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Friday, July 17, 2009

Death of BMV and NMD

What does BMV, NMD mean, is it some kind of government defence initiative. Well for the uniniated BMV is Below Market Value and NMD is No Money Down deals. Both were creations of an overheated buy-to-let mortgage market where landlords could buy property and then immediately remortgage finance at a higher value than the initial purchase price.

I've recently argued that BMV is dead because surveyors will now only value a property by taking open market value (OMV) as what ever the price the property was sold for however, much of a bargain a landlord thinks they have been able to secure.

I recently started a raging debate on this forum by suggesting that BMV was dead.

It appears that there are a lot of people who disagree. It is an interesting debate and revealing not least in the respect that those people that seem to have the most to say are also the ones that have a large interest in flogging so called BMV properties to unsuspecting landlords. Funny that!

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1 comment:

Nick Pope said...

Not dead but poorly sick!

As a surveyor and valuer potential landlords should be aware that the lenders (via the CML) now insist on developers providing full details of any incentives and if these are over 5% appropriate deductions will be made. In addition the new RICS Red Book strongly advises the use of second hand sales of similar properties and that comparable evidence on the same site should be considered with extreme care.

In addition lenders require confirmation of a reason why a back to back sale or re-mortgage within 3-6 months is at a significantly higher price than the original. Valuers are naturally cautious wishing to avoid negligence claims and need vey strong evidence. However professionally we should value at open market value and a previous sale of the same property is not always a reliable guide.

As a landlord as well I am taking the view that in the short term picking up cheap re-possessions is the way forward but only to hold not to make a few pounds on a turn.

It may sound a trifle arrogant but I don't think this is the time for "amateurs" to get into the market.

Nick P