ANYONE who has ever bought a house will know that the costs soon mount up.
What with conveyancing fees, stamp duty, and removal costs to name a few, it is understandable that many purchasers rely on a mortgage lender’s valuation report as the only “survey” they obtain.
This can be a false economy. What is sometimes not understood is that the lender’s valuation report is a pretty limited document.
It is specifically designed to help the mortgage lender decide whether the property is suitable security for the loan. It addresses the questions which the lender has, but these may not be the same as the issues that are important to a prospective purchaser. It is certainly not a detailed survey.
Consumer organisations, lenders and professional organisations have always advised that an impartial survey report should be obtained. With the property market in the doldrums, and our recent experience of unprecedented drops in property values, many purchasers are understandably nervous.
Finding out as much as possible about the property before making a legal commitment to purchase it makes sound economic sense, but what different surveys are available to help you know what you might be taking on?
The Royal Institution of Chartered Surveyors (RICS) is the leading body which regulates standards in property matters. It has designed three levels of survey which its members offer to house buyers. The rationale is that forewarned is forearmed.
If you want to find out about the condition of the property but don’t need advice on valuation then the RICS Condition Report might be the best option. This is the cheapest type of report and is suitable for conventional properties in reasonable condition.
It gives a traffic-light rating of the condition of the different elements of the building including services and outbuildings and highlights problems that require attention. It also gives advice on matters that legal advisers need to investigate, but it doesn’t include any comment on the valuation of the property.
More extensive information is included in the RICS Homebuyer Report. This builds on the information contained in a RICS Condition Report and usually costs a bit more.
It includes advice on additional matters such as the “Market Value” and the reinstatement cost for insurance – these are not the same thing. Information on the location and environment and the recorded energy efficiency of the property are also a standard element of this report. Again, the report is colour-coded making for straight-forward reading.
An older, run-down or unusual property might merit a Building Survey. This costs more again because it gives even more detailed information on the structure and fabric of the property. It generally doesn’t include the valuation elements included in the RICS Homebuyer Report but this can often be provided separately.
Whichever type of report you choose, you should arrange for it to be carried out by a Chartered Surveyor at an early stage in the process. It may well flag up issues that you were not aware of and you might want to renegotiate the price as a result.
Keeping the momentum going is really important in successful property transactions. If the survey confirms that all is well, this can give you the peace of mind to know that you can go ahead and commit to the purchase.
The RICS website www.rics.org gives a lot more detail on the different types of survey available. Use the report to your advantage and reduce the risk of making an expensive mistake.
Don’t be tempted to buy in haste and repent at leisure.
Peter Woodhead, BSc, MRICS, an independent Chartered Surveyor. For further information or advice contact him at McAfee Professional Services, Coleraine, Tel: 028 7034 2247.