Which survey and why?
Monday, June 20, 2016
You’ve found your dream home, but before you get completely carried away, make sure the property is structurally sound and is not going to be a complete money pit. According to The Money Advice Business, 20% of homebuyers rely solely on a mortgage valuation report. Often buyers are seduced by the charm of a property, overlooking the pitfalls of cracks, peeling paint, loose tiles and poor plumbing.
At a time when you’re already investing a great deal of money, a survey may appear an unnecessary expense, but a few hundred pounds spent on a survey could save thousands of pounds and emotional angst down the line. It may even allow you to renegotiate the purchase price or withdraw from a purchase that would have been financially disastrous. By being aware of any issues before you buy a property, your head can rule your heart enabling you to make an informed decision about the purchase and, if necessary, budget for repairs work that will need doing once you complete.
If you need a mortgage, your lender will usually insist on a Mortgage Valuation Report to ensure your desired property is worth the price you’re paying – or at least the amount it’s lending – before they approve your mortgage. A valuation is just that - a surveyor will check the property and assess the value based on its general condition, the value of homes recently sold in the area and the buoyancy of the housing market. You may not receive a copy of the report and are advised instead to get your own survey. Both the Consumers’ Association ‘Which?’ magazine and the Council of Mortgage Lenders give this advice because the mortgage valuation report is prepared for your lender – not for you. It answers the lender’s questions about whether the property offers suitable security for your loan but not questions that concern your personal interests or details of the property’s condition.
The Royal Institution of Chartered Surveyors (RICS) offers a range of inspection reports. There are two main survey types, which are recognised by RICS – a Homebuyer Report or a Building Survey and both are carried out by chartered surveyors. You will need to choose the right survey for your needs; ideally one that’s based on the condition of the property, not on the cost of the survey.
When you employ a RICS surveyor directly you will be issued with a survey report, and own the details of the survey, allowing you to negotiate accordingly. Frosts surveyors are members of The Royal Institution of Chartered Surveyors (RICS), qualified to carry out reports and surveys on residential property and land but do not survey any properties sold through The Frost Partnership due to conflict of interest. They will be pleased to act for you when you purchase in any other circumstances.
The RICS Homebuyer Report identifies what the surveyor considers to be the key issues. By applying condition ratings to elements of the building, the services, garages and permanent outbuildings, the surveyor will tell you whether defects are serious or urgent. It includes an opinion of the market value and reinstatement cost (which you will need for insurance purposes) and focuses on matters that may affect the value of the property if they are not dealt with.
The survey is designed to help you decide whether or not to go ahead with buying the property, what is a reasonable price to pay for the property and allow for any repairs the property needs. It will determine whether you need further advice before exchanging contracts.
The RICS Building Survey is more suited to properties needing renovation, major alterations or those not built using modern or traditional methods of construction. For these kinds of projects, a full structural survey or building survey is required. It highlights major issues, as well as minor defects and the cost of repairs, technical information on the construction of the property, the materials used, plus the location. It doesn’t look beyond the floorboards or behind the walls. Some homebuyer’s reports include a property valuation, so you may be able to revise your offer if the survey reveals a lower price than the mortgage lender’s valuation.
In the event that your RICS Homebuyer report or RICS Building survey uncovers problems, don’t panic! Most surveys find some issues, especially in older properties. The most common issues include damp, roofing, central heating faults, electrical installation; complications which will need the services of additional contractors. If structural faults are found this may require further advice from a structural engineer. Find out if any problems are still under a guarantee, calculate the cost implications and use any estimates to renegotiate the price or ask the seller to fix the issues before you complete the purchase. Bear in mind that it’s not just about cost but also the upheaval of repair work.
In addition to RICS Homebuyer Report and RICS Building Surveys, The Frost Partnership surveyors can also offer advice in respect of: access rights and boundary disputes, expert witness reports, building replacement cost reports, lease extensions, valuation reports for matrimonial and probate/inheritance tax purposes, party wall matters, compulsory purchase, and schedules of dilapidation and condition. For more information click here or email email@example.com .