Day to Day Conveyancing: Do I Really Need To Get A Full Survey?
As we all know moving house can be expensive and some people might be tempted to cut costs in some areas.
One area you really can’t afford to cut costs on is your survey.
The most popular excuse for not commissioning a survey is “my lender will carry out the survey”. Lenders carry out what is called a ‘lender valuation’, to make sure the house is worth the money they are lending as the mortgage. It doesn’t look at the structural condition.
Choosing which survey to commission can be a very confusing situation. Not made any easier by lenders who offer to sort it out for you.
There are three types of survey you can get;
Home Condition Report
But which one do you need to get?
To ease your mind about the choice and justifying the cost we asked Robert Bryant-Pearson, CEO of surveying firm Allied Surveyors, some questions to find out more:
Why are there different types of survey and are they really better than the one for the mortgage lender?
To all intents and purposes there are only two main types of survey, a Building Survey – sometimes called a structural survey – and the more streamlined reports: the ‘Home Buyer Report’ and the 'Home Condition Report'.
The third alternative is not a survey at all; it is merely a valuation for the mortgage lenders so that they may be assured that the house is worth more than the amount of the proposed mortgage. For ease of reference, mortgage sellers often refer to this “mortgage valuation” as a “survey” and this certainly causes some confusion if the mortgage company charges a fee of £600 or £700 for it.
Why is it so important for purchasers to have a more detailed survey?
For the vast majority of people, buying a house is by far and away the largest single purchase they will make in their lifetime. Ironically, people like to know that they will get a guarantee on a second-hand car or they will take out insurance against the near inevitable such as their teeth needing fillings or their cat getting ill, but, in buying a second-hand house, they will take a flyer on anything being wrong with it to save a few hundred pounds in commissioning a survey. Solicitors work tirelessly to ensure that the legal paperwork is in order but it is the surveyor who is the ‘eyes and ears’ of the purchaser’s team in considering the actual property. It is the surveyor’s job to thoroughly inspect all the nooks and crannies which can give clues to things going wrong with the building which could cost a lot of money to remedy in years to come. The roof space is the most useful part of the building to help the surveyor understand the construction and its quality, but for a mortgage valuation it is not even required to be inspected. In addition to reporting on the defects and the likely potential defects which may occur, the surveyor will also warn of potentially expensive legal issues which may arise such as shared access or rights of way, the maintenance of boundaries, retaining walls etc, as well as threats posed by trees or flooding.
Do you have any cautionary tales regarding people who decided not to commission a survey before buying a house?
Yes, there was a case where a purchaser discovered that the property was subject to ongoing structural movement which would be expensive to remedy and therefore instigated legal action against the surveyor for professional negligence. As it happens, the surveyor was actually an employee of a company called Colley’s which is a wholly owned subsidiary of Bank of Scotland. It is reported that Bank of Scotland could show that, although the purchaser had been charged £715, the paperwork showed that the applicant had been informed that this was merely for a valuation report for the bank. Under the terms of this type of valuation report, the surveyor is not obliged to access the roof space or to recommend that further investigations would be prudent. The courts decided, therefore that the surveyor was not negligent in failing to recommend that further investigations should made in respect of structural movement.
Sometimes, however, there may be a clue in the name. A couple who bought a house bordering the River Thames subsequently sued the vendor (the seller) who had not disclosed that the garden was subject to flooding. They may have guessed: the house was called “Tides Reach”.
Trees can damage buildings, not so much because of the roots getting under buildings but because the trees take a huge amount of water from the ground and this distorts the ground conditions under the foundations. Removing trees can have a similar effect because an increase in the water content of the ground beneath the foundations can cause ‘heave’. A purchaser who bought a house with a treeless garden wondered why huge cracks appeared during the following winter and it was later discovered that the vendor had removed a line of large trees next to the house. The house was called “The Poplars”.
As I have already touched upon, the most common mistake is for purchasers to believe that they may rely upon the brief valuation report carried out for the mortgage lenders as being some sort of ‘survey’.
Purchases of large and older, extended properties especially would be wise to commission a Building Survey which may cost between £500 and £800 in many instances but more in the case of very large houses, of course.
Typically, a HomeBuyer Report will cost between £300 and £500 and this is generally suitable for houses built since the beginning of the last century. A Condition Report should be of similar scope to the HomeBuyers Report but it will not include a valuation: this type of report may be obtained by the vendor and the purchaser should be able to rely on its veracity provided the terms and conditions therein do not exclude this.
Chartered Surveyors are typically paid around £200 for a mortgage valuation and therefore if your mortgage lender says that you are being charged £500 or more for a ‘survey’, you should check exactly what sort of inspection will be carried out. Most mortgage lenders have a “Treating Customers Fairly” policy which should prevent them charging for a full survey when they only commission a mortgage valuation.
What Does This Mean For You
Regardless of whether you are buying a relatively new house, or a house in an area you know it always pays to commission a full structural survey. It could actually save you money in the end.