Guide to valuations and surveys
When buying a property, you should always commission a private survey to ensure peace of mind. Many people, however, simply rely on the contents of a mortgage valuation, which is not a survey and is commissioned by their lender simply to determine whether the property provides adequate loan security. A more detailed private survey such as a Condition Report, Homebuyer Report or Building Survey, will determine any potential areas of concern with the property and may help you negotiate a reduced purchase price if, for example, defects are found.
What is a Mortgage Valuation Report?
It is important to remember that a mortgage lender’s valuation report is not a survey. It merely tells the lender whether or not the property is reasonable security for the loan required. Costs vary and are dictated by individual lenders’ fee scales which depend on the purchase price.
What is a Condition Report?
This is the most basic and consequently the cheapest of the private surveys you can instruct and provides an objective overview of a property’s condition, highlighting any areas of major concern but without extensive detail. The report is completed to a standard format as defined by the Royal Institution of Chartered Surveyors (RICS) and essentially, this option is well suited to those buying modern homes in good condition. You should be aware that the Condition Report does not include a market valuation of the property although this may not be considered an issue if you receive a courtesy copy of your lender’s mortgage valuation report which is likely to contain this information anyway. Similar to the other survey types outlined below, the price of a Condition Report is usually determined by the purchase price of the property, although this may also vary depending on where you are looking to buy in the country.
What is a Homebuyer Report?
The Homebuyer Report tends to be the most popular of the three private home survey types. It is also completed to a standard format as defined by the RICS and applies to houses, bungalows and flats that are conventionally constructed and in reasonable condition. This would generally include properties that date from Victorian times to present day new-builds.
The Homebuyer Report is a mid-range priced product and typically surveyors charge fees based on the purchase price and geographical location of the property. It is more expensive than a mortgage valuation but less expensive than a Building Survey and its aim is to help the purchaser make a reasoned and informed decision as to whether they purchase the property or not and at what price.
The Homebuyer Report covers the inside and outside of the building, the services and the site. Defects that the surveyor considers will not affect the value of the property are not reported on and condition ratings are used to describe the various elements of the property. It is worth noting that surveyors will only report on those areas of the property that are exposed and fully visible; no destructive investigations will be carried out. Services such as electrical wiring, drainage, gas installations and heating systems will not be tested and many people choose to have reports carried out separately with regard to these. In all cases, any further specialist investigations or tests recommended should be undertaken prior to exchange of contracts.
The report will also include a market valuation as defined by the Royal Institution of Chartered Surveyors (RICS). This will be determined by the surveyor and is based on experience of the local property market and by assessing ‘comparable evidence’. In other words, he or she will assess evidence of other similar properties that have sold in the vicinity and determine market value by making adjustments for factors such as location, condition, size and facilities. Finally, a reinstatement cost for rebuilding purposes will also be provided. This is the amount that the structure of the property should be insured for; it is worth noting that this bears no relation whatsoever to market value as the figure is based on a purely mathematical calculation determined by floor area, type, location and a number of other features.
What is a Building Survey?
A Building Survey (sometimes incorrectly referred to as a Structural Survey) is appropriate for just about any property type including those that are listed, unusual or requiring renovation and will provide comments not only on defects found but also the cause, together with advice on the remedial measures required. These surveys provide a comprehensive report about the current condition of the property. In some cases building surveyors will also be able to produce budget costings for the works required, which can also be used for tendering with contractors.
Building Surveys tend to follow a bespoke format although there is also now a standard report form that has been produced by RICS. Once again, the cost of a Building Survey usually depends on the purchase price and location of the property although the nature and condition of the property may also be factored in.
You can find a surveyor to carry out a Condition Report, Homebuyer’s Report or a Building Survey through the Royal Institution of Chartered Surveyors.
In all cases where a private survey is instructed, you should speak to the surveyor prior to his or her inspection to ensure that your requirements are met. If there are any particular defects that you have noted during your earlier viewings of the property such as cracking to walls, signs of dampness, evidence of rot or indeed anything else that is of concern to you then you should also raise these when you speak with the surveyor. Finally, you should not be afraid to ask the surveyor about his or her experience and whether they have carried out surveys on properties that are similar to the one that you are hoping to purchase. Happy house hunting!
Martyn Stones is technical director at Countrywide Surveying Services