Surveys
In broad there are generally three options available :
- valuation report : reliance on ‘brief’ report prepared by lender
- home or flat buyers report : detailed report and survey
- structural report : full structural report
This will be undertaken by your lender in order to establish whether the property being purchased will be adequate security for the amount of the proposed loan.
Normally you will be required to pay for and have sight of this report BUT this report is merely a brief valuation and will not necessarily reveal sufficient information about the state of the property to allow you to make a reasoned judgment as to whether or not to proceed.
Where the amount required by the buyer on mortgage, represents a high percentage of the purchase price, the interests of your lender and yourself broadly conincide, in that if the value of the property does not provide adequate security for the loan, it is unlikely to represent a wise investment for yourself.
In these circumstances, it may be considered that a lender’s valuation report alone will provide sufficient protection of your interest : a valuation alone may also be considered adequate in circumstances where you are purchasing a property in the course of construction which is to be covered by the NHBC or similar scheme.
Home Buyers Valuation and Survey Report
This option represents a compromise between the mortgage valuation and a full structural survey and is thus an attractive option where, for reasons of expense or otherwise, you may be reluctant to commission a full structural survey.
In many cases your lender will agree (for an additional fee) to instruct their valuer to undertake the Home Buyers Survey concurrently with the mortgage valuation with consequent savings in time and expense for yourself.
This type of survey may provide adequate information where you are purchasing an ordinary suburban property built within the last 100 years, but you should not be misled into thinking that this type of survey result is an absolute guarantee of the state and condition of the property : although of much more value to you than a mere valuation this type of survey is still relatively superficial in scope.
Full Structural Survey
The potential expense of a full survey deters many clients from choosing this option BUT I would remind you that abortive expense on a survey is preferable to discovering that (for example) many thousands of pounds of structural repairs need to be done to the property you have just purchased without the benefit of a survey.
This option is undoubtedly the most expensive of the three on offer : the exact expense and value to yourself depending on what the surveyor has been instructed to investigate.
A full survey will only reveal the true state and condition of the entire property if the surveyor is correctly instructed to investigate all aspects of the property
Guidelines
The need for a full structural survey may be indicated by the presence of one or more of the following factors :
- the property is of high value
- the amount of your intended mortgage represents a low proportion of the purchase price
- the property is more than 100 years old
- the buyer intends to alter or extend the property after completion
- the property is not of conventional bricks and mortar construction
- the proximity of the property to features which may cause subsidence or other structural problems
- the property is not detached
A surveyor, even when instructed to carry out a full structural survey, will not normally investigate drainage or electrical systems.
A property which does not have mains drainage may require a separate drainage survey from an expert in the field, since the cost of repair or replacement of a private drainage system can be prohibitive : liability for escaping effluent may also involve civil and criminal penalties.
If the electrical wiring system has not been inspected in the last five years a report on the adequacy and safety of the electrical installations may be desirable.
Where environmental issues are relevant, a separate environmental survey may also be desirable to ensure the land does not harbour any hazardous substances which may incur liability on the land owner under the respective environment protection legislation.
If radon is a concern, the local authority for the area can often supply information relating to the presence of radon in the area : the National Radiological Protection Board publishes definitive maps, provides information on radon, and may be able to offer a written report on the radon potential for a property
Flats and other attached properties
Where the property to be purchased is a flat or is a property which is structurally attached to a neighbouring property, a full survey may well be desirable.
The structural soundness of the property being bought is in these circumstances dependant on the soundness of the neighbouring property also, and the surveyor must therefore be instructed to consider inspection of the adjoining property (if possible) as well as the property actually being purchased