Homebuyers in England and Wales are facing bills for thousands of pounds by failing to have a sufficient survey of their property before purchase, according to new research from RICS. This is unlikely to come as any surprise to conveyancers.
The report indicates that Home surveys help buyers make informed decisions as to whether to go ahead with buying a property, before legally committing themselves. Despite their importance, many buyers remain confused about surveys. A mortgage valuation report is often wrongly assumed to be a building survey. Actually, it is purely an indication of the property’s value for loan purposes, prepared for the lender, not the purchaser. Most importantly, it won’t uncover any potential problems. However, when questioned, 58 per cent of respondents wrongly believed a valuation report included the building’s condition, including searching for damp and structural movement.
A further 31 per cent were mistakenly under the impression it included advice on any legal issues a solicitor should investigate. It may be surprising that many purchasers, when entering into a legal contract for the most expensive investment they will make during their lives do not have a full survey done on the property and are therefore unaware of exactly what they are signing up for. A quarter of all homebuyers who only had a mortgage valuation report had to make unplanned building works to their property after purchase. On average, the bill for these works, such as damp proofing or repairing a roof, came to £1,818 — but the cost can be much higher.
Even where clients pay for a mortgage valuation report, RICS still recommend they arrange a survey with their own surveyor. There are two options available; an RICS Homebuyer Report, which provides an inspection and report on the property’s condition, plus a valuation. A building survey is more detailed, and may be the best option if the property is in a bad state of repair, has been significantly altered, or if you are planning a major conversion or renovation.
A survey might just be able to help clients negotiate a better deal on thier property transaction. 76 per cent of those questioned agreed that a more comprehensive survey could potentially allow them to negotiate a better deal with the seller and avoid paying an inflated price for a property.
David Dalby, RICS Residential Director emphasised the importance of getting a survey done in the current market: “In difficult economic times like this it makes sense to ensure you are getting the best possible value when purchasing a property. No one wants to find a nasty surprise down the line, or pay over the odds for a property that needs lots of work. A survey not only gives you a price valuation, but also a detailed report of the state of the property. Armed with this information you are in a much stronger position to decide whether to proceed with the purchase, or negotiate a better deal.”
Many conveyancers we speak to seem unwilling to advise their clients of these common misconceptions for fear of holding up sales or becoming know by local or national instructing estate agents as being difficult. The Conveyancing Handbook which we have reviewed indicates that clients should be advised about these issues but we wonder how many conveyancers actually do or can demonstrate they do if challenged.