MRT1 · Mortgage Law, Practice and Application
MRT1 tests whether you can read a valuer’s comments and predict what the lender will do: lend, retain, down-value or decline. You also need the legal issues that change what the security is worth: tenure, lease length, easements, covenants, planning and building control, flood and subsidence, listing and insurance. Most questions give you a property and a problem and ask for the consequence, so learn the cause-and-effect, not just the definitions.
10 min read6 sections
Checked against: Walbrook (formerly LIBF) CeMAP qualification specification v14, MRT1 LO9 (AC9.1-9.4) and LO10 (AC10.1-10.6); Law of Property Act 1925 s1; Leasehold and Freehold Reform Act 2024 s27; Leasehold Reform (Ground Rent) Act 2022; Building Safety Act 2022 ss117, 119, Sch 8; Town and Country Planning Act 1990 ss91, 171B; RAO 2001 art 61(3) (legislation.gov.uk), checked 11 Oct 2026. Independent prep, not endorsed by Walbrook (formerly LIBF).
The spec (MRT1 AC9.1) expects you to name a defect from its signs. Learn the pattern, because the stem describes symptoms and asks for the cause.
| Defect | Tell-tale signs | Usual remedy |
|---|---|---|
| Rising damp | Tide mark up to about 1 m, salts in plaster, no or failed damp-proof course | Install or repair a damp-proof course, re-plaster |
| Penetrating damp | Patches near a leak: below gutters, around windows, under defective roofs | Fix the source: gutters, pointing, flashing, roof |
| Condensation | Black mould high in corners and on window reveals, worse in winter | Ventilation and steady heating, not building work |
| Subsidence | Tapering diagonal cracks from openings, widening in dry summers, clay soil, nearby trees | Structural engineer, monitoring, root or drain work, sometimes underpinning |
| Heave | Upward movement as clay swells, often after a large tree is removed | Structural engineer; design for movement |
| Settlement |
Every note. Every question. One pass.
4 more sections of this note are part of Premium.
From ≈£2.72/mo on the Until-you-qualify pass (18 months)
| Movement from the building’s own weight, usually early in its life |
| Often none if stable; usually excluded from insurance |
| Dry rot | Musty smell, cotton-wool strands, fruiting bodies on damp timber | Specialist timber treatment, remove the damp source |
Non-standard construction matters too. Designated defective prefabricated reinforced concrete houses (Housing Act 1985 Part XVI), such as Airey types, are declined by most lenders unless repaired under an approved scheme and certified. Modern timber frame with a brick outer skin is generally accepted.
Japanese knotweed is a lending issue, not an automatic decline. Lenders that will lend typically want a professional management plan, often with an insurance-backed guarantee. Dumping it in household waste is unlawful, and causing it to grow in the wild is an offence (Wildlife and Countryside Act 1981 s14).
Trap: Candidates confuse subsidence (the ground moves) with settlement (the building’s own weight). Insurers normally cover subsidence, heave and landslip but exclude settlement.
Takeaway: Read the symptoms, name the defect, then ask what report the valuer will want before the lender decides.
A lender only cares whether the property is adequate security. A defect can lead to one of four outcomes (MRT1 AC9.2 and AC9.3):
A retention reduces the money released at completion. If Sam borrows £240,000 with a £15,000 retention, the lender advances £225,000 on the day and Sam must find the other £15,000 himself, then pay for the work.
A down-valuation cuts the loan because lenders lend on the lower of price and valuation. At 85% LTV, a £260,000 purchase valued at £240,000 supports a loan of £204,000, not £221,000.
Trap: Treating a retention as extra money for the works. It is part of the agreed loan, held back.
Takeaway: Minor defect, lend. Costed defect, retain or require works. Unknown or serious defect, defer, down-value or decline.
