How to choose the right property survey
Every year, nearly a million people buy a property to live in or to rent out to tenants - yet many do so without having an independent survey or even a check to see if the property is safe to live in.
There are many reasons why people don't get a survey on a property. Some buyers feel it's an added expense at an already expensive time. Others think that as they are buying a new-build property, it's unnecessary. And some just believe the surveyor is in cahoots with the agent or developer, so there is no point paying for their service.
The reality is, the person who carries out the survey for you is one of the few people involved in the buying process who is solely on your side. Unlike the agent you buy through, the lender who gives you your mortgage or the insurance company, a thorough survey on your property means you have one person to call if there is a problem with the property of which you weren't aware. Without them, you are very much on your own.
Depending on which level of survey you choose, the surveyor may advise on:
- Checking the condition of your property
- Current or future minor and major repairs and costs
- Identifying how much it would cost to re-build the property for insurance purposes
- Giving an independent view on the property's value
- Advising of any further checks the property will require.
Considering that the time when we buy a property tends to be an emotional one – when getting married or having children, for debt reasons or downsizing – it's wise to have a second opinion on such a momentous purchase over and above a mortgage valuation for the lender, so you are fully aware of the property's pros and cons.
The right survey for your property
There are five different levels and types of surveys to consider when buying a home. Some are unavoidable, such as mortgage valuations. Others, although not a legal requirement, are worth considering to verify the condition and safety of the property.
Mortgage valuation (from £100)
This is often considered by buyers as the equivalent to a survey – but it isn't. Although you may pay for it, it protects your lender. If the report doesn't highlight a problem, there is no comeback. It is purely a lender's check that the property you are buying is as described. A mortgage valuation is carried out by a member of the Royal Institution of Chartered Surveyors (RICS).
Snagging surveys (from £100)
If you are buying a new-build, it should have passed building regulation inspections and have a certificate from an insurance company such as Zurich or the National House Building Council. This doesn't mean it doesn't need checking, though.
A snagging survey looks for mistakes made by building contractors, such as poorly painted walls, missing screws on door hinges and wonky switches. The benefit of this survey is that by ensuring on exchange that completion is subject to fixing any problems highlighted in a snagging survey, the developer would need to put these things right to get their money.
Home condition report (from £250)
This survey is for anyone buying a property that appears to be in 'good condition' but would still benefit from being checked for potential problems you may not see, such as hidden damp, woodworm or structural movement. The report will help cost likely future repairs.
It should highlight the legality of alterations and additions made to the property and estimate how much the re-building costs are so you can secure a quote for buildings insurance.
A home condition report can either be carried out by someone who is a member of The Residential Property Surveyors Association (RPSA) or by a qualified member of RICS.
Homebuyers report (from £300)
A survey of this nature is typically for properties that have been built since the Victorian age. The report will mirror the Home Condition Report and include advice and possibly an independent valuation of the property.
If the value of the property suggested is less than you have offered, don't panic; it doesn't mean you have to pull out of the sale. Talk to the surveyor about how easy and expensive it will be to fix any problems. Use this information to negotiate the price down and if the seller won't budge, consider whether to carry on buying or pull out. Your surveyor will be experienced with these negotiations, so use them to help you.
A homebuyers report can only be carried out by someone who is a qualified member of RICS and any surveyor giving a valuation has to be signed up to RICS' Valuer Registration.
Building survey (from £500)
This survey is vital for older character properties and properties of 'non-standard' construction such as timber. It's also wise to have this survey if you are planning major works such as a loft conversion or extension.
A building survey looks in great detail at the condition and any defects the property may have and potential to extend. If agreed, the surveyor would also give detailed costings of rectifying problems.
A building survey can only be carried out by someone who is a qualified member of RICS.
What other reports should you have?
An electrical and gas survey is essential if the property is more than 25 years old or there are bare wires showing. It is especially important if you plan to rent out the property as you will need safety certificates to do so legally. Some companies run specialist home services reports that cover your gas, electrics, plumbing and heating, with costs from around £200.
"With many properties built before the Second World War, it is vital to make sure gas and electrics are safe before you or a tenant moves in," says John Davidson from Gas-Elec. Your surveyor may also suggest you consult other experts such as a structural engineer, timber and damp surveyors or someone to check the drains.
Do you really need a survey?
According to RICS, "over a fifth of homebuyers who did not take out a home survey are saddled with a property they would never have bought". On average, the cost of making repairs post-purchase is around £5,750.
Graham Ellis from RICS says in his experience "common problems are things like damp, wet and dry timber rot and structural movement but also issues such as Japanese knotweed are being identified, which require immediate expert attention".
Kate Faulkner from Propertychecklists.co.uk adds that "whether I'm buying for myself, as an investment or on behalf of a company, I always have a survey done. There are many properties I have bought which I thought looked OK, only to find out there were serious problems, ranging from broken guttering that caused damp in the walls to a major structural problem, which meant the seller had to have their kitchen floor dug up and re-filled before I could complete.
I've rarely had a survey carried out which hasn't found something I didn't know about and the advice given by surveyors has been invaluable."
What if you have had a survey, move in and find something wrong?
In the case of a mortgage valuation or snagging survey, there is typically no comeback. If you have bought a new- build, the developer (or after two years, the insurance company) should step in to repair defects.
If you have had a home condition report from a member of the RPSA, the service comes with an insurance which, according to Mike Ockenden, who runs RPSA, "will make good the cost of any repairs that need to be made". As the insurance is attached to the report, not the surveyor, even if they go out of business or stop practising, the buyer can still make a claim.
When they carry out a homebuyers report or building survey, all RICS members should carry professional indemnity insurance to cover themselves against the risk failing to identify a problem. If you are concerned the surveyor has missed something, contact them and explain the problem. Make sure you follow up any calls in writing, so you have a record of the conversation. It may be that the problem can be easily resolved. If it is more serious, the surveyor may negotiate to correct the issue.
If you have followed the surveyor's complaints policy and are still not happy, you can escalate the issue via RICS (rics.org/uk/regulation/complaints/complaints-procedure/) or seek legal advice.
How surveyors value a property
After the credit crunch, many surveyor valuations made on behalf of lenders were called into question, especially on new-build, city-centre flats, some of which were dropping in value by half. This led to repossessions and losses to lenders, who then looked to recoup money through surveyors' professional indemnity insurance.
These issues led to a review of how property valuations were carried out and the recommendations, although yet to be implemented, meant better training for surveyors. In the future, it may even mean that lenders need to pay for their own valuations rather than you.
So how does a surveyor value your home? Richard Sexton of e.surv chartered surveyors says there are five main tasks:
- Looking up previous prices your property has sold for to understand how its value relates to the local market
- Taking into consideration the current condition and any building works required on your home
- Understanding changes you have made,which may affect the property's value
- Knowing what has happened locally that may influence the value of a property, such as transport changes
- Researching prices of similar properties sold locally.
"It's part-science and part-art to value a property," says Sexton. "But surveyors are well trained to understand what adds and detracts value and should always be happy to explain and justify their valuation to you."
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.