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A Guide to Surveys

Introduction

Many people don’t bother to commission a survey when buying a property, either because they feel they cannot afford one in addition to all the other costs of moving, or because they don’t think one is necessary.

There are, however, sound reasons for not skimping on a survey – among them:

• You will want to be confident that the property you are buying is in a good structural state and so represents a solid investment

• You will not want to be faced with bills for structural repairs shortly after you have shelled out purchase costs and, quite possibly, stretched yourself to your financial limits with mortgage repayments

• A survey may, if it uncovers serious problems, enable you to negotiate a reduction in the purchase price that will more than cover the surveyor’s fee

In a property that is new enough still to be covered by a structural warranty, the risk of major defects should be slight, and any such problems should be dealt with under the warranty. For most other properties, however, a survey is advisable.

The different survey options are explained below. A chartered surveyor can advise you on the type best suited to the property you are buying.

Types of survey

There are three levels of survey:

1. Valuation for Mortgage Purposes – commissioned by your lender to ensure that the property provides adequate security for the loan

2. Homebuyer Survey – suitable for most properties of conventional construction that are less than 75 years old

3. Building Survey (or Structural Survey) – generally recommended for:

  • Older properties
  • Properties of unusual construction (timber-framed, thatched, etc)
  • Properties that have been badly neglected
  • Properties to which the purchaser intends making significant structural alterations

    Valuation for Mortgage Purposes
    In assessing current market value, the valuer will examine such factors as the property’s construction and general state of repair, its tenure, and its location. The resulting report will not guarantee that the property is structurally sound and without defects.

    If, in the valuer’s opinion, the property is worth less than the amount you propose to borrow, your lender may grant a smaller loan, or refuse a loan altogether.

    Even if the valuer considers the property to be worth a satisfactory amount, he or she may advise the lender not to make a loan unless certain work (such as treatment for damp) is carried out, and may recommend that part of the loan be withheld until the work is done. Known as ‘retention’, this may be a problem if you are on a limited budget. However, don’t give up just yet: you may be able to renegotiate the purchase price with the vendor.

    The fee for the Valuation for Mortgage Purposes will be included in the cost of setting up your mortgage.

    Homebuyer Survey
    In many cases, the lender’s valuer will carry out a survey for the buyer on the same visit.

    A Homebuyer Survey is a halfway house between a valuation and a Building Survey, and many people choose this option. The surveyor’s report (which follows a standard format) comments on the condition of parts of the property that are readily visible and/or accessible, and assesses market value. Recommendations for further inspections or tests (of wiring, drains, and so forth) may be included.

    Although the surveyor will go into some detail, he or she will not carry out a full examination of the property, and the report will contain numerous exclusion clauses.

    The fee for a Homebuyer Survey depends on the property’s value. Between £250 and £500 is the norm.

    Building Survey
    This is the most comprehensive type of survey. The amount of detail will vary according to your instructions and budget, but, as well as commenting on the construction of the property and the materials used, the surveyor will report on all defects, their implications, and the probable cost of rectifying them. He or she may recommend further specialist investigations or tests.

    In the case of a flat or maisonette (particularly if it is in a conversion), the survey should include an inspection of the entire building (roof, foundations, drains, and so on) plus any communal services such as electricity, gas and water, to the extent to which you would be liable under the terms of the lease.

    It will be impossible for the surveyor to see everything – for example, much of the wiring will be hidden under floors and behind skirting boards. The inspection may also be limited by the vendor, who must agree before certain things (such as disturbing fitted carpets) can be done.

    The report will be extensive and may appear alarming. Don’t hesitate to seek clarification where necessary: the surveyor should be able to put any faults into proper perspective. If serious defects are revealed, you can ask the vendor to reduce the price by the amount needed to put them right, but he is not obliged to do so.

    The cost of a Building Survey varies according to such factors as the size and value of the property, its condition, and the amount of detail required. Around £500 – £1,000 is usual.

    Finding a surveyor

    The person you instruct should be an associate or fellow of the Royal Institution of Chartered Surveyors (RICS) – designated by the letters ARICS or FRICS after his or her name – and a building surveyor (as opposed to a general practice surveyor).

    Because of possible conflict of interest, the firm of estate agents/surveyors representing the vendor is not allowed to act for you. Ask your solicitor to recommend a surveyor, or try personal contacts who have bought property recently. Alternatively, you can search for details of RICS members in different areas at
    www.rics.org
    Fees vary, so it’s worth getting more than one quotation.

    Last Word

    It’s true that some people who have crossed their fingers rather than commissioning a survey have discovered no major structural faults subsequently. Others, however, have not been so lucky.

    Perhaps the question one should ask oneself is not whether one can afford to have a survey done, but whether one can afford not to.


    More pages

    Page 1: Introduction

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