Do You Need A Survey When Buying Your House?
“Do I need a Survey?” is still a question we Conveyancing Solicitors are invariably asked by our clients when buying a new house or flat.
In short: “yes” is always our reply.
But, statistics tell a different story.
Only 1 out of 5 Buyers commission a Building Survey or a Homebuyers or Home Condition Report before buying their new home.
Welcome to Chapter 8 of our Series, your Conveyancing Questions Answered All in One Place.
New House, No Survey: A Gigantic Mistake?
You’ve seen the home you want to buy.
Your pulse starts to race: a few hundred thousand pounds may be burning a hole in your pocket.
Your only thoughts are on getting a Survey. Right?
You wouldn’t dream of not carrying out a survey on the property –would you?
So, why do so many buyers shy away from commissioning a survey?
Excuses: The Usual Suspects
We hear many excuses:
– “The Building Society or Bank “Survey” should cover it already.”
– “The house is a new build, so there shouldn’t be anything wrong with it.”
– “It’s too expensive on top of everything else we have to pay for!”
– “The house is too old; we won’t bother.”
– “There’s no point as we’ve agreed on a price for the Property”
Let’s debunk some of those myths.
1. The Myth of the Lender Survey
When clients require a mortgage they often say they do not need a survey as their Lender will be carrying out a “survey” for them.
The Lender is looking after its interests and merely instructs Surveyors or Valuers to carry out a valuation.
By doing so, the Lender ensures it will not be lending too much on the property that may impair its ability to sell a property if it were repossessed.
Some Lenders, it is true, will provide a little bit more information, but it is simply too risky for you to rely on such a Valuation
Top Tip: It protects your Lender, not you!
2. “We shouldn’t have any issues with a new build.”
Another common excuse is that a house built within the last ten years has an NHBC guarantee or similar.
The NHBC guarantee is actually only a warranty.
The warranty covers major and minor defects in the first two years. After that, you’re only covered for major defects.
Top Tip: Don’t expect a new build to be perfect! Consider a New-Build Snagging Survey (See below)
3. “It’s too expensive on top of everything else we have to pay for!”
It always pays to budget for your move, and we would urge you to plan for a survey as well.
Do the maths – when set against the agreed asking price, the cost of the survey will become practically insignificant; you would have saved money by pulling out of a property with an adverse survey or may renegotiated a lower price.
4. “There’s no point as we’ve already agreed on a price for the Property.”
Remember: adverse or uncalculated report findings may allow you to renegotiate a reduced price.
The final price is subject to amendment right up until exchange of contracts.
5. “The House is too old; we won’t bother.”
Yes, the property may well have stood the test of time and may be many years old.
However, older properties need upkeeping, and a survey may pinpoint areas of work that will require attention either in the short term or longer term.
And remember, your Conveyancer will not normally visit the property. For that reason, identification with issues such as Listed Buildings or Extensions and Renovations that may or may not have required planning permission or building regulation approval will be of great benefit.
“And remember, your Conveyancer will not normally visit the property. For that reason, identification with issues such as Listed Buildings or Extensions and Renovations that may or may not have required planning permission or building regulation approval will be of great benefit.”
“Okay, we get it. So how many surveys are there available and what do they offer?”
1. The RICS Home Condition Report
This report is aimed at new houses or properties in good condition. It is presented in a basic traffic light rating outlining the condition of the property, advice that may be needed from your legal advisors and details of urgent defects. This will cost you around £250.
2. An RICS Homebuyer’s Report (HBR)
The HBR not only looks at everything mentioned in the Home Condition Report, but also any structural problems the property may have such as; damp, timber issues, central heating systems, electrical installation, complications that may need a structural engineer and any problems with the roof. However, be aware that this report does not cover beyond floorboards or behind walls.
The Surveyor will also let you know about the necessary repairs, ongoing maintenance advice and estimated costs. With its 1,2,3 rating system, you can quickly identify the most serious problems. This can cost anything between £400-£500.
3. Building Survey
This is suitable for all properties, specifically if you are planning to carry out any work, or it is an older or larger property. It provides a structural report tailored to your property, highlighting defects, repairs and maintenance options.
Although priced at around £600, you could argue that it is worth every penny; it provides detailed advice on repairs and the surveyor’s opinion on the potential hidden defects in the area. However, it does not offer a valuation.
The surveyors provide information about repair options, but you should shop around first. You could save money on repairs by comparing it with the lender’s valuation.
4. New-Build Snagging Survey
With new-builds constantly cropping up around the UK at the moment, this is a good one to bear in mind.
This is an independent inspection looking specifically for faults in new properties. The cost of this may vary from £300 onwards, depending on the size of the property. It will pick up on problems such as plumbing or poorly completed paintwork. It is the developer’s responsibility to resolve any issues that may arise within the new build before you move in.
There is a helpful summary of each type of Survey provided by the RICS which you can view here: RICS Home Survey Information Sheet: At-a-glance Survey Comparisons.
If you are buying a property in our area, we would be happy to advise you on which Surveyor to use and likely costs.
Three Real-Life Cautionary Tales
1. A Buyer had found their perfect house and believed that they had carried out a thorough survey, so signed the contract; so far, so good.
However, they soon discovered that this house was subject to ongoing structural movement. This would be expensive to remedy, so therefore, the purchaser instigated legal action against the surveyor for professional negligence…but was this Surveyor truly a ‘baddie’?
Well, it happened that this particular surveyor was an employee of a subsidiary of the Bank of Scotland. It was reported that the Bank of Scotland could prove that, although the purchaser had been charged £715, the paperwork stated that this was merely a valuation for the bank. This meant that the Valuer had not actually carried out a proper survey on the house, so the Surveyor could not be held responsible.
The Verdict: Don’t Confuse a Valuation with a Survey.
In this type of valuation report, the surveyor is not obliged to access the roof space or recommend further investigations on the property.
Unfortunately for the Buyer, the courts decided that the surveyor was not negligent in failing to recommend that further investigations should be made in regards to structural movement.
Consequently, the purchaser was in the wrong; they assumed that they were covered by the Lender, but the Lender generally surveys the property for their own interests.
Thus, the purchaser learned their lesson the hard way; it is better to commission your own survey and do not rely on a Lender’s valuation.
2. Buying a House Outside Your Area…
If you’re thinking of relocating to a different area because of a job, for example, this is an important read!
Here is a cautionary tale which befell clients who were relocating because of a job move to the north-west of England.
Our clients, on our advice did a bit of detective work and scouted various locations. They eventually found a property overlooking a park at what
appeared to be a good price, but, fair to say this fairy tale home was in need of modernisation, or in estate agents’ language –“little tender loving care” (TLC).
What the HomeBuyer’s Report Revealed.
Most of the recommendations were not a surprise, given the state of the property.
Some of the usual suspects mentioned above were found; penetrating damp, condensation, no insulation, decay on timbers, internal decoration, new kitchen, damaged drains, overgrown trees, small area of asbestos and boundaries in disrepair.
You name it, it had it!
It turned out that the final summary took our clients’ breath away. Without the Surveyor’s knowledge of the local area, they may never have known:
“While the property is located in an enclave of prestigious houses overlooking a park, we would point out that within 200 metres of the property, it is possible to buy a terraced house for as little as forty thousand pounds.
This could severely affect the long-term value of the house and much depends on what the immediately adjacent area takes as to whether it will prove a good investment.”
So, was it worth it?
For our clients it truly was. Although they were perfectly happy to endure the renovation process, the possibility of their property reducing in price over time was a deal-breaker. For them, it was an unacceptable risk.
The cost of the survey was nothing compared to what might have happened if they had bought the property and lost tens of thousands of pounds due to renovations and decreasing value.
3. Buy in Haste, Repent at Leisure…
A top barrister and his wife who were interested in buying the grand Italianate Laughton Manor near Lewes. It was built by Queen Victoria’s friend, Sir James Duke Bart (no-less) in the mid-19th Century.
The Buyers exchanged contracts within a day. They were in no need for a mortgage finance, no chain and seemingly no time for a full survey.
After they had signed the contracts, the Buyers ordered a survey on the property, and what they discovered was not too promising…
These April Fool Buyers found rising damp and dry rot. They accused the Sellers of “reckless misrepresentation” and asked for their deposit back in full, plus damages for the Seller’s failure to mention the property’s state of disrepair, which would cost around £600,000 to rectify.
Did the Buyer Succeed without a Survey?
Unfortunately, the buyers’ claim that they were victims of misrepresentation fell on deaf ears as the court dismissed their counterclaim on the basis that the sellers were unaware of the rot and damp.
Not only this, but the Court referred to Caveat Emptor meaning ‘let the buyer beware’. This means that it is the buyer’s responsibility to carry out checks on the property to ensure that it is satisfactory. Thus, it was the buyers fault for failing to carry out a survey before signing the contract. The court decided that the buyers had no right to cancel the contract on the grounds that they were not subject to fraud; they were simply victims of their own negligence.
The sellers came out on top in the court case; the contract had been rescinded, the £150,000 deposit was forfeited and the remaining £210,000 was still due to be paid. The Buyers argued that they were under no form of contract, so no longer owed the sellers any more money. However, the courts disagreed, stating that they were still obliged to pay any outstanding costs.
The Lesson Learned.
If you are buying an old property, you may think it isn’t worth having a survey: “You get what you expect, right?” However, we believe this story, in particular, proves how detrimental it can be if you avoid paying for a survey. Getting your house checked out could save you a lot of time, hassle and money.