The Property Survey – A Misunderstood Necessity
Thursday 27th October 2011
Specialist residential surveyor and valuer Geoffrey Milnes of Andrew Granger & Co (www.andrewgranger.co.uk explains the misconceptions that buyers have about surveys and valuations and clarifies their differences.
In these austere times, with public spending cuts, the ever present threat of unemployment and banks demonstrating an increasing reluctance to lend, no one has money to waste. House vendors are cutting prices to attract interest and purchasers are haggling more fiercely than ever before, looking for ways to get their dream property at minimal cost. However, whilst buying a house is the most expensive purchase most of us make, many people do so with alarmingly little information about the property. Buyers tend to rely on the relevant professionals to take care of everything and many see the survey as an unnecessary extravagance at a time when they are paring costs to the minimum. In fact, many people put more time and research into buying everyday items like a sound system or a washing machine than they do buying a house. Many of those very same people then live to regret the fact that they didn’t have a proper independent survey carried out before committing to buying.
Misplaced trust
The first misconception that many buyers have concerns the mortgage company valuation. It is commonly believed that, if the mortgage company have given an application the go ahead, then everything must be satisfactory. However, in reality the valuation process may involve simply asking a valuer to drive past the house in question to see if it looks OK, or carrying out a computer check to see if the price matches up with changes in the house price index.
What buyers tend to forget is that the mortgage company carry out a valuation, not a survey, and that this is for their own lending purposes and not for the buyer to rely on as a statement of condition. The buyer is given a copy of the report as a courtesy but the information is limited, and no advice is given about repairs, any legal issues or the significance of any problems. Other than on the question of value, there is very little comeback on the valuer if the buyer finds a problem with the house post purchase.
Neglecting the survey and counting the cost
The Royal Institution of Chartered Surveyors (RICS) recently carried out research which suggests that homebuyers are losing thousands of pounds by neglecting to have a proper survey prior to purchase*. The reasons for this vary, but include issues with cost and misconceptions about what the valuation report actually shows. But, despite these times of austerity, cutting financial corners can have significant financial implications for purchasers. The RICS research concluded that a quarter of all homebuyers who only had a mortgage valuation report had to make unplanned building works to their property after purchase. The average costs of these works came to £1,818 – and in some cases were even higher. The survey also found that 58% of respondents erroneously believed that a valuation report included an assessment of the building’s condition and a search for damp and structural movement.
A solution to the problem
The RICS has addressed these misunderstandings by producing the ideal survey – the HomeBuyer Report – which provides an easy to read, understandable breakdown of a property’s condition, advice on the urgency of any repairs needed and helpful information for the conveyancer. It also indicates whether the house price is realistic. The inspection is carried out by a chartered surveyor who is working for the buyer and is responsible to them for the report and its contents. The surveyor will carry out a thorough inspection of those areas of the house it is reasonable to get to. That includes the roof space and lifting manhole covers as well as all the other elements of the house. If the surveyor can’t get to some areas, the buyer will be told. The cost of the report varies depending on the size and price of the house, but is usually in the region of £300-£600+vat. With the average house price hovering at around £170,000, it’s a pretty shrewd investment for that dream property.
The right survey for the right property
If the house is very large, very old or very expensive, it may be that a building survey is more appropriate. This is a much more detailed inspection and report, giving a breakdown of any defects, their likely causes and probable remedies. A valuation can be included if required. The level of inspection is much more detailed, as is the report, and therefore the costs are higher. Typically they will start at around £650+vat, and can be as much as £2000-£3000+vat for the very large properties with land and outbuildings. In this instance it’s advisable to obtain a firm quote by talking to a chartered surveyor before instructing the survey.
Too many purchasers take too little time to discover just what they are buying, and often end up paying for significant repairs after they have moved in. Frequently, the cost of these is usually much more than the price of the survey they should have had. If nothing else, a survey offers peace of mind that the house is in good order with no major problems, and appropriately priced. More importantly, a survey carried out prior to purchase highlights any significant defects and can help the buyer avoid the cruel irony of an expensive post purchase nightmare resulting from the desire to cut corners and costs.
*Survey conducted for RICS by GfK NOP Business. 1,001 online interviews were carried out in August 2010. Respondents had either bought a property in the last 12 months or were considering doing so in the next 12 months.
About the author
Geoffrey Milnes BSc. FRICS, Dip HI has over 30 years’ experience as a specialist residential surveyor and valuer. Formerly Associate Director with Countrywide Surveyors, Geoff now works in the Professional Services team at one of Leicestershire’s largest estate agencies and chartered surveyors, Andrew Ganger &Co (www.andrewgranger.co.uk).