be ticked and the following phrase (standard phrase 49)
     should be typed in section 14b:

     “The flat/maisonette is in a block constructed with concrete panels and is classified as a Large Panel
     System. Flats/maisonettes of this form of construction are not acceptable for mortgage purposes and
     should be declined.”

     Section 14c - saleability - must be answered “No”.

     Section 15 - A valuation must not be provided. ‘Not Applicable’ should be typed in the space
     provided.

4.   PRC Houses/Bungalows not either Designated or LPS Types

     These will be considered on their individual merits, subject to a requirement for a structural
     engineer's report confirming that the property is in satisfactory structural condition.

     Reporting of non-designated PRC houses and bungalows

     Section 4 - Tick ‘Other’ and state type of construction in Section 14b

     Section 11 - “The property is of PRC construction and has not been designated as defective under
     the Housing Acts. A Structural Engineer’s report is required to confirm that the property is in
     satisfactory structural condition.”

     A full retention amount (equal to the value of the property - using numerical values) must be
     typed in the suggested retention box.

5.   All PRC Flats and Maisonettes (i.e. designated or non-designated or Large Panel System)

     THESE ARE NOT ACCEPTABLE AND MUST BE DECLINED

     Reporting of PRC Flats and Maisonettes

     Section 4a          Construction, tick appropriate box - PRC

     Section 14b         The following phrase should be typed: This is a ……….flat/maisonette and is not
                         an acceptable security for mortgage advance.
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     Section 14c         Saleability - should be answered “No”

     Section 15          No value should be provided.

Steel Frame

This is an acceptable form of construction and will be considered on the merits of the individual unit.

The following systems are known to be steel framed and should be treated accordingly:-

          Arcal                            Gateshead
          Arrowhead                        Gee Walker & Slater
          Athol                            Hawthorn Leslie
          Birmingham Corp                  Hilcon
          BISF                             Hitchen
          Blackburn                        Homeville
          Braithwaite                      Howard
          British Housing                  Kehouse Unibuilt
          Cornes                           Leeds Corp
          Coventry Corp                    Livett Cartwright
          Craig                            Lowton Cubitt
          Crane                            Modular
          Cryden Cussins                   New Georgian
          Dennis                           Nissen Petren
          Dennis Pulton                    Norwest
          Dennis Wild                      Open System Building
          Discus                           Presweld
          Dorlonco                         Pyrocol
          Falkner Nuttall                  Riley
          Fincast                          Rubery Owen
          SFI (Inclutex)                   Trusteel
          Spaceway                         Universal Type 1
          Steane                           Unitroy
          Stewart & Lloyd                  Weir
          Telford                          5M
          TRN

This list should not be regarded as an exhaustive list.

Unclassified Non-Conventional and Modern Methods of Construction

If the modern method of construction meets Santander’s normal lending requirements – marketability,
habitable, insurable, suitable for owner occupation then the property is acceptable. Valuers must be
confident that the construction has a suitable life term.

Santander expects valuers to liaise with valuers for other lenders to ascertain other lenders view of the
construction type as this could significantly affect future marketability.

There are many systems of construction, which do not fall into the broad categories previously
described, and may be acceptable to Santander as mortgage securities. The policy is that where a type
of dwelling is considered marketable for owner occupation it will be considered on the merits of the
individual unit/location.

MMC properties will have to have the necessary unqualified NHBC guarantees or similar, have BRE
approval, approvals for materials used and situated in a location where marketability would not be an
issue, to be considered. They would also need to be acceptable to insurers.




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Typical forms of MMC are:

Volumetric construction, where the whole dwelling is prefabricated off site in modules which are then
assembled on site. Modules may be constructed in a variety of forms from a basic structure to fully
finished and serviced units.

Panelised construction, where flat panels are produced off-site and assembled on site to produce a
three-dimensional structure. The most common approach is to use open panels, consisting of a skeletal
structure. More complex, or closed panels involve more prefabrication typically including lining materials
and insulation. Services, windows, doors, internal finishes and external cladding may also be
incorporated.

Hybrid: a method also referred to as semi-volumetric that combines both the panelised and volumetric
approaches. Typically, volumetric units for highly serviced areas such as kitchens and bathrooms
(sometimes referred to as "pods") are used with the remainder of the dwelling or building constructed
using panels.

Non-off-site MMC, encompassing innovative house building techniques and structural systems typically
including technologies such as "Tunnel Form" or "Thin Joint Blocks" that fall outside the off-site
categories.

FLATS AND MAISONETTES

A flat                   A self contained dwelling on one or more floors, to which access is gained by common
                         lifts or staircase.

A maisonette             A self contained dwelling on one or more floors with private access.

High Rise Flats Santander defines high rise as more than six storeys. Where there is a lift there is no
                limit as to the maximum number of storeys acceptable as mortgage security. Where
                there is no lift, a block of over six storeys, above ground level, will not be acceptable.
                (For specific information on local authority/ex-local authority flats see below.)

The mortgageability of high rise blocks with lifts will be determined by several factors, including:-

                         o   The type of construction;
                         o   The acceptability of the lease;
                         o   Local Authority or private sector origins;
                         o   Future marketability of the property.

If in doubt about the acceptability of a block in local authority areas, whether high or low rise, please
forward any queries to Panelintel@Santander.co.uk

Local Authority Flats

Local Authority or ex-Local Authority blocks of ‘conventional’ construction are acceptable. LPS blocks
are not acceptable. However, some Local Authority flats, and particularly medium and high rise blocks,
are considered to be poor securities with very limited future marketability. This is caused by a number of
factors including high and escalating service charges, poor security, vandalism and crime. There may be
no history of re-sales on the open market and some lenders do not consider such dwellings as suitable
mortgage securities, which in itself limits marketability.

It is essential to maintain a cautious approach in all right-to-buy and ex Local Authority cases. Adverse
marketability/other factors must be stated whenever appropriate.




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Reporting of Local Authority Flats considered unacceptable for Mortgage Lending

If the property is not considered an acceptable security for mortgage purposes, section 14c saleability
should be answered “No”. In addition, a valuation must NOT be provided in section 15, instead the words
‘Not Applicable’ should be stated. An explanation of why the property has been declined should be given
in section 14a

Converted Flats and Maisonettes

These are acceptable in principle, but the valuer should carefully consider the marketability of each
converted flat and, if it has any serious shortcomings, it should be declined.

Flats and Maisonettes above commercial premises

Good quality purpose built or converted flats above shops may be suitable mortgage securities but must
be carefully evaluated on their individual merits. The valuer must have due regard to factors which may
limit marketability, eg location, the type of non-residential use, access to the individual unit, etc.

Santander will not lend on flats immediately above onerous uses such as restaurants (where flue causes
nuisance), where there are unacceptable noise levels or unsocial operating house or above dangerous
trades such as motor showrooms or workshops.

Flats in mixed use areas

Santander accepts flats in mixed use areas, subject to marketability.

NEW BUILD OR NEWLY CONVERTED PROPERTIES

Newly built and newly converted properties must be reported as ‘New Build’ in Section 12 of the VMP.
Where the subject property is newly converted, valuers should give details of the development in Section
14b, eg total number of units on the development (not just restricted to the subject building).

This is a change in reporting requirements.

Valuers must only recommend properties for mortgage where there is a second hand market for the
property from owner occupiers and where the demand for the new build property does not exist purely as
a result of the incentives, deposits and other offers from the developer.

Only property awaiting first occupation should be valued on the basis of ‘new build’ property. If a ‘new
build’ property has been occupied, it must be valued on a second hand basis.

Where a self build property has only been recently occupied for the first time, valuers should indicate that
the property is new build in Section 12, and include a requirement in Section 14b for confirmation of an
appropriate new build warranty.

This is a change in reporting requirements.

Recently Built/Converted Properties

In the case of a second hand property built in recent months/years, Santander does not insist on the
certification/supervision required for new houses. However, if the valuer is aware that the property was
not built with an approved new build warranty or has not been professionally supervised he/she should
state this information in the report and this factor should be taken into account in the valuation. The
valuer should consider how this affects the marketability of the property before recommending it for
mortgage.




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Building Warranties and Professional Supervision

Santander will only accept a newly built or newly converted property if it is provided with an approved
new build warranty, or it is built under the supervision of a suitably qualified professional (with
professional indemnity insurance). A warranty is not required in the case of flats and maisonettes
converted from, or out of, a former dwelling house (subject to the creation of a maximum of 4 units).
Where there has been a conversion of a single property into 5 or more units, a suitable warranty is
required. Where the unit is part of a development creating more than 5 units (even if less than 5 in the
subject building), then a suitable warranty will also be required.

Acceptable Building Warranties

         The National House-Building Council (NHBC)

         The NHBC equivalent for Self Build

         The Zurich 10 (new build or conversion) being phased out from 2009.

         The Premier Guarantee for Private Housing

         Premier Guarantee for Completed Housing

         LABC Hallmark New Homes Warranty Scheme

         Building Life Plans

         Build Zone

Professional Supervision – acceptable qualifications

Santander will only accept properties which have been supervised by professionals who hold one or
more of the following qualifications:-

         The Royal Institution of Chartered Surveyors (FRICS, MRICS)

         The Institute of Structural Engineers (FIStructE, MIStructE)

         The Chartered Institute of Building (FCIOB, MCIOB)

         The Association of Building Engineers (FB Eng, MB Eng)

         The Chartered Institute of Architectural Technologists (CIAT)

         The Institute of Civil Engineers (FICE, MICE)

         Architect Registered with the Architects Registration Board (ARB). An architect must
          be registered with the Architects Registration Board even if also a member of another
          institution e.g. the Royal Institute of British Architects (ARIBA)

In addition, the suitably qualified person must have professional indemnity insurance cover appropriate
for the build scheme concerned.

RE-INSPECTIONS OF NEW BUILD PROPERTY

Santander does not require a re-inspection on completion when one of the approved new build
warranties is provided. A re-inspection on completion is required in the case of properties built under
professional supervision.


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NEW BUILD VALUATIONS

Santander’s requirement is that new build valuations are provided in accordance with the guidance
provided in the RICS Red Book. Santander does not require second hand or forced sale valuations
unless specifically requested within the report. (eg A&L valuation report requires projected market value
for new build flats).

Santander only lend on completed habitable properties, therefore a valuation of a partly built property is
never required.

Valuers should be aware of the rules and guidance contained within the "Red Book".

In addition to the above the valuers should be aware of the following considerations when valuing a new
house:-

a)   Have the appropriate Planning and Building Regulation Approvals been obtained?

b)   Has provision for bonds for construction of roads and sewers been made?

c)   Have arrangements been made for the property to be included within any NHBC or similar warranty
     scheme? If not, has the construction been supervised by a suitably qualified person.

     d)   Are there likely to be any obvious adverse covenants, easements or other restrictions?

Valuing new build properties

When valuing new build properties, valuers should:

     1. Value the property by reference to comparables and any other sales marketing evidence.
     2. If valuation within 5% of the sale price, then value at sale price.
     3. If valuation not within 5% of the sale price then stick with the valuation.

It is important to note that where incentives are being offered on the purchase of the property,
valuers should not simply deduct the value of those incentives from the purchase price when
considering the valuation.

How to report new build properties

When reporting on a new build property (which may be completed, partly completed or not yet
commenced)

Section 10         the valuer should advise the name of the builder and the house design being built.
                   Santander has devised standard phrases 18, 19 and 20 to be used with new build
                   property.

Section 11         no retention should be imposed if the works outstanding will be carried out in the course of
                   completing the property.

Section 12         Section 12a should be answered “yes” as should Section 12b if the property is nearing
                   completion – within a week.

Section 15         if the property is virtually complete, only a Market Value at time of inspection must be
                   provided.

Section 15         if the property is not close to completion, only a ‘Market Value on completion of repairs in
                   Section 11’ should be provided.

How to report new conversions

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New conversions must be treated in the same way as new build property – answering ‘Yes’ at
Section 12a.

Section 2d          This should be the date the property was originally constructed, not the date of conversion

Section 10          The valuer should advise the name of the builder and the house design being built.
                    Santander has devised standard phrases 21-23 to be used with new conversions.

Section 11         No retention should be imposed if the works outstanding will be carried out in the course
                   of completing the property

Section 12         Section 12a should be answered “yes” as should Section 12b if the property is nearing
                   completion – within a week

Section 14b        Give any other details of the conversion/development that are relevant

Section 15         If the property is virtually complete, only a Market Value at time of inspection should be
                   provided

Section 15         If the property is not close to completion, only a ‘Market Value on completion of repairs in
                   Section 11’ should be provided.

Retentions

For a partially complete new build/new conversion where works are to be carried out in the course of
completing the property, valuers must not list the outstanding works in Section 11 or provide a retention
unless there are defects or other concerns. If defects are noted in a newly completed property or
additional information is required, the works required should be listed in Section 11 with an appropriate
retention.

Retentions on new build property must only be used where there are defects which need to be rectified
or the valuer has other concerns, eg concerns that the outstanding works might not be completed or may
not be completed to a satisfactory standard. This may be the case if an applicant is remortgaging an
unfinished self build property. A full or part retention may be appropriate.

Incomplete new build/newly converted properties

Valuers may encounter circumstances where a new build property is being sold unfinished eg without
kitchen or bathroom fittings, say where the builder has gone into administration. If the property is
uninhabitable or without appropriate warranty, then the property should be declined.

CML Disclosure of Incentives Form

When valuing new build property and new conversions, valuers must have sight of the CML Disclosure
of Incentives Form prior to considering the valuation. Only on receipt of this information should the
valuation be considered and the mortgage valuation submitted to Santander.

Santander has a number of standard phrases for reporting incentives which are in bold below. These
phrases must be included in Section 14b of the VMP (exactly as they appear below).

1      Where the CML Disclosure of Incentives Form has not been made available

Where the form is not available, the valuation report should not be completed but E.surv should be
advised to put the case on hold pending receipt of the form. (01536 534034 – option 1). Valuers should
allow 2 calendar weeks for the form to be provided. If the form is not received after 2 weeks, the
valuation report should be signed off without a valuation and the words ‘Not Applicable’ must be entered
in the valuation fields. The following phrase must be included in Section 14b.

It is not possible to provide a valuation for mortgage purposes because a CML Disclosure of
Incentives Form has not been provided by the seller/builder/developer.

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2      Where the CML Disclosure of Incentives Form advises there are no incentives

The following phrase should be used in Section 14b:

The seller/builder/developer confirmed no sales incentives are included in the sale and the
lender’s legal adviser should be required to confirm in accordance with the CML Handbook.

3      Where incentives have been disclosed

The following phrase should be used in Section 14b:

Sales incentives of (list the incentives disclosed by the seller/developer in the sale) have been
disclosed on this sale and should be confirmed by the lender’s legal adviser in accordance with
the CML Handbook.

4      Where property part of small development/conversion

Santander do not require valuers to obtain a copy of the CML Disclosure of Incentives Form in the case
of
                  Very small new build developments – up to and including 4 units
                  Conversion of a single dwelling house where up to and including 4 units are created

However, if the valuer has concerns that there are incentives or other unusual circumstances then he
may prefer to request a completed CML form.

 If the valuer considers that a CML form is not required, then the valuer should include the phrase below
in Section 14b:

The property is part of - either a conversion of a former dwelling house into a maximum of 4
units or on a small development of fewer than 4 units – and there is no indication that sales
incentives are included in the sale. A CML Disclosure of Incentives Form has not been obtained
but the lender’s legal adviser should be required to confirm that there are no sales incentives in
accordance with the CML Handbook.

It is important to note that where incentives are being offered on the purchase of the property,
valuers should not simply deduct the value of those incentives from the purchase price when
considering the valuation.




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OTHER REPORTING MATTERS

PROPERTIES WITH LAND

Providing there is no requirement or intention to use the property and/or land for commercial or
investment purposes, (e.g. where the land itself will be the source of the income required to meet the
mortgage payments as with a farm, it should be declined), the property and land can be considered in
the normal way.

Properties with land should be valued on a comparison basis. If a property has in excess of 10 acres,
then the valuer should value the property with 10 acres, disregarding the value of the remaining land.
This is to be the 10 most appropriate acres for the enjoyment of the dwelling.

Valuers must report all properties with land (whether or not the current use of the land is
agricultural) by ticking the ‘Agricultural Land’ box in Section 8. Details of the extent of the land
and its current use should be stated in Section 14b.

PARK HOMES

Park Homes, mobile homes or properties situated on holiday parks are not acceptable securities. Any
structure/property that can be readily transported or is capable of being moved is not acceptable.

LISTED BUILDINGS

Santander’s policy is to consider buildings listed as being of historical or architectural importance on their
individual merits and will rely on valuers to advise accordingly in this respect.

The majority of such buildings encountered will be Grade II listed, but occasionally valuers may be asked
to consider Grade I or Grade II* listed buildings.

Valuers will need to consider all factors that will impact on the future marketability of the property before
recommending it to Santander for mortgage. Valuers are expected to be fully conversant with relevant
legislation as well as the planning and maintenance implications associated with listed buildings.

FLYING FREEHOLDS

Santander accepts properties with flying freeholds, subject to marketability. Where the flying freehold
forms a significant proportion of the property this could affect value and marketability to the extent that
the property should be declined.

RIGHT TO BUY

Santander’s policy is to value those properties coming under the "Right to Buy" provisions in the Housing
Act 1980 as amended by subsequent legislation on the basis of open market value regardless of
discount provisions and pre-emption clauses.

Reporting Right to Buy properties

Section 14 b should include the following phrase (standard phrase 121):

“It is understood that the applicant is purchasing the property from the Local Authority/Housing
Association as a sitting tenant and therefore at a concessionary price. The valuation ignores discount
provisions/pre-emption clauses.”

If the tenant is exercising the Right to Buy and the tenant/purchaser is in occupation, valuers must report
that the property is tenanted on the valuation report ticking ‘Yes’ to the question ‘Was the property
tenanted at the time of inspection’.




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BUY TO LET PROPERTY

Santander only lend on Buy to Let properties that are single dwellings (flat or house) where there is a
demand for that property for owner occupation. If the demand for a particular property is restricted to
investors, then the property must be declined. If the application is for a BTL mortgage, this information
will be included on the valuation instruction.

Valuers should follow the specific guidance notes explaining Santander’s requirements and complete the
supplementary BTL sheet in addition to the normal valuation for mortgage purposes (VMP).

Properties sub-divided into a number of units, whether flats, bedsits etc are not acceptable. If you
receive such an instruction, this should be cancelled and E.surv Administrative Office (Kettering)
notified. If the property has already been inspected, the report should be submitted declining the
property.

If valuers encounter a property that appears to be currently let, but the valuation instructions are not for a
BTL valuation, they should value the property on the assumption of vacant possession and ensure ‘Yes’
is indicated to the tenanted question in the VMP. The circumstances that lead them to believe that the
property is let should be explained in section 14b of the valuation report, and appropriate wording, for
example … ‘ Access was provided by the tenant’. The Conveyancer must be asked (Section14b) to
ensure that any existing tenancy is terminated on, or prior to completion, of the mortgage to ensure
vacant possession.’

If valuers wish to provide additional information to Santander that cannot be included on the valuation
report then they should send an e-mail to Panelintel@santander.co.uk.

Valuers are expected to be fully conversant with residential letting legislation.




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SECTION 3 – PROCEDURES/SPECIFIC REPORTING REQUIREMENTS



MUNDIC            ………………………………………………………….…..……                                             P30


COAL MINING ……………………………………………………….………                                                      P31


JAPANESE KNOTWEED.......................................................................   P32


TRANSCRIPTION REPORTS AND MULTIPLE APPLICATIONS


England, Wales and Northern Ireland ………………………………..…                                        P33

Scotland ………………………………………………………………………                                                       P33




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MUNDIC

Mundic is local Cornish terminology for the phenomenon occurring in properties built throughout
Cornwall and parts of West Devon, mainly between 1900 and 1960, and consisting of concrete blocks or
shuttered concrete construction manufactured locally using mine waste material as a constituent. Such
concrete is highly susceptible to decomposition ultimately rendering properties structurally unstable.
Properties so affected are likely to be blighted and un-saleable.

Main Postcodes affected: All TR, PL10-20, 22-35, EX20, 22, 23

Policy/Procedures

1. Santander will only grant loans on suspect Mundic properties if a Concrete Screening Test has been
   prepared strictly in accordance with the latest RICS Guidance Note and the concrete has been
   classified as sound.

2. The Company will require Concrete Screening Tests prepared for vendor or other third parties to be
   assigned to and responsibility extended in favour of the applicant and Santander.

3. Suspect concrete purpose-built and converted flats will not be considered acceptable, in principle,
   unless the entire block has been tested and the concrete classified as sound.

4. Revaluation applications will be subject to the same lending policies as for new mortgage cases.

Valuation and Reporting Guidance for Mundic

1.   The following phrase (Standard phrase 25) is required in Section 10 (VMP) and Section 3 of the
     Revaluation form (used for further advances).

     Due to the property’s construction, age and location the concrete elements of the structure
     may contain deleterious aggregate commonly known as Mundic. A concrete screening test
     is needed to determine the property’s suitability as a mortgage security based on an
     acceptable classification of the aggregate.

2.   The following phrase (Standard phrase 75) is required in Section 11 (VMP) and Section 4
     (Revaluation).

     Obtain a concrete screening test report for the presence of Mundic, prepared in accordance
     with RICS guidelines from a ‘competent’ valuer.

3.   For the retention, it is necessary to enter a full retention figure (equal to the ’When finished value’-
     using numerical values). This will prevent any money being released until a satisfactory concrete
     screening test report has been obtained.

     The valuer must not complete the ‘Market Value at Time of Inspection’ but should provide a ‘Market
     Value When Finished’ valuation.

4.   Valuers will be required to check, comment and advise the Company on screening test reports
     submitted for their approval. Whilst a concrete screening test report for comment and approval will
     normally be received from E.surv’s Kettering Administrative Office, it may arrive from a Mortgage
     Operations site or another source. From whatever source it is received the reply should be sent
     via Santander Team, E.surv Ltd, Lahnstein House, Gold St, Kettering. NN16 8AP, Fax 01536
     535502 or gpmcs@esurv.co.uk.

5.   Santander no longer insists that concrete screening tests are carried out by a member of an
     approved panel of testers. It is the responsibility of the valuer to ensure that the concrete screening
     test has been competently prepared in accordance with the latest RICS Guidance Note and that the
     concrete has been classified as sound. Sufficient documentation should be retained on file to
     support a recommendation to lend on the basis of the concrete screening test, as with any
     equivalent engineer’s or specialist’s report.

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6.   If a copy of a concrete screening test is provided during the course of an inspection, the holder of
     the report should be requested to submit it to Santander for formal processing, as with any similar
     documentation, and the valuation report and recommendations should be completed in the usual
     way.

7.   External Inspections - Where there is a possibility of mundic content, any requests for an external
     inspection should be upgraded to a full inspection.

COAL MINING

When reporting on properties in current, or past coal mining areas, valuers should consider whether to
recommend that a coal mining report should be obtained from the Coal Authority. The decision should be
made with an appreciation of the local property market and the perceived risks involved.

If a Coal Mining Report is not required, the following text is suggested in Section 14b of the valuation for
mortgage purposes:-

`The property is situated in an area of past mining activity where associated subsidence damage to
buildings is known to occur, but this is generally of a long standing nature and rarely represents an
ongoing problem’

Requesting Coal Mining Reports

1. Properties in Areas of Current/Past Mining (where subject property does not show evidence of
   structural movement)

If a Coal Mining Report is required, the following text is suggested in Section 14b [Standard Phrase
142A]:-

“ The property is situated in an area of past mining activity/current mining activity. The conveyancer
should obtain a mining report from the Coal Authority to provide information as to historical and future
mining activity and whether the property has been the subject of any compensation claims, ensuring that
the property is not adversely affected.”

or in the case of a new house [Standard Phrase 142B]:-

“The property is situated in an area of past mining activity/current mining activity. The conveyancer
should obtain a mining report from the Coal Authority and ensure that the requirements of the Coal
Mining Subsidence Acts have been complied with.”

Where actual damage is known to have occurred to other properties in the area this should be reported
in Section 14a. Any adverse effects upon marketability should also be indicated in Section 14a and taken
into account in the valuation.

2. Properties in Areas of Current/Past Mining (where subject property displays evidence of structural
   movement)

Structural damage caused by mining subsidence should be treated in the same way as any other
structural defect. The structural movement standard text [a choice from Standard Phrases 41 – 44]
should be used in Section 10 of the report in accordance with the this document.. Where appropriate, an
inspection by a Structural Engineer, or Chartered Building Surveyor should be requested in Section 11
[Standard Phrase 79] with any recommended works carried out as a condition of the loan. In addition, a
coal mining report should be requested as above.

If it is known that compensation has already been paid by the Coal Authority, this should be mentioned in
Section 14b with a recommendation to obtain details of the agreement with the Coal Authority, since no
further compensation will be available for the damage sustained.




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Review of Coal Mining Reports

When the requested mining reports are received, they should be reviewed. The valuer has a duty to give
advice about the need for further investigations and any impact on value.

Conveyancers also have a duty to recommend that coal mining reports should be obtained. If these are
then passed to the valuer, they should be reviewed as above.

Valuation Issues

The valuer is required to reflect the market. If it is considered that the value is affected by the market’s
perception of the coal mining problem the valuation must reflect this.

If the valuer is unable to assess the potential physical risk to a property, or the impact of a mining
problem upon value it may be appropriate to recommend in Section 11 of the VMP that a specialist
investigation should be carried out as a condition of the mortgage. A full value retention should be
recommended and no present value provided until the results of the specialist investigation are known.

JAPANESE KNOTWEED

Where evidence of Japanese Knotweed is found, either currently growing or having been treated, It is
Santander’s policy that such affected properties are not acceptable, and should be declined.

Where Japanese Knotweed is suspected / evident in proximity to plot boundaries, and because this is an
invasive plant with large root systems which has proved very difficult to remove/ control, specialist advice
should be sought. In this instance it would be appropriate to make a full retention, pending this advice.

Unless there are unqualified guarantees, the property must be declined.




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TRANSCRIPTION REPORTS AND MULTIPLE APPLICATIONS - ENGLAND, WALES AND
NORTHERN IRELAND

The only circumstances where Santander will consider a transcribed report are where the valuer has
previously completed a private Building (Structural) Survey (not Home Buyer’s Survey) on a property on
behalf of the customer, it is in order for the valuer to complete a valuation on Santander forms without re-
inspecting the property provided the original report was completed within ten days of the Santander
application. The fee for completing the transcription report should be agreed between the valuer and the
customer and paid directly to the valuer. Santander will not charge the customer a fee and will not pay
the valuer a fee for transcription reports of this type.

If a period of more than ten days has elapsed between the original report and the customer
approaching Santander, a transcription report is not acceptable and Santander will instruct a valuer
in the normal way charging the full VMP scale fee to the customer.

Procedure

The following procedures apply to transcription reports:

1          The date of inspection recorded on the valuation form should be the actual date on which the
           property was inspected.
2          The date of the report (adjacent to the signature) should be the date on which the transcription
           report was typed and signed.


TRANSCRIPTION REPORTS AND MULTIPLE APPLICATIONS - SCOTLAND

Santander’s policy differs in Scotland because of the different legal system of property purchase

1.   Multiple/Subsequent Applications

     Multiple applications will arise in one of two situations, where either:

     i)     Two or more instructions are received from Santander on the property virtually simultaneously
            and where it is possible to issue a report for each instruction resulting from a single inspection;
            or
     ii)    One or more instructions are received from Santander subsequent to having carried out a
            previous inspection.

     In respect of i) the following procedure will apply:

     a)     Individual reports should be prepared following the single inspection in respect of each
            application in the names of the individual applicants.
     b)     Each report should be identical in content and show the same date of inspection and report.
     c)     Only instructions received prior to the site inspection should be processed in this way.
     d)     Santander will pay a single valuation fee in respect of the site inspection/multiple valuation
            reports.

     In respect of (ii) the following procedure will apply:

     a)     A fresh inspection and valuation report must be issued in respect of each instruction.
     b)     Each report should be factual as to the information relevant at the date of the individual
            inspection and the relevant dates should appear as to the date of inspection and of preparation
            of the Report.
     c)     Santander will pay a valuation fee in respect of each instruction.




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2.   Valuations Reports Commissioned by someone other than Santander

     Valuation Reports Commissioned by another Lender

     Where a valuer has previously completed a valuation report commissioned by another lender,
     Santander will not accept a transcription report and will instruct a valuer of its own choice.

     Valuation Reports Commissioned Privately by the Mortgage Applicant

     When a panel valuer has previously completed a private valuation report on a property on behalf of
     the applicant, it is in order for the valuer to complete a valuation on Santander forms without re-
     inspecting the property, provided

        the transcription report is completed within 3 months of the date of the original report
        that office of the firm is on Santander’s panel
        the property in a postcode set up on Santander Quest for that office
        the price/estimate of value is within the authority limit approved for that office.

     The procedure is as follows:-

     a) Instructions will be issued by Santander via E.surv’s Admin Office in Kettering. Instructions
        emanating from any other source should be queried with E.surv prior to being actioned.

     b) The instructions will contain the normal information together with the name and office of the panel
        valuer who prepared the original report.

     c) Information provided to Santander by the customer or introducer is accepted by it in good faith.

     d) The Valuation for Mortgage Purposes should be returned within 3 calendar days of receipt of the
        instruction. It is not necessary to provide copies of the privately instructed report.

     e) No fee will be payable by Santander in respect of a transcription. The valuer is expected to seek
        payment for the transcription directly from the applicant.

3.   Santander does not accept transcriptions on new build property, remortgages and right to
     buy property in Scotland.




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SECTION 4 – REPORT FORMATS




         VALUATION FOR MORTGAGE PURPOSES (VMP) ……………       P36


         RICS HOMEBUYER SURVEY & VALUATION ……………………        P36


         PRIVATE BUILDING (STRUCTURAL) REPORT & VMP ……….   P36


         REVALUATION ……………………………………………………….                P36


         RE-INSPECTION………………………………………………………                P37


         EXTERNAL INSPECTION & VALUATION (EIV) …………………     P37


         BUY TO LET SUPPLEMENTARY SHEET (BTL) ………………..     P37




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MAIN REPORT FORMATS


Valuation for Mortgage Purposes (VMP)

The basic mortgage valuation report is required by Santander to advise whether a property is adequate
security for an advance. All information on the report is disclosed including the valuer’s identity.

Detailed guidance notes for the VMP are provided in Section 5.


RICS HomeBuyer Report (HBR)

This service consists of two reports:-

(i) A HomeBuyer Report
(ii) A Valuation for Mortgage Purposes

Valuers instructed to prepare a HBR must comply fully with the relevant RICS Practice Notes. The
arrangements regarding the Standard Terms of Engagement must be followed as customers do not
receive terms and conditions at point of sale.

The HBR is exclusively for the customers use and Santander underwriters will not receive a copy. A
simultaneous Valuation for Mortgage Purposes (VMP) is prepared for Santander Mortgage Operations.
This must contain everything necessary for the lending decision as specified in the RICS Red Book, UK
Appendix 3.2 and Santander’s Guidance Notes without regard to anything contained in the HBR.
Santander will continue to collect the fee at point of sale.

It is the responsibility of valuers undertaking the HBR to ensure that they are in possession of and fully
conversant with the current version of the relevant Practice Notes before proceeding.

Valuers preparing a HBR for an applicant should not make reference to the HBR in the valuation report.
Reports must stand alone.

Private Building (Structural) Survey and a simultaneous VMP

This service consists of two reports:-

(i) A Building (Structural) Survey
(ii) A Valuation for Mortgage Purposes (VMP)

All instructions for private building surveys will be sent to valuers who must confirm the terms and
conditions including the fee directly with the customer prior to issuing the report. Santander does not
require sight of the private report.

The valuation fee for the basic VMP will be collected from the customer and passed onto the valuer.

Valuers preparing a Private Building (Structural) Survey for an applicant should not make reference to
the Private Building (Structural) Survey in the valuation report. Reports must stand alone.

Revaluation

These valuations involve properties which are already in mortgage with Santander where the customer
requires additional finance. The report is not released to the customer.

The revaluation should include a brief inspection of the whole property in order to provide the valuer with
sufficient information to cover the revaluation requirement.



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Re-inspection Report

The Company will normally require this inspection service in the following situations:-

     (i)     Completion of a new property that does not have an approved new build warranty.
     (ii)    Completion of repairs and release of retention.
     (iii)   The release of monies in connection with an insurance claim.
     (vi)    Out of date valuations

The inspection should preferably be made by the valuer who prepared the original report.

External Inspection Valuation (EIV)

This report is for use in circumstances when Santander requires a valuation appraisal to assess the risk
of lending without a full valuation inspection

Valuers should not complete the EIV form if the property is listed under the exclusion list in the EIV
guidance notes. In these circumstances the valuer should advise E.surv that an upgrade is required and
a VMP should be completed following a full inspection.

The EIV report is not released to the customer.

Buy to Let Supplementary Sheet (BTL)

A BTL Supplementary Sheet should be completed together with a standard Valuation for Mortgage
Purposes when a BTL mortgage valuation is instructed.




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SECTION 5 – QUALITY OF SERVICE



CONDUCT OF VALUERS ……………………………………………………. P39


VALUATION OR TECHNICAL CHALLENGES …………………………… P39


FAILSAFE VALUATION CHALLENGES …………………………….......... P39


POST VALUATION MATTERS …………………………………................... P39




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CONDUCT OF VALUERS

Discretion
Valuers are individually responsible for any advice they give within the scope of their professional
expertise. Panel valuers must avoid giving gratuitous advice to anyone on either their own, or
Santander’s behalf. The findings of the inspection and content of the report should not be discussed
with any third party.

Contacts with Vendors, Agents, Builders, etc.

The findings of the inspection and the content of the report should not be discussed with any third party.
They are confidential to Santander and the applicant.

Dealing with the Applicant/Borrower

As a general rule, in the case of VMPs, valuers will not need to communicate directly with the applicant.
Whenever possible, direct dealings with the applicant should be avoided and any queries channelled
through esurv.

Often the inspection will involve meeting the mortgage applicant/borrower directly or his/her
representative. Care should be taken not to be drawn into open discussion with regards to the condition,
acceptability or value of the property. Valuers should record the details of any discussions in their site
notes to cover the possibility of a subsequent challenge as to what was said.

VALUATION OR TECHNICAL CHALLENGES

When a valuation is being challenged, the valuer has two options – to amend, or confirm the original
valuation.

In the case of an amendment, an amended report should be created on Quest and the revised valuation
inserted. Section 14b should state that the amended report contains a revised valuation and supersedes
its predecessor.

When any other form of technical challenge is received, the valuer should respond to the origin of the
request by Quest letter and, in cases where a reporting error is to be corrected, an amended report
should be issued, with Section 14b containing a brief explanation of the amendment.

FAILSAFE VALUATION CHALLENGES

All valuations submitted to Santander are audited by a sophisticated automated valuation model. The
system highlights any ‘outlying’ valuations considered to be above the acceptable range of values for the
property. These outlying cases are also subject to a manual check. If both audits confirm that the
valuation appears high, the valuation will be referred back to the valuation firm. The firm has the
opportunity to reduce the valuation by providing an amended valuation report or confirm that the
valuation is correct.

If an amended report is submitted, only the amended report is released to the applicant.

POST VALUATION MATTERS

This may relate to valuation figures, insurance rebuilding costs, recommended repairs, retentions or
decisions to decline, and involve the challenger asking for a change to the report.

All post valuation matters must be sent via e.surv, Kettering. Valuers must not deal with post valuation
queries received directly from customers, brokers or Santander branches, Telephone Distribution (TD) or
Abbey for Intermediaries (AFI). However, valuers may be contacted on occasions by Santander
Property Risk, who may request changes to valuation reports.

All replies from valuers on post valuation matters must be sent via e.surv, Kettering.


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SECTION 6 - GUIDANCE NOTES



           VALUATION FOR MORTGAGE PURPOSES GUIDANCE NOTES ……. P39


           REVALUATION REPORT GUIDANCE NOTES …………………………… P54



           RE-INSPECTION REPORT GUIDANCE NOTES …………………………. P58



           EXTERNAL INSPECTION GUIDANCE NOTES …………………………… P61



           BUY TO LET SUPPLEMENTARY SHEET GUIDANCE NOTES ……. … P65




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                Valuation for Mortgage
                       Purposes


                         Guidance Notes for
                              Valuers




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Introduction

These notes relate to the valuation form introduced in January 2010, reference Rev. R 101/10. In these
guidance notes the Valuation for Mortgage Purposes report is referred to as the VMP.

The valuers have to select from a set of boxed options in many sections of the report. In most
cases these are mutually exclusive. The guidance notes indicate where more than one option
may be selected. The selected box should be completed with an “X”.

When choosing from the options, it is recognised that there will be situations that do not exactly fit
into one category. In these instances, valuers should use their judgement to select the option
that best fits the situation. Explanatory notes can be made in appropriate sections if necessary for clarity.

The notes give guidance on the way in which the form should be completed but valuers
remain responsible for carrying out the inspection and preparing the report in a manner that they
consider appropriate for each property

RICS Appraisal and Valuation Standards (The Red Book)

Compliance with the relevant practice statements of the Red Book is mandatory. Regard may be paid
to guidance notes within the Red Book to the extent that they do not differ from Santander’s specific
guidance. If there is such conflict, Santander’s guidance must be followed.

Property Inspection

Inspections should be undertaken in accordance with the Red Book and any specific Santander
requirements.

Reporting Style

Santander’s preferred style is to use the third person singular when completing reports i.e. avoid the use
of "I" or "We".

The content of the report should be as concise as possible avoiding long narrative descriptions in the
free text sections, and using recommended standard phrases where possible.

The use of technical terms, abbreviations and initials should be avoided.

The typographic style should be consistent throughout the report in terms of the fonts selected and the
use of upper and lower case type.

Reports should be checked thoroughly for typing, spelling and technical errors before signing.
Amendments to reports should be typed and an amended report submitted, providing details of the
amendment in Section 14b.

When a private building survey report or RICS HBR (or similar) has been prepared simultaneously with
a VMP, the latter must stand alone (no cross referencing). Santander will not have sight of a customer's
private report.

Assumptions and Third Party Information

If information provided in the report is based on an assumption, e.g. the length of the lease, the
fact that this is an assumption should be clearly indicated in the text of the report if it is not already
explained in the section wording.

Similarly, information gained from third parties should be explained in the report e.g. "It is understood
from the vendor that .....".

Do not rely on specialist reports, estimates or guarantees available at the time of the inspection.
It is appropriate to acknowledge the existence of such documents but valuers should be non-committal
as to their adequacy.
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Disclaimers and Limitations

Santander does not accept the introduction of general disclaimers or exclusion clauses into its reports.
However, where the inspection of a property is specifically limited, e.g. there may be no access to a
roof void or a garage may be locked, this should be reported in Section 14b. Valuers must use their
judgement to determine if an inspection should be abandoned until further access is made available.

Contact with Third Parties

The contractual duty when completing a VMP is to Santander rather than the applicant or to any other
 third party. If an applicant or other interested party, e.g. vendor or selling agent, approaches the
valuer about the report, the valuer should remain non-committal and refer the enquirer to Santander.

If a request is received to depart from the normal scope of a VMP, the valuer should contact the
Santander Survey Centre to clarify that this will not be possible and to allow the opportunity for the
applicant to choose a more detailed report.

The following notes apply to the form on a “section by section” basis.

Surveyor's Reference

This provides space for the valuer to use their own office reference.

Instructing Branch/BDU

The name of the instructing branch, business development unit or mortgage processing location is
normally provided in the valuation instructions, and should be entered in the space provided. If this
information is not provided, state, "Not known".

Application Reference

A reference number is provided in the valuation instructions e.g. Z000150512. This reference should
automatically map across from the instructions to the report. If not please complete the reference should
be entered in the appropriate space.

Processing Location

Completed reports are normally returned to a Santander processing location rather than to the
instructing source. The name of the processing location involved should be provided in the valuation
instructions, (which in the majority of instructions this will either be Fareham or Stockton on Tees).

Property Address

The address on the instruction will be as provided by the applicant at the branch or broker. Experience
has shown that this information cannot always be relied upon. Valuers must check the address during
the inspection and make sure it is correctly shown on the report, correcting any errors.

The postcode is important as it is used for insurance purposes, please ensure that this is correct. If a
postcode is not provided in the valuation instructions try to find this out and give at least the first part of
the postcode e.g. LS24.

Applicant's Name

This information will be provided in the valuation instruction. Include the titles and initials of the
mortgage applicants if known, e.g. "Mr A and Mrs B Smith".

Please ensure that the applicant(s) name is correct on the valuation form and typed in upper
and lower case.


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Date of Inspection

This is the date on which the property was inspected.

Purchase Price or Estimated Value (as stated in the instructions)

The figure entered in this field, must be the figure provided in the valuation instructions.
If the valuer is aware that purchase price given is incorrect, an explanation along with the correct
figure should be given in Section 14b.

If the instructions do not provide a purchase price or estimated value and this information cannot
be ascertained from a third party, e.g. the vendor or the estate agent, state, "Not Known".

Is this a transcription?

Transcription means completion of Santander’s VMP forms using information gained from a previous
inspection of a property instructed by a third party. Before preparing a transcription report, valuers
must ensure that the case meets Santander’s requirements for permitting transcription reports. If the
case does not meet Santander’s transcription requirements, then the valuer should contact E.surv.

If the report is a transcription report, select “Yes” otherwise select “No”.

Was the property tenanted at the time of inspection?

Please answer ‘Yes’ if property was tenanted at the time of inspection (this includes tenants who are
purchasing under the RTB scheme or from their landlord). In addition, further comment should be
provided in Section 14b, ie how the valuer knows the property is tenanted – eg ‘Access was provided by
someone who advised they were the tenant’.

Does this mortgage valuation relate to the purchase of a property in Scotland?

Answer ‘Yes’ or ‘No’ as appropriate.

Section 1: Tenure - Valuation assumption

This information should be taken from the valuation instructions, unless the valuer has information
to the contrary.

Select one of the following: Freehold / Feudal (Scotland only) / Leasehold / Other

For leasehold, valuers should assume leases have 70 years unexpired at a low ground rent. If
valuers are informed otherwise, they should clarify in Section 14b by stating their understanding
and the source of their information. The conveyancer will be asked to confirm that the valuer’s
assumption is correct.

Valuers are not expected to find out details of service charges but if they know that charges are
abnormally high, they should make comment in section 14a if they are likely to affect marketability.
In the absence of information to the contrary, reasonable service charges should be assumed
having regard to the age and character of the security and in accordance with the assumptions in
Section 1 of The Red Book.

In Scotland, the feu duty should be assumed to be redeemed.

If “Other” is chosen, valuers should provide an explanation of their assumption and the source
of their information in section 14b as appropriate.

For shared ownership property, tick ‘Leasehold’ option and make appropriate comment in Section 14b.




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Section 2a: Property Type

The options are mutually exclusive; valuers should select one from the following:

House
Bungalow
Chalet Bungalow
Purpose Built Flat
Converted Flat
Purpose Built Maisonette
Converted Maisonette
Tenement Flat
Flat over non-residential use
Other (please specify in Section 14b)

Where the property does not fit exactly into a category, valuers should use their judgement
and select the option that best fits the type of property concerned.

When “Other” is chosen, please provide an explanation in section 14b as appropriate.

Section 2b: Property Style

The options are mutually exclusive; for houses/bungalows, valuers should select one from the following:

Detached
Semi detached
Mid terrace
End terrace
Back to back
Other (please specify in Section 14b)

Where the property is a flat/maisonette, select one of the options below

High-rise block
Low-rise block

Do not refer to a flat as being semi-detached, mid or end terrace.

Where the property does not fit exactly into a category, valuers should use their judgement
and select the option that best fits the style of property concerned.

When “Other” is chosen, please provide an explanation in section 14b as appropriate.

Section 2c: Public Sector

Where valuers believe that the property was built for the public sector, they should select “Yes”,
otherwise select “No”. In answering this question, valuers should use their judgement based on
the appearance of the property and their knowledge of the history of the area.

Where this question is answered “Yes”, a brief explanation should be provided in
Section 14a or 14b as appropriate.

Section 2d: Approximate Year of Construction

Enter the approximate year of construction (not conversion). The format must be four numbers, e.g.
1960. Do not enter text such as “late 1800’s”, “18th Century” or “1930’s”. An approximation to the
nearest ten years will be adequate, but state the actual year of construction if it is known. For converted
properties, the year of conversion should be indicated in Section 14b. It is appreciated that it is difficult
to be precise when dealing with period properties and in such circumstances an “educated guess” will
suffice.
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Section 3: Flats and Maisonettes

State the floors on which the unit is located using abbreviations rather than words e.g. LG, G, 1, 2, 3. A
forward slash is permissible for split level accommodation in flats or maisonettes e.g. 1/2. State the
number of floors in the block e.g. "4". State whether a lift is provided by selecting "Yes" or "No"

Section 4a: Construction

State the most appropriate generic construction type by selecting one from the following options:-

Conventional masonry (brick, block or stone)
Conventional modern timber frame
In situ concrete
PRC designated
Large panel system
Steel framed
Pre-1960 timber frame
Other (please specify in section 14b)

Whether or not a PRC property has been repaired, valuers should tick “PRC designated” and use the
appropriate phrase in Section 11.

Where “Other” is selected, please ensure that an explanation is provided in Section 14b as appropriate.

For non-conventional construction, valuers should make appropriate enquiries of the vendor, estate
agent or local authority to establish the name of the system. This should be inserted in this section
of the report; e.g. “Wimpey No-Fines”. If enquiries are unsuccessful, state “Not Known”.

Section 4b: External Finish

Main Walls - Provide a brief description of the external finish e.g. stone, brick, rendered etc. It is not
necessary to state whether the walls are of cavity or solid construction or to provide a measurement
of wall thickness. In the case of a property with a number of different wall finishes, state the predominant
finish.

Main Roof - State whether the main roof cover is pitched or flat and briefly describe the covering
e.g. "pitched and slated". In the case of a property with a number of different types of roof cover,
describe the main roof cover.

Substandard methods of construction, which are likely to affect marketability, should be reported in
Section 14a.

The inability to inspect significant sections of the external walls or roof covers due to access problems
or sight lines should be reported in Section 14b (and Section 10, if appropriate).

Section 4c: Building Insurance Code

This is a code used for building insurance rating purposes. The most appropriate code should be
stated having regard to the following table:

Code                     Walls                         Roof
01                       Class 1                       Class 1
02                       Class 1                       Class 2
                    or   Class 2                       Class 1
03                       Class 2                       Class 2
51                       Class 1                       Thatch
52                       Class 2 (some brickwork)      Thatch
53                       Class 2 (no brickwork)        Thatch
59                       Special                       Thatch
99                       Special                       Special

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Walls - Class 1 walls means 50% or more of the external walls (including party walls) are built of
brick, stone, concrete, metal or tile. Also included are modern (post 1960) timber framed houses
unless clad with a combustible material. Other walls are to be categorised as Class 2.

Roofs - Class 1 means 70% or more of all roof surfaces are of slate, tile, metal, concrete,
asphalt or felt on timber. Other roof coverings are to be categorised as Class 2, or Thatch.

Special - Unusual types of construction, e.g. windmills, oast-houses etc are classed as special.

Section 4d: Mundic

If the property is potentially subject to Mundic problems select “Yes”, otherwise select “No”. If this
section is answered “Yes”, standard phrases should be used in Sections 10 and 11 to require the
applicant to obtain a Mundic screening report – see the appropriate section in the Valuation Policy
Document.

Section 5a: Accommodation

Using numbers, (rather than text), state the number of principal rooms. Where the current use of a
room varies significantly from the use for which it was designed, e.g. a bedroom used as a study,
valuers should use their judgement to include such rooms in the most appropriate category.

Number of floors - state the number of floors on which habitable accommodation is provided
i.e. ignore cellars and non-habitable attics for the purposes of this Section.

Number of living rooms - do not include kitchens unless they are part of a kitchen/dining room.

Number of bedrooms - do not include "box rooms" if they are so small as to be incapable of use
as a bedroom. In the case of a studio flat/bedsit state "0" bedrooms and "1" living room. Explanatory
comment should then be made in Section 14b.

Number of bath/shower rooms - include any en-suite bathroom/shower room. Do not include
separate WCs unless a bath or shower is provided in that room.

It is not necessary to record room sizes or room fittings. Any abnormal or significant factors that affect
marketability should be reported in Section 14a or 14b as appropriate.

Section 5b: Gross External Floor Area of Dwelling

Round to the nearest square metre. Floor space with headroom of less than 1.5 metres and integral
garages should be excluded.

The floor area of flats should be measured to include the width of external walls and to the centre line
of party walls. Common parts, common halls and staircases should be excluded. Valuers should
exercise their own judgement in each case as to whether extensions such as conservatories
should be included in the floor area or recorded as outbuildings in Section 6b.

Section 5c: Estimated Rebuilding Costs

Valuers should use the current BCIS tables including an allowance for garages, domestic
outbuildings, greenhouses, swimming pools, ornamental ponds, tennis courts, terraces, service
tanks, drains, septic tanks, pipes and cables, central heating, oil tanks, drives, footpaths, garden
walls, gates, hedges, fences, landlords fixtures and fittings and aerials.

Any anomalies, or parts of the property that the valuer believes should be excluded from the
sum insured, should be clarified in Section 14b of the report.

If the valuer considers that it is not appropriate to provide a recommended reinstatement cost
by applying the BCIS tables, a provisional figure should be provided and an explanation of the
difficulty should be reported in Section 14b e.g. listed buildings with extensive period features which
would require specialist rebuilding.
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For flats and maisonettes calculate the reinstatement cost for the subject flat only, not the cost of
rebuilding the whole block. A statement stating this has been done is not required.

Section 5d: Residential Element greater than 40%

When working out the percentages, valuers need have regard to the total floor area of a
property and the land on which it stands. This is taken to be the total floor area
including both habitable and non-habitable accommodation, plus outbuildings and land.

Section 6a: Garage/Parking

Valuers should use their judgement and choose the most appropriate generic garage/parking
facility by selecting one from the following options:-

          Single garage
          Double garage
          Garage space / parking space on site
          Garage / parking space on separate site
          No garage / garage space / parking space

Valuers should give a brief description to clarify the garaging and parking facilities, e.g.
“The garage actually has space for three or more vehicles” or “There is a double garage and a
single garage”.

The construction of the garage should be entered and significant defects should be considered for
comment in Sections 10, 11 and 14.

Section 6b: Outbuildings / Common Facilities

Briefly describe outbuildings that are permanent and which contribute to the value of the property,
eg conservatories which are not considered to be part of the main accommodation Should be included
here. In particular, include any outbuildings that have been included in the recommended rebuilding
cost.

Do not comment about the condition of outbuildings in this section. Significant defects should be
considered for comment in sections 10, 11 and 14.

Only describe those common facilities that are significant and contribute to the value of the property.
In the case of flats, it is not necessary to describe normal common parts but any unusual
features, such as shared sports facilities, should be described.

If there are no outbuildings/common facilities, state ‘None.

Section 7a: Service Connections

There is a separate question for each of the services, drainage, water, gas and electricity. Based
on a visual inspection of the services, valuers should select one from the following options
“Mains/Non mains/No" for each service.

Where services appear to be non-mains, valuers should comment on the type and location in
section 14a or 14b as appropriate.

If it is not possible to determine whether a particular service is provided, state “No” and comment in
Section 14b.

Section 7b: Central Heating

Select one option from “Yes”, “Partial” and “None” and briefly describe the type of system
e.g. “Gas fired boiler to radiators”.

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Electric storage heaters are not, strictly, a form of central heating. Valuers should
only report their presence if they consider that they contribute significantly to market value.

Information relating to the provision of the hot water supply is not required.

Section 8a: Site

The options in this section of the report are not mutually exclusive. Valuers should select
appropriate box(es) to highlight irregularities that require investigation by the conveyancer.
A brief explanation of each issue should be provided in Section 14a or 14b as appropriate.

Rights of way

          Shared drives/access
          Garage or other amenities on a separate site
          Flying freehold
          Shared service connections
          Ill-defined boundaries
          Agricultural land included within property – please tick if property has any significant area of land
          (irrespective of use)
          Other (if there are other issues relating to the site that need investigating)

Where a property has a significant amount of land (in excess of an acre), the approximate extent of the
land should be stated in Section 14b.

If the applicant or close family member owns adjoining land/property which is not included in the
mortgage valuation please tick ‘Other’ and provide more details in Section 14b.

Section 8b: Does the surveyor need to inspect the title plans prior to confirming the valuation

Select from either "Yes" or "No".

It is not expected that valuers will ask to see the title plans as a matter of routine. The title
plans should only be requested if the valuer has concerns regarding issues that might be
significant to the valuation, e.g. non contiguous land, access across neighbouring land, plots of
over 0.5 hectares, ill defined boundaries or agricultural land included with the property.

When this section is answered "Yes" Santander will obtain a copy of the title plan and forward this
 to enable the valuer to confirm that the plan correctly identifies the property inspected. It is
recommended that a sketch plan is prepared on site in such cases sufficiently detailed for the
purposes of comparison when the title plan is obtained.

Section 9: Location

Valuers should use their judgement and select one from the following options that best
describe the location:

          Residential suburb
          Residential within town/city
          Mixed residential/commercial
          Mainly commercial
          Commuter village
          Remote village
          Isolated rural property
          Other (please specify in Section 14)

Where “Other” is selected, please provide an explanation in Section 14b.

Any issues concerning the property's location, which significantly affect marketability, should be
reported in Section 14a.

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Section 10: Condition (to include movement and tree standard phrases)

Comments about the condition of the property should be concise and of a general nature.
Santander has developed a set of recommended phrases which should be used in this section.
These are included in this document.

It is anticipated that Section 10 will only contain:

         a general statement on condition
         one of Santander’s standard movement phrases (all movement to be reported)
         one of Santander’s standard tree phrases

Valuers should avoid making specific reference to minor defects that are unlikely to affect market value.
To do so implies that a detailed inspection of the property's condition has been undertaken. Minor
defects should not be included in a valuation report.

Defects that detract significantly from marketability/ value or that pose significant health
and safety risks should be included in Section 11 as recommended repairs rather than be listed
in this section.

When dealing with a new, partly built property or new/partially complete conversion, include details
of the builder and property style and include a statement to the effect that the report is based on an
inspection of the site, and specifications provided by the builder. Standard phrases are provided and
their use is encouraged. Santander has standard Section 10 phrases to cover this.

Structural Movement and Trees

Santander has developed a number of standard phrases for reporting structural movement and
the potential problems from trees. The use of these phrases triggers different actions by
mortgage processors and therefore valuers must use the standard phrases.

It is important that valuers report ALL evidence of movement even though this may be slight.

Standard Phrases for Movement

There are four standard phrases for reporting movement.

Phrase 1       Evidence of movement was observed in the form of (brief description). This appears to be a
               minor defect which is not thought to have any serious structural significance.

Phrase 2       Evidence of movement was observed in the form of (brief description). This appears to be
               longstanding and non-progressive and the likelihood of further significant movement seems
               remote. No structural works are considered necessary.

Phrase 3       Evidence of movement was observed in the form of (brief description). It is not possible to
               say that further significant movement will not occur. Further movement would seem unlikely
               but from a single inspection this cannot be positively established and further specialist advice
               may be prudent.

Phrase 4 Evidence of movement was noted in the form of (brief description). This appears significant
         and likely to be progressive.

NB. The mortgage centre will assume that no structural engineer’s report is required when
standard phrase 3 is used.

If valuers wish to recommend a structural engineer’s report in Section 11, they must use in conjunction
with Standard Movement Phrase 4 in Section 10. Where phrase 4 is used in Section 10, the following
phrase should also be included in Section 11:

‘Obtain a report from a structural engineer or chartered building surveyor and any recommendations
should be carried out under professional supervision.’
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Standard Phrases for Trees

TREE PHRASE FIVE (complete missing text)

There is a <TEXT> tree approximately <TEXT> metres from the property growing <TEXT>. Whilst no
associated damage was noted, trees can cause problems to structures and services on or within
shrinkable subsoils.

TREE PHRASE SIX (complete missing text)

There is a <TEXT> tree approximately <TEXT> metres from the property growing <TEXT>. This tree
constitutes a risk to the structural integrity of the property. Specialist advice from an arboriculture
consultant or engineer is recommended.

TREE PHRASE FIVE-PLURAL (complete missing text)

There are some <TEXT> trees approximately <text> metres from the property growing <TEXT>. Whilst
no associated damage was noted, trees can cause problems to structures and services on or within
shrinkable subsoils.

TREE PHRASE SIX-PLURAL (complete missing text)

There are some <TEXT> trees approximately <TEXT> metres from the property growing <TEXT>.
These trees constitute a risk to the structural integrity of the property. Specialist advice from an
arboriculture consultant or engineer is recommended.

The phrases deal with warning of the potential risk to structures from tree growth rather than dealing with
evidence of structural problems that are already apparent. If movement is apparent, one of the four
structural phrases should be used.

Phrase 6 provides a stronger warning than Phrase 5 and should be used when the risk is considered to
be greater e.g. The trees are of a type that have a high demand for water or the trees are very close to
the property.

If trees within the curtilage of the property are a potential threat to neighbouring properties, for example
there may be a public liability risk, appropriate comment should be made in Section 14b.

When reporting the presence of trees, valuers should not recommend specific remedial actions, e.g.
lopping or removal, without specialist advice. The possibility of Tree Preservation Orders should also be
reported.


Section 11: Repairs/reports/information recommended as a condition of the mortgage

If specialist reports, further information or repairs are required as a condition of the mortgage, select
‘Yes’. If ‘No’ is selected, the text field should be left blank.

Only defects which affect the value and or marketability of the property (and can be remedied), should
be included in this section. The only minor defects permitted in Section 11 are those of a progressive
nature which are likely to become a major defect if not remedied and health and safety issues.

Cosmetic repairs or improvements should not normally be included in Section 11. Works of
improvement should only be included when the valuation instruction specifically state that it is the
applicant’s intention to undertake improvements as part of the mortgage application, ie the mortgage
offer is to be based on a ‘when improved’ valuation.

All Section 11 requirements should be typed in a numbered list, giving precise details of the repairs
required in an instructional format to ensure that the applicant and underwriters know what is required to
progress the loan. For example:

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1. Obtain the advice of a structural engineer or chartered building surveyor on the need to strengthen
the roof structure and undertake recommended work.

Valuers must not include statements such as ‘subject to estimates’, nor recommend undertakings,
maximum LTVs etc.

Specialist Reports

The recommendation for specialist inspections should normally require the whole property to be
inspected and reflect the inter-related nature of defects, eg where there is evidence of rising damp, there
is always the risk of associated timber decay.

Retentions

If any works are listed in Section 11, a suggested retention must always be provided. This must be the
valuer’s estimate of the cost of the recommended repairs. This must be a numerical figure. The
estimate of cost helps the underwriters with their lending decision.

When are full retentions required?

Full retentions are required when further information is required to confirm whether the property meets
Santander’s lending policy, eg, when documentation is sought to confirm repair to PRC certification, or
when further information is required to clarify the extent of the defect, eg when a Structural Engineer’s
report is required

Specialist reports may be forwarded valuers for consideration. The valuer is able to provide a revised
retention figure by letter/memo, if required.

What valuations are required with a ‘Full retention’

Where there is a ‘full retention’, only a ‘Market Value on completion of repairs in Section 11’ should be
provided.

New Build

When dealing with a partly built property, being sold with the benefit of an appropriate warranty/
certificate a retention figure must not be provided for works that will be carried out to complete the
property before the applicant takes ownership. Only defects should be noted in Section 11.

However, if a property is being sold unfinished, or without an appropriate warranty then the property
should be declined.

This is a change in reporting requirements.

Section 12: New Build (to include new conversions)

Valuers should tick ‘Yes’ for all new build and new conversions as well as new build/new conversions
which have been recently occupied for the first time. If the property is capable of being completed within
a working week, the valuer should select ‘Yes’ to at 12b.

Section 12c: Buy to Let application

Select either “Yes” or “No” to indicate whether the report relates to a Buy to Let application. This
will be shown on the instruction. If the application is a BTL application, select either “Yes” or “No” to
indicate whether the property is currently let.

The actual rent passing, estimated rent and valuer’s own opinion of rental value must be stated in annual
terms. This is intended to capture the true rental value of properties for which there is a fluctuating
demand during the year, such as properties in tourist areas that achieve a higher rent for short lets
during the summer season and revert to an Assured Shorthold Tenancy at other times. When providing
annual figures, do not deduct for voids.
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BUY TO LET APPLICATIONS AND THE BUY TO LET SUPPLEMENTARY SHEET
(FORM ABK IN QUEST)

If an application has been made for a BTL mortgage, this will be clearly shown on the valuation
instruction.

In the case of Buy to Let mortgage applications, in addition to answering the questions in section
12c of the VMP the valuer is required to complete a separate Buy to Let Supplementary Sheet
which is for Santander’s use only and is not disclosed to the customer or their conveyancer.

Answers to questions in section 2 of the supplementary sheet should mirror those provided in
section 12c of the VMP.

Section 13: Roads

Select the options that best describes the circumstances:
        Made up road
        Unmade road
        Partly completed new road
        Pedestrian access only
        Other (Please specify in Section 14b)

If “Other” is chosen, please ensure that an explanation is provided in Section 14b.

In cases where it is likely that expenditure will be incurred on the road in the foreseeable future,
valuers are not expected to quantify the cost. It is recommended that where incomplete the valuer
should use the words ‘Nil if road bond’. It will be the subject of a post valuation query if no such bond
exists.

If the condition of the road is such that it affects the property's value and/or marketability, comment
should be made in Section 14a.

Section 14a: Marketability

If there are factors that adversely affect the marketability of the property, valuers should
select “Yes”, if not select “No” box.

Where the question has been answered “Yes”, valuers should describe in concise terms
the nature of any adverse factors that affect the marketability of the property, e.g. proximity to an
obnoxious use, busy roads, unusual design features, high maintenance liabilities, poor structural
condition.

Knowledge of problems with other properties in the vicinity should only be mentioned if these
impact on the marketability of the subject property.

This section should also be used to report concerns with regard to the risk of flooding,
damage caused by mining subsidence and any other environmental risk. However,
recommendations as to whether specialist reports are necessary should be included in
Section 11.

Section 14b: Other Important Factors

If there are factors that require clarification valuers should select “Yes”, if not select “No”.

This section should be used to report matters that require further clarification and to record
assumptions made in other parts of the report e.g. matters to do with tenure, town planning,
use of the property. This section should be used if there is a requirement for the conveyancer
to investigate matters – see suggested standard phrases attached.

Limitations of the inspection due to lack of access should be mentioned in this section.
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Comment should also be included about any significant disparity between the purchase
price/estimated value and the mortgage valuation e.g. sitting tenant purchases, marketing
incentives, apparent over-pricing.

Section 14c: Acceptability for mortgage purposes

This section should be answered by selecting either "Yes" or "No".

A negative answer indicates that the property is being declined and the application will not proceed. In
this case, the valuation sections should be completed as "Not Applicable" and an explanation of why the
property is not considered to be acceptable security should be provided in Section 14a. There is also no
need to provide an estimated rebuilding cost or to recommend repairs in Section 11.

Section 14d: Occupation Restrictions

Where valuers have reason to believe that properties are or could be subject to occupancy
restrictions (e.g. live/work units) they should select “Yes” and provide an explanation in Section 14a.

Section 15: Valuation for Mortgage Purposes

Valuers should indicate that the valuation is provided on the assumption of vacant possession
by selecting “Yes”. Otherwise select “No” and provide an explanation in Section 14a.

N.B. It is very important to the lending process that regard should be had to properly checking the
entering of valuation figures before sign off. Please ensure that full stops are not used in the valuation
figure and that the words match the valuation.

Market Value at the time of inspection

If the valuer provides a ‘Market Value at time of inspection’ this is taken as confirmation that the
Property is mortgageable in its condition/use at the time of inspection.

A valuation should always be given except when:

         The property is not acceptable for mortgage
         A new build property is not close to completion
         A full retention is made

In these cases complete ‘not applicable’ in the valuation fields. Where the property is not acceptable for
mortgage an explanation should be provided in Section 14b.

New Build

When a new build property is close to completion (completion of the property within a week) a Market
Value at time of inspection’ should be given as the property is almost finished, this should be the
valuation of the completed unit.

Santander do not require valuations of partially built properties as the property is not suitable for
lending unless it is habitable.

‘Market Value on completion of repairs in section 11, or, if new build when the property is finished’ is
required when:

         Repairs are recommended in Section 11

         A full retention has been made – it is the value assuming Section 11 conditions are met/works
          are complete

         A new build property is not close to completion – the valuation should assume completion of the
          property
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If the property is being declined, Section 14c “Acceptability for mortgage purposes” should be
answered “No”, and valuations must not be provided. All valuation fields should be completed as “Not
Applicable”

It is recognised that it is often not possible to distinguish "before" and "after" valuations when
the extent of the recommended repairs are limited e.g. if the recommended repairs are to renew
guttering at an estimated cost of £500, the property is not necessarily worth £500 less in its
un-repaired condition. The difference between the two valuations is not a simple mathematical
deduction of the cost of repair and in some circumstances the two valuations may be the same.

Signature

This section of the form should be completed in full. The name and qualification of the inspecting
valuer should be typed, in addition to the valuer’s name, RICS number, and panel appointment
number and company surcode (first 3 letters of company name) – eg 2456 SAR

The name, address and telephone number of the valuer will be visible to the customer and the
conveyancer.

Definition of Market Value

Santander considers the definition of Market Value to be in accordance with the relevant definition
provided in The Red Book.

Valuation Evidence

Santander quality control procedures require valuers to include a justification for each valuation
in their inspection records. A minimum of two comparable transactions should be shown
and adjustments made to relate these to the subject property. Details of any alternative
valuation evidence should be recorded e.g. opinions sought from other valuers.




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                         Revaluation Reports



                          Guidance Notes for

                               Valuers




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GUIDANCE NOTE FOR REVALUATION REPORTS

Introduction

These notes relate to the revaluation report form introduced in January 2010. The form can be
recognised by the Quest reference Rev.M 01/10.

These notes give guidance on the way in which the form should be completed, but individual valuers
remain responsible for carrying out the inspection and preparing the report in a manner they consider
appropriate for each property

A revaluation is instructed when the customer is seeking an additional loan. Revaluations require all
properties to be inspected internally.

RICS Appraisal and Valuation Standards (The Red Book)

Valuers shall have regard to mandatory requirements and advisory guidelines provided within the
relevant sections of the Red Book. When Santander’s specific requirements differ from advisory aspects
of the Red Book, Santander’s guidelines should take precedence.

The following notes apply to the form on a “section by section” basis.

Surveyor's Reference

This provides space for the valuer’s own reference.

Instructing Branch/BDU

The name of the instructing branch, business development unit or processing location is normally
provided in the valuation instructions and should be entered in the space provided. i.e. Solent,
Fareham, Teesside, SMS. If this information is not provided, state "Not known".

Application Reference / Mortgage Account

These reference numbers are normally provided in the valuation instructions e.g. Z000150313 for
the Application Reference and 26089570 for the mortgage account reference.

For valuers connected via the Quest SPN network, the references should automatically map across from
the instructions to the report. For valuers not connected via Quest SPN, the reference should be entered
in the appropriate space. If this information is not provided state “Not known”.

Processing Location / Mortgage Centre

Completed reports are normally returned to a Santander mortgage centre (processing location – usually
Fareham or Teesside). The name of the processing location involved should be provided in the valuation
instructions.

Property Address

The address on the instruction will be as provided by the applicant at the branch or BDU. Experience
has shown that this information cannot always be relied upon. Valuers should check the correct
address during the inspection and correct any errors providing as full an address as possible on the
report.

Applicant's Name

This information will be provided in the valuation instruction. Include the titles and initials of the
applicants if known, e.g. "Mr A and Mrs B Smith".

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Date of Inspection

This is the date on which the property was inspected.

Section 1: Tenure - Valuation assumption

This information should be taken from the valuation instructions unless the valuer has information to
the contrary.

Select one of the following: Freehold / Feudal (Scotland only) / Leasehold / Shared Ownership/
Leasehold / Other.

For leasehold, valuers should assume leases have 70 years unexpired at a low ground rent, unless
informed otherwise in the instructions. If valuers are informed otherwise from other sources, (e.g. the
occupier,) they should clarify their understanding and the source of their information in section 4.

In Scotland, the feu duty should be assumed to be redeemed.

If “Other” is chosen, valuers should provide an explanation of their assumption and the source of
 their information in section 4.

Section 2: Purpose of the Additional Loan

Information regarding the purpose of the additional loan is generally included in the instruction.
Valuers should select one of the following to confirm their understanding of the purpose of the
loan and only depart from the purpose indicated in the instruction if contrary information is indicated
by the occupier.

Home improvements, structural (adding bedroom/s)
Home improvements, structural (other)
Home improvements, non structural
Shared ownership (purchase additional/remaining share)
Purchase land (non-contiguous)
Purchase land (contiguous)
Purchase freehold
Change of borrower
Personal purposes (e.g. buying a car, debt consolidation, purchase of a holiday home)
Other, clarify in section 4
Release of part of security (land and/or buildings)

Where the purpose of the loan is for improvements or alterations, valuers should list the works
of improvement that the applicant is known to be making, e.g. extension, new kitchen, fitting central
heating.

For ‘Release of land/buildings’, the valuer should be made aware of the element of land to be released
and the intention for adjoining land so they can confirm not only the reduced value of the decreasing
security but whether the proposal would impact on marketability/access etc

Valuers should include the approximate cost of the improvements/alterations in the space provided.

Section 3: Repairs recommended as a condition of the Additional Loan

Recommended repairs should be restricted to those that, if not attended to, will materially affect the
value and/or marketability of the property. For more details, refer to the guidance notes for the
Valuation for Mortgage Purposes. Wherever possible include a (realistic) suggested retention figure.

When the valuer is recommending that Specialist report(s) be sought prior to release of funds
and where suggested retention cannot be quantified, the form should be completed as below:

Section 3 – use Santander’s standard phrases to request the appropriate specialist report(s).
Section 3 – Suggested Retention – input “A full retention figure (equal to the value – in figures)”
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Section 5 - Market Value at time of inspection – input “Not Applicable”.
Section 5 - Market Value When finished/after repairs – provide on assumption repairs /improvements
specified are satisfactorily completed.

Special Instructions for properties at risk of Mundic

Certain properties in Cornwall and parts of Devon are at risk of Mundic problems. When there are
reasons to suspect that the property may be affected by Mundic, Santander requires valuers to
recommend a Mundic screening report be obtained prior to releasing the funds. Valuers should
adopt the following procedure:

Section 3 - Recommend a Mundic report from a specialist.
Section 3 – Suggested retention, input “a full retention figure (equal to the value – in figures)”.
Section 4 – Provide an explanation of why Mundic is suspected (see Santander’s standard phases).
Section 5 - Market Value at time of inspection – input “Not Applicable”.
Section 5 - Market Value when finished provide a “When Finished” value on assumption that a
satisfactory Mundic report is received.

Section 4: Comments

This section should only be used where it is necessary to provide clarification of replies given in
other sections of the report or to identify other important factors to be brought to Santander’s attention.

Section 5: Valuation for Mortgage Purposes

Valuers should indicate that the valuation is provided on the assumption of vacant possession by
selecting “Yes”. Otherwise select “No” and provide an explanation in Section 4.

Market Value at time of inspection

A Market Value at time of inspection should be provided except when a “ full retention ” is being
suggested in Section 3.

Where the suggested retention is a “full retention ” input “Not Applicable” in Market Value At Time
of Inspection.

Market Value on Completion of Repairs

A ‘Market Value on Completion of Repairs’ is required when works of improvement/repairs are listed
and costed in Section 2, or when a retention is recommended in Section 3 for repairs.

Signature

This section of the form should be completed in full. The name and qualification of the inspecting
valuer should be typed, in addition to the valuer’s name, RICS number, and panel appointment
number and firm’s surcode.

Definition of Market Value

Santander considers the definition of market value to be in accordance with the relevant definition
provided in the Red Book.

Valuation Evidence

Santander quality control procedures require valuers to include a justification for each valuation in their
inspection records. In the majority of cases this will involve the recording of comparable evidence
within site notes/valuation sheets. A minimum of two comparable transactions should be shown and
adjustments made to relate these to the subject property. Details of any alternative valuation evidence
should be recorded e.g. opinions sought from other valuers.


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                    Re-inspection Report


                         Guidance Notes for
                              Valuers




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RE-INSPECTION REPORT GUIDANCE NOTES

Introduction

These notes relate to the re-inspection form introduced in January 2010. The form can be recognised by
the reference Rev.K 01/10 in the bottom left hand corner.

These notes give guidance on the way in which the form should be completed but the individual
valuer remains responsible for carrying out the inspection and preparing the report in a manner
which he/she considers appropriate for each property.

The property is to be inspected internally.

RICS Appraisal and Valuation Standards (The Red Book)
Compliance with relevant practice statements of the Red Book is mandatory. Regard may be paid to
guidance notes to the extent that they do not differ with Santander’s specific guidance. If there
is such conflict, Santander’s guidance must be followed.

Property Inspection
Inspections should be undertaken in accordance with the Red Book and any specific Santander’s
requirements.

Section by Section Guidance Notes
The following notes apply to the form on a section by section basis.

Valuer’s Reference
This provides space for the entry of an office reference. This is not a reference generated by
Santander’s branches or mortgage centres.

Mortgage Account
An account number is normally provided in the valuation instructions and this should be entered
in the appropriate space. If a number is not provided, state “not known”.

Mortgage Centre
Completed reports are normally returned to a Santander Mortgage Centre (usually Fareham or Stockton
on Tees) rather than to the instructing branch or Regional Office. The name of the Mortgage Centre
involved should be provided in the valuation instructions.

Property Address
Provide as full an address as possible. The postcode is important and is used for insurance purposes.
If a postcode is not provided in the valuation instructions try to find this out and give at least the first part
of the postcode, e.g. LS24.

Applicant’s Name
This information will be provided in the valuation instructions. Include the titles and initials of the
mortgage applicants if known, e.g. “Mr A and Mrs B Smith”

Date of Inspection
This is the date on which the property was inspected.

Section 1 : Result of Reinspection
This section is relatively self-explanatory, but check the purpose of the re-inspection prior to
inspecting the property and completing the form. If there are any queries regarding the reason
for the re-inspection, please check with the relevant mortgage centre.

Section 2 : Details of Outstanding Work
If there are any significant items of work outstanding briefly indicate these in a clear and precise
manner, using terminology that can be readily understood by the applicant/customer. If
relatively minor items are outstanding only a general comment is necessary.
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Section 3 : Recommendations
Where not all of the essential repair items have been undertaken the valuer must use his/her
judgement as to whether or not this may affect the value of the mortgage security. If the
outstanding items are significant, then it may be appropriate to recommend a further retention
and/or re-inspection.

Section 4 : Current Value
The Company requires an updated valuation if at the time of re-inspection it is materially different
from the original valuation. The Company regards a 10% increase or decrease in the value as
being materially different. Justification for the revaluation should be stated on the re-inspection forms.

Section 5 : Other Important Factors/Remarks
Use this section to comment on any other factors that may be pertinent to the re-inspection of
the property, e.g. the property’s general condition may have deteriorated since previous inspection,
or it may be necessary to clarify the reasoning behind the request for a further re-inspection.

Signature
This section of the form should be completed in full. The name, qualification, valuer’s number
and surcode of the inspecting valuer should entered. The name of the valuing firm is not disclosed
to mortgage applicants and applicants do not receive copies of re-inspection reports.




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                         External Inspection


                         Guidance Notes for
                              Valuers




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EXTERNAL INSPECTION GUIDANCE NOTES

GUIDANCE NOTE FOR EXTERNAL INSPECTION VALUATIONS

INTRODUCTION

These notes relate to the re-inspection form introduced in January 2010. The form can be recognised by
the reference Rev.F 01/10 in the bottom left hand corner.

External Inspection Valuations are carried out on behalf of Santander to assess the value of a property
and assist underwriters in making lending decisions. The contents of these reports should not be
disclosed to the customer or to their conveyancer.

RICS APPRAISAL AND VALUATION STANDARDS
These guidance notes should be read in conjunction with relevant practice statements within the Red
Book with regard to such matters as limited inspections and valuation assumptions.

INSTRUCTIONS
Our panel manager, e.surv, will allocate instructions to valuers in the normal way. Eligibility for External
Inspection is determined by rules in the Bank’s Quest system, not the panel manager.

EXCLUSIONS
Properties where the estimated value is more than £1.000,000.
Flats and maisonettes.
Joint Ownership / Low Cost Housing Schemes.

If valuers receive an ineligible instruction, they should immediately contact e.surv to inform them they
have upgraded the report type to a Valuation for Mortgage Purposes (VMP).

THE INSPECTION
Valuers are required to view the property from the public highway or footpath. They should also use
public access to the side or rear of the property if available. It is important to remember that they have
not been invited onto the property and should therefore not go onto private land, including shared
driveways and private back alleyways.

UPGRADING AN EXTERNAL INSPECTION TO A VMP
It is considered that in certain circumstances it is inappropriate for a valuation to be based purely upon
an external appraisal and the inspection should be upgraded to a VMP. Such circumstances will
include:-

Incorrect Instruction
Properties where the valuer has reason to believe that the instruction information is inaccurate. (e.g.
tenure, number of bedrooms.)

Properties that are not used exclusively as residential dwellings

Down Valuation
Where the valuer’s valuation differs from the customer’s estimate by more than 10%.
Where the valuer’s estimate of value based upon an external appraisal suggests that the loan to value of
the application exceeds 85%.

Unsuitable for mortgage
Where the valuer considers that the property is unsuitable for mortgage purposes, whether because of
its construction, situation or any other factor.

Valuer cannot find/see the property
Properties that cannot be adequately viewed from public land, e.g. set too far back or view hindered by a
large hedge or wall, or simply cannot be found.

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Unusual property
    Insufficient comparable information available
    Properties where a valuer’s local knowledge or observations, lead them to believe that there are
     significant legal issues that require investigation by the conveyancer; e.g. rights of way, flying
     freehold.
    Non-traditional construction (e.g. pre-cast reinforced concrete, steel frame, large panel system,
     historic timber frame.)
    Buildings’ insurance construction code is not either Class 1 Walls and Class 1 or 2 Roof.
    Properties with unusual characteristics that make valuation difficult.
    Properties of an historic character or that may be Listed.
    Plots that obviously exceed 1 acre
    Properties known to be subject to occupancy restrictions (e.g. sheltered housing or agricultural
     employment.
    Converted barns.

Possible structural issues
    External inspection reveals evidence of significant movement or, while not displaying such
      problems, the property is in an area where structural movement is prevalent.
    External inspection reveals the presence of a tree that the valuer believes may constitute a
      potential risk to the property.
    Properties in an area where mining subsidence is common.
    Properties believed to be at risk from Mundic problems.
    Properties that appear to be poorly maintained or display significant defects on external
      inspection
    Properties that are still under construction or where significant building work is underway e.g.
      extension
    Properties that are known to have flooded in the past five years.
    Repaired PRC properties

Uninhabited
Properties that appear to be uninhabitable or uninhabited.

Other
Instructions where the property value is above the valuer’s authority limit. This list is not exhaustive and
valuers must use their own professional judgement to decide whether they can provide an approximate
market value for the property based upon an external appraisal.

Where valuers encounter one of the above issues, they should upgrade the instruction to a full Internal
Inspection and contact E.surv to inform them that this has been done. The reason for the upgrade will be
recorded by Esurv and should also be recorded in the valuer’s site notes. The External Inspection
Valuation Report must not be completed. In the circumstances of an upgrade, only the VMP report
should be completed and the VMP fee will be paid.

COMPARABLES
Valuers should complete site notes to record their observations during the External Inspection and
comparable evidence used to support the valuation should be recorded.

REPORTING
The address and references should be mapped in from Quest together with the estimated value and
advance required. The External Inspection Valuation report is a short form requiring minimal input.

Section 1 – Tenure – Complete basing the valuation assumption on the information contained in the
instructions.
Section 2a and b - Property Type and Style – Complete appropriate boxes.
Section 2c – Select either Yes or No based on observation.
Section 2d – Year of Construction – This may be in the instruction, but valuers should use their own
knowledge and observation and provide approximate year of construction.


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Section 3 - Flats/Maisonettes only - Should not be completed as flats/ maisonettes are excluded from
this service. (This section has been included now to prevent the need for future system development if
External Inspection Valuations are used for flats in the future for this or other products.)
Section 4 - External Finish – Insert type of main wall and roof finish as visible from public land.
Section 5 – Accommodation - Insert number of bedrooms as provided in the instructions. Where the
valuer believes this to be incorrect, they should upgrade the instruction to a VMP.
Section 6 – Garage/parking - Select the most appropriate box. If provision of garaging/parking is not
apparent, leave this section blank
Section 7 – Location – Select appropriate box.
Section 8 – Saleability – Select Yes or No. If the answer is ‘No’ do not provide a valuation. Valuers
should upgrade to a VMP where they have serious doubts about saleability.
Section 9 – Valuation - Complete approximate Market Value in figures and words.
Signature – This section of the form should be completed in full. The name and qualification of the
inspecting valuer should be completed together with their RICS number, panel number and surcode.
Valuer Alerts have been incorporated in the EIV report.

SPEED OF SERVICE
The speed of service for External Inspections is three working days.

FEES
If an external inspection is upgraded and a VMP is undertaken, the normal VMP scale fee will be
payable. However, the customer will not be charged for the upgrade.

In the circumstances of an upgrade only the VMP fee will be paid.

SPEED OF SERVICE for upgraded reports

It is recognised that if the valuer has attempted an External Inspection and then decides that a full VMP
is required, it may be difficult to meet the speed of service requirement.




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        Buy to Let Supplementary
                  Sheet


                         Guidance Notes for

                              Valuers




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BUY TO LET SUPPLEMENTARY SHEET

GUIDANCE NOTES FOR VALUERS

Introduction

These notes relate to the re-inspection form introduced in January 2010. The form can be recognised by
the reference Rev.C 01/10 in the bottom left hand corner.

Background

Transitional Valuation Arrangements

A Buy To Let Supplementary Sheet has been developed for use with a standard Valuation for Mortgage
Purposes or the Re-valuation report for additional borrowing.

The Supplementary Sheet has a Quest form reference ABK and will appear in the drop down list of
Santander reports on Quest systems.

The Supplementary Sheet will need to be manually created in addition to the valuation report. Both the
valuation report and the supplementary sheet will need to be signed off individually by valuers.

The valuation report and the supplementary sheet should be attached to the same case record, i.e. it is
not necessary to create a separate Quest record for the supplementary sheet.

Completion of the Supplementary Sheet

The VMP or Revaluation report should be completed in the normal way. The valuation should be
provided on the basis of vacant possession unless specified to the contrary in the instructions.

The Buy to Let Supplementary Sheet will not be disclosed to customers. It contains additional questions
which will be used exclusively by Santander’s underwriters.

     1. Rental Property Questions

               a) Is there reasonable demand for rented property of this type in the locality – Yes/No?

                    Based on their experience of the rental market in the area, valuers are asked to indicate
                    whether they believe there is reasonable demand from potential tenants for this type of
                    property.

               b) Is the property suitable for letting/ investment – Yes/No?

                    Valuers are asked to indicate whether the property is suitable for letting, i.e. not too small,
                    not too large, etc.

               c) Is the proposed/passing rent in line with the current market – Yes/No?

Buy to Let applicants will be asked to confirm the level of the passing rent or to provide an estimate of
what rent they believe to be achievable. This figure will be provided in the valuation instructions and
valuers are asked to use their local experience to provide an opinion as to whether the figure is in line
with the current rental market. If the proposed/passing rental figure is not considered to be in line with
market, or if a rental figure is not provided in the instructions, valuers are asked to provide their estimate
of the current rental value of the property. The basis of the rental valuation should be unfurnished.

Is there any evidence currently of multi-occupation or, if currently vacant, does the accommodation
layout suggest that the property will be multi-occupied – Yes/No?


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Valuers are asked to use their judgement and experience to alert Santander to the potential for multi-
occupation, e.g. bedsit arrangements, numerous kitchens and bathrooms, sub-division into self-
contained units, etc.

Comments

This section provides a space for valuers to draw the attention of Underwriters to any other issues which
might be relevant to the lending decision.

Sign-Off

It is vital that valuers sign off the Supplementary Sheet on Quest as well as the VMP. The two are
separate reports on the same case record.

Speed of Service

Speed of service for Buy to Let valuations is the same as that for normal VMPs




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SECTION 7 – PANEL FIRM ISSUES



       VALUATION ADMINISTRATION BY E.SURV …………………………..…… P69


       CONDITIONS OF PANEL APPOINTMENT ………….………………………. P69


       CHANGE OF ADDRESS, TELEPHONE NUMBERS, ETC ..……………….. P69


       CANCELLATION OF INSTRUCTIONS…………………….………………….. P69


       QUALITY CONTROL ..…………………………………………………….…….. P70


       COMPLAINTS ……………………………..……………………………………… P70


       FEE PAYMENT ………………………………... ………………………………… P70




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VALUATION ADMINISTRATION by E SURV

Panel valuer administration is carried out by:

Esurv Ltd
Lahnstein House
Gold Street
Kettering
NN16 8AP

Tel: 01536 534034 (Option 1)
Fax: 01536 511560
E Mail: santander@esurv.co.uk


CONDITIONS OF PANEL APPOINTMENT

Panel valuers are asked to sign an agreement setting out the terms and conditions of their panel
appointment. Checks will be carried out prior to panel appointment on the quality of panel valuers’
reporting.

The following are some of the principal conditions, but the full set should be consulted (see
Appendices):-

    Santander requires that its inspections and valuations must be carried out by Chartered Surveyors.

    Appointments are made for specific post code areas; panel valuers may only operate for Santander
     within these locations.

    Reports must be personally signed by the inspecting valuer and include his/her professional
     designation. Reports must not be inspected by a non RICS qualified member of staff and signed off
     by a superior.

    Appointment to Santander’s Residential Panel of Valuers vests in the corporate body of the firm, not
     in any individual partner, director or employee. Thus panel appointees must satisfy themselves as to
     the knowledge, experience and competency of any employee carrying out work on behalf of
     Santander.

    All firms must carry valid professional indemnity cover of at least the minimum required by the RICS.
     A copy of the renewal certificate should be forwarded to the Santander Panel Management team
     Propertyrisk.panelmgmt@santander.co.uk .

CHANGE OF ADDRESS, TELEPHONE NUMBERS, ETC

Please inform the Panel Management Team in Milton Keynes Propertyrisk.panelmgmt@santander.co.uk
Fax 01908 347025 of any changes to a panel appointee's name, address or telephone number. Each
panel appointment is identified by the unique Registration Number and Surcode, which should be quoted
in all contact with Santander.

CANCELLATION OF VALUATION INSTRUCTIONS

If valuers are asked to cancel an inspection prior to commencing the inspection, they should advise
Esurv and await further instructions. The fee will not be paid.

If a request to cancel an inspection is made after completing the valuation, the valuer is normally entitled
to the fee.




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QUALITY CONTROL

The quality control of panel valuer reports is intended as a positive exercise, designed to provide
feedback to valuers and guidance as to compliance with Santander’s guidance standards.

During the course of each year, panel valuers may be contacted by Santander’s Quality Control Team
and requested to provide copies of:-

- Selected reports together with site notes.
- The original inspection instruction.
- Justification of value evidence used/logged in support of the valuations provided.

COMPLAINTS

Complaints against panel valuers may originate either pre or post completion and involve either the
borrower/applicant or Santander departments.

When a complaint is received about an inspection/report carried out by a panel valuer, Santander
Central Complaints Team will forward details of the complaint to the valuer who is requested to comply
with the following procedure:

- Acknowledge receipt directly to the complainant or his/her Solicitors within 48 hours.
- Inform PI Insurers, if appropriate.
- Take appropriate steps, without any delay, to investigate and resolve the complaint, if necessary with
  re-inspection of the property.
- Respond to the complainant or representatives either directly or as instructed by PI Insurers.

The Central Complaints Team at Milton Keynes or our Panel Manager, e.surv, will maintain a watching
brief to ensure that neither Santander nor its customer(s) are disadvantaged by the failure of the valuer
or their PI Insurers to handle the complaint fairly and expeditiously.

FEE PAYMENT

Scale of Fees

Santander publishes valuation fees for each report type and a copy of the current fee payable to panel
valuers can be obtained from Santander’s Panel Management Team at Milton Keynes
Propertyrisk.panelmgmt@santander.co.uk. The fees paid by customers for new applications include a
non-refundable administration fee which is not passed on to the valuer. The fees quoted in the scale of
fees are inclusive of VAT.

Fee Payment Procedures

Esurv Ltd has the responsibility for fee payments to panel valuers. Esurv have issued their own
guidance about the process to be followed for fee payments for work done. It remains essential that
valuation instructions must only be accepted from Esurv by Quest SPN (and not directly from branches,
mortgage centres, or third parties such as mortgage introducers). All reports must be returned by Quest
SPN.

Property Sales Valuations

Valuations undertaken on behalf of Santander’s Property Sales department (dealing with the sale of
properties in possession) are subject to a separate instruction and fee payment system.

Staff Relocation Valuations

Valuations undertaken for Santander’s staff relocation scheme are also subject to a separate, non-
Quest, instruction and fee payment system. Each instruction will be accompanied by a letter from
Relocations Department asking for an invoice to be returned with the report.

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SECTION 8

Appendices:


SANTANDER REPORT FORMS


VMP




Revaluation




External inspection (EIV)




Re-inspection




BTL




Santander Standard Phrases




GENERAL CONDITIONS TO THE APPOINTMENT OF THE RESIDENTIAL PANEL




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