New House, No Survey: A Gigantic Mistake?
Update: this blog has now been updated, and you can view it here.
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?
“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, the statistics tell a different story.
Only 1 out of 5 Home buyers commission a Building Survey or at the lesser ‘Royal Institute of Chartered Surveyors’ (RICS ) Homebuyers or Home Condition Reports before buying their new home.
So, why do so many home buyers shy away from commissioning a survey?
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.
“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
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
Now, I know we mentioned a gigantic mistake in the title.
You’ll find out what we mean if you read next week’s blog where we’ll tell you about some real life survey nightmares!
And not all have happy endings!
Editor’s Note: This post was originally published in January 2013 and has been updated for freshness, accuracy and comprehensiveness.