Lender design stance just hurts buyers: iBuyNew's Mark Mendel

GUEST OBSERVER

Lenders failing to provide off the plan apartment purchasers with a funding pre-approval which lasts until settlement could prove costly for thousands of buyers in Victoria.

Victorians who bought off the plan apartments scheduled to be completed this year face losing their deposits due to new design standards requiring more space.

The big four banks have made a policy in line with the new standards by refusing to lend for one-bedroom apartments smaller than 50 sqm.

The situation is unfair as banks had applied different standards for the developers of the apartment projects.

If banks are prepared to fund a development for construction then they should take the same stance on providing finance when it comes to the buyers of those off-the-plan apartments.

Many Melbourne apartment projects due to be completed in 2017 were designed in 2014 or prior, before the discussions about the new designguidelines had even been made public.

The banks should be offering to fund the buyers of those apartments under the same policy that exists when the construction started.

Buyers of off-the-plan apartments should be able to go to the bank that funds the construction and take out a pre-approval that will last them until settlement.

This reduces a part of the risk for the buyer as they don’t have finance risk. It also reduces problems for the developer as they don’t have settlement risk and overall it’s a win/win situation for the bank.

Mark Mendel, is founder and chief executive officer of iBuyNew.com.au and can be contacted here.