Westpac tightens rules for off-the-plan purchases
As lenders continue to tighten the rules around lending to investors, Westpac has added new rules around purchasing off the plan.
After a round of lenders tightening the belt on investor lending last week, Westpac has chosen to make some changes to lending criteria around off-the-plan purchases. Purchasers looking to purchase an apartment off the plan will be required to wait for an in-person valuation before getting final loan approval.
According to the Australian Financial Review, Westpac will introduce new rules that will require a valuer to inspect the physical property as soon as occupational health and safety rules allow, typically a few weeks prior to completion.
“A property must be completed before the valuer can physically inspect and complete the valuation,” a confidential Westpac document stated, according to the AFR.
Previously, banks would offer approvals based around reviewing the properties plans and looking at the prices of the surrounding area and other similar properties. Off-the-plan properties would typically have two valuations; one that offers conditional approval when reviewing the plans and possibly visiting the display, and then a final valuation upon approval.
Tony Kelly, managing director of Herron Todd White, was reported by the AFR as saying tougher inspections will guarantee quality and boost industry standards.
The report did note that there could be issues if the completed apartment’s value is less than the original price, whether this is due to market changes or construction issues. Industry experts who didn’t want to be named told the AFR display fixtures and finishes can often be of higher quality than the finished product.