House buying? Why have a survey?
The media is awash with coverage of recent flooding, and the suggestions that insurance companies may no longer offer flood cover. Consequently, signs and chances of flooding have become a widespread concern for home movers.
However, a residential property survey has always been a crucial part of the home buying process, and your conveyancer will almost certainly advise you to have one carried out whatever the age of the property. This includes new builds, in case the builder has carried out shoddy work that all mounts up to a general inconvenience discoverable only once you have moved in. Conveyancers may be negligent if they do not warn of the need for a survey. Indeed, the Council of Mortgage Lenders (CML) handbook, which conveyancers must comply with when a buyer is proceeding with a mortgage, specifically states (our words in square brackets) that:
“We recommend that [the conveyancer] should advise the borrower that there may be defects in the property which are not revealed by the inspection carried out by our valuer and there may be omissions or inaccuracies in the report which do not matter to us but which would matter to the borrower. We recommend that, if we send a copy of a valuation report that we have obtained, you should also advise the borrower that the borrower should not rely on the report in deciding whether to proceed with the purchase and that he obtains his own more detailed report on the condition and value of the property [i.e. a survey], based on a fuller inspection, to enable him to decide whether the property is suitable for his purposes.”
You might think it obvious to have a survey carried out, as people pay for inspection of a second hand car, so why not for a house costing hundreds of thousands of pounds? This is all the more highlighted by the fact that property buying in England and Wales is governed by the Latin maxim ‘caveat emptor’ (‘let the buyer beware'). As a result, the state and condition of a house is the buyer’s responsibility to inspect and make sure they are happy with it before committing to an exchange of contracts. Having a survey should help identify issues with a property that could turn out to be very expensive to fix after it is too late and the sale has gone through.
However, research by the Government working group MORI seems to suggest that a vast percentage of people fail to have a survey, whether because of the cost, the confusion of how to go about organising one, who to use, a belief that the property ‘looks’ fine, or the assumption that the lender’s basic valuation acts as a survey of the property, which is in fact is not at all the case.
The consumer group Which? Is reported to have carried out research (via a test group) in 2008 that of those home buyers who did not opt to have a survey, one in four ended up having to spend more than £2,500 to correct serious issues that would have been uncovered in a survey, and for one in ten, the cost of fixing the problems that the survey would have uncovered was over £10,000.
The good news for those reluctant to have a survey is that a survey can be produced to a seller with a request that the property price is lowered to cover the works. The Which? research found that such buyers were able to negotiate a reduction in the price of the property to account for the problems, averaging around £2,000.
So what are the choices? To start with, our advice is to only employ a RICS Chartered Surveyor, and insist that the person inspecting is indeed a Chartered Surveyor.
Then, in terms of the actual survey, there are simply three choice/types:
1. Condition Report
This simply describes the condition of the property, with a basic summary of any risks and potential legal issues. It uses simple ‘traffic light’ ratings to clearly highlight the condition of elements of the property.
2. HomeBuyer / HomeSurvey
This remains the most popular report for property buyers. These are various names given to this survey designed for a relatively modern property of conventional construction, being cavity brickwork or timber framed walls under a tiled or slated roof. This is more detailed than the Condition Report and includes all the coverage of a Condition Report, plus a separate market valuation and advice on any defects that may affect the value of the property and recommendations for repairs and ongoing maintenance.
3. Building Surveys
This is a very comprehensive report providing information about the fabric and condition of the property, as well as defects, repair and maintenance advice. The surveyor may be able to provide an estimate of repair costs and a valuation as separate services.
Typically, this survey is undertaken when dealing with a larger, older, run-down or unusual property, or if you are planning major works. Alternatively, this is the most thorough survey if you simply want more information than the HomeBuyer / HomeSurvey.
Commenting in the area of surveys, Christopher Green of Christopher Green & Associates in Fordingbridge, Hampshire says, "As a surveyor with 30 years in the field I have always believed the maxim, any job worth doing should be done properly, and to that end I will only do two types of survey. They are both full and detailed inspections of the house being purchased but the HomeSurvey is as Tim has said for buildings of cavity brick construction which started being built in large numbers in the late 1800's. The survey is comprehensive and the report will cover all the potential problems which vary with the age of construction. Prices start around £450+vat which to be honest is not that expensive when you consider that even a small defect will cost several hundred pounds to put right or more.
The Building Survey which used to be called a Structural Survey is for buildings constructed before the late 1800's as they will be of solid brick or stone, cobb or early timber framing and may have a thatched roof or old roof frame which requires a very particular type of inspection and report. These surveys can take a couple of days and will cost from £750+vat.
Personally I would avoid the Condition Report as they tend to be undertaken by unqualified surveyors or those with little experience. I know of individuals who claim to be professional surveyors but have no formal qualification as a chartered surveyor. The traffic light system in my view is unhelpful and can be misleading to those who don't understand it.
I would always recommend talking to your surveyor personally before the survey and discussing exactly what it is you want. If you find you understand the surveyor and they are helpful then they will be an asset in the complicated buying process."