There can be confusion over the difference between a survey and a valuation
(discussed below). And between the different types and purposes of surveys. Strictly
speaking the word ‘survey’ means no more than a look at a property
by a professional person for a specific purpose – which could be to appraise
its basic value as security for mortgage purposes or to assess the dilapidation’s
schedule at the expiry of a full repairing lease.
These days the prospective
buyers are usually sent a copy of the valuation report but one should not place
too much faith in this superficial type of survey. It may have been subject to
a thorough inspection by a qualified surveyor who would have commented on any
real problems but that is not necessarily the case.
This type of report
has a single purpose: to confirm to the lender that it would not be ill-advised
if they were to advance the requested loan secured by a charge against the title
to the property. If there is a major defect – which, unrepaired, would significantly
reduce the resale value – the surveyor should have drawn this to the attention
of the lender as their client.
Of course, where a particular defect is
significant, the valuer may recommend a reduced offer, suggest a retention from
the advance, or even turn the property down completely. Remember that the report
was commissioned by the lender and accordingly it is not a warranty or guarantee.
Mostly importantly you should not rely on it fully as indicating that nothing
else is remiss with the property in question. A full Structural Survey is a
more involved and detailed investigation which will have been carried out by a
qualified surveyor who will then report in detail on the condition of most aspects
of the property – any matters not covered, for example, the drains, the
heating system or whatever, will have been noted in the report usually with recommendations
for contacting a specialist contractor. In the case of a big old house or converted
flats it may be imperative to have such a detailed survey carried out, but it
will be a relatively costly undertaking. You must also bear in mind that the
surveyor will have tried to make reference to every existing fault – and
any potential fault – which has come to his attention. Consequently, his
report may well sound quite a catalogue overall, so it is particularly important
that you understand the implications of what is said. We do recommend that you
read the report carefully, and maybe talk to your solicitor, to avoid jumping
to hasty conclusions.
If a survey does show up a major and unexpected fault,
then we may be able to arrange for an adjustment in the price, or for the seller
to assist with the cost of the remedial work. Either way it is not the end of
the world – there are very few properties which could pass a full structural
survey unscathed and clean.
Incidentally, the Royal
Institution of Chartered Surveyors and the Construction
Industry Council argue that the term ‘structural survey’ can be
misleading and have tried to define various building inspections and surveys very
precisely. They have found that the same titles sometimes identify different services
on a localised basis and can confuse people moving from one part of the country
to another.
Some ‘structural surveys’ would include a valuation,
while others prepared by a structural engineer for example, may only cover the
load-bearing elements and not expect to be involved in more superficial issues.
Accordingly,
these Professional Bodies recommended that the term ‘structural survey’
is replaced with ‘building survey’ and stress that it is everybody’s
interests to have the conditions of engagement, with a definition of the brief
and the extent of the inspection to be undertake, agreed in writing at the outset.
A
building survey is therefore a investigation and assessment of the construction
and condition of a building which will not normally include advice on value. This
may be carried out by a chartered surveyor or structural engineer and will generally
include the structure, fabric, finishes and grounds. The exposure and testing
of services are not usually covered.
The extent of the survey should be
subject to specific agreement with the client while advice on the cost of repairs
will be subject to such agreement. The report will include reference to visible
defects and guidance on appropriate maintenance and remedial measures.
The
report may still recommend that specialist and elemental investigations are undertaken
or other specialist advice obtained relating to specific issues.
Because
of the time, cost and professional responsibility involved in producing a structural
or building survey, they are expensive. There is a more limited form of house
buyer’s survey which is widely available. These ‘Home Buyer’s
Reports’ are prepared on a standardised basis and intended as a mid-way
option between a valuation and a full building survey. The pro-forma cost is related
to the price of the property while the report includes a number of strong explanation
and exclusion clauses. The latest version also includes recommendations for repair
work graded according to their importance and urgency.
For straightforward
properties where the client requires no out-of-the-ordinary advice, these reports
in a standard format and under the relevant standard conditions of engagement
are proving popular although minor items of disrepair which do not materially
affect the value will not normally be reported. Whether services will be tested
or not will be agreed between the parties beforehand.
Finally, the question
arises of whether one should have a separate survey, or rely on the valuer’s
report to the lending authority. Generally speaking, with a modern property there
should be nothing major which is not apparent on close inspection. On the other
hand if you are particularly concerned about an older property, or a worrying
feature of a more modern property and really feel it is worth spending money to
be fully informed and reassured about the condition, then we can give you a list
of reputable local surveyors that you may care to approach. Obviously, we are
not in a position to offer this service ourselves if you are buying one of the
many properties we are offering for sale.
Do not confuse surveys, any surveys
– which are commissioned by an individual and for their own purposes –
with Home Condition Reports which will be introduced in a few years time. They
are not surveys but a ‘snapshot’ of the property at that point in
time and will be in the public domain and open to free inspection by potential
buyers.
