The residential property survey – what consumers need to know and why the conveyancer has a vital role to play
The majority of us in the property profession will be aware of the importance of commissioning a survey when purchasing a property, along with the potential pitfalls associated with failing to uncover something, which could later turn out to be very costly to put right. However, it seems that this same level of knowledge and awareness is not shared outside of our industry. In fact, research shows that most of today’s home buyers are still blissfully unaware of the various survey options available to them.
Research by MORI for a Government working group, and by Which? found that while 80% of home buyers say they do (or would) procure a survey when buying a home, only 18% actually do so. However, rather than making an informed decision that they do not wish to go ahead and commission their own survey, the main reason for the discrepancy in these numbers is simply because a significant proportion of buyers are under the misconception that the lender’s valuation constitutes a survey. This is something we want to change.
The benefits of commissioning an independent condition survey of a property are huge — and not just for the buyer. For those conveyancers acting on behalf of a buyer who has commissioned a Home Condition Survey (HCS), you too can enjoy peace of mind. Because, with an HCS, the surveyor is required to source the most up to date EPC, ensuring that any information relating to the recently launched Green Deal and any associated loan, will be highlighted, early on in the process — alleviating any responsibility on the part of the conveyancer to ensure you are working with the most up to date energy certificate and advising your client of any loans attached to their future home.
However, I digress — back to the lack of awareness among home buyers of the various survey options available to them. In addition to the existing research that’s out there, we conducted our own survey in 2012 among our members. The findings showed that a worryingly high proportion of home buyers still lack basic awareness about the different property surveys available to them. 72% of our members reported that the home buyers they had been in contact with over the last year had not been aware of the range of property surveys available to them — or how home condition surveys and the lenders valuation vary in terms of the level of investigation they entail or the information that they provide.
So whose responsibility is it to educate these misguided buyers?
Well, according to our member survey, the majority of residential property surveyors believe that the responsibility for educating the home buyer should lay with the conveyancer. While this may not be popular among some, it was felt by the majority that the buyer’s conveyancer is in the strongest position to advise clients early on in the process of the various survey options available to them. What’s more, the Council of Mortgage Lenders (CML) seems to agree — if you refer to the CML handbook, there is a clause that clearly leaves you as a conveyancer potentially liable if you fail to make your client aware of their survey options.
So how as conveyancers can you ensure you meet your responsibilities, set out by the CML?
At the RPSA, we have been working closely with the conveyancing community over recent months to deliver a solution that aims to better inform buyers of the survey options available to them, while alleviating conveyancers of any responsibility placed on them by the CML. To ensure that consumers make an informed choice about obtaining a survey, we are urging conveyancers to include the following three bullet points, immediately above where the client signs the letter of engagement, requiring the client to tick one of the following boxes:
– I will arrange my own survey (I understand that my lender’s valuation is not a survey)
– Please arrange a survey for me
– I do not want a survey
The simple introduction of the above text has already proved an effective way of ensuring that buyers are aware there is a difference between a lender’s valuation and a survey. What’s more, by including the suggested lines above, as conveyancers you can demonstrably discharge any responsibility that you have in respect of the lenders handbook, while ensuring that your customer is better informed.
We have a long way to go in educating buyers about the survey options available to them but we believe that by working together and taking small steps, we can assist consumers in making a more informed choice when they purchase their next home.