Valuation & Surveys
Both you and your mortgage lender need to know whether the property is actually worth the amount of money you have agreed to pay for it. As well as what is known as the basic valuation, there are two main types of survey: the homebuyer’s report and the buildings survey (also known as the full structural survey). All lenders require a basic valuation, but is strongly advised that you also have an independent, more detailed survey carried out as the basic valuation will only show up any obvious problems that you will probably have noticed yourself. The level of survey you need depends a lot on the individual property you are buying.
Is A Survey Really Necessary?
Surveys are expensive. You already have to pay for a basic valuation for your lender, and you may be tempted to risk not to bother with any closer examination of the property by professionals. Certainly you can look it over yourself and this can give you some idea of its condition, but there is no doubt that a trained eye will show you all the problems which you would not pick up on. A survey might seem to cost a lot at the time, but you will regret if you have to pay out thousands of pounds later on for major repairs for faults you didn’t know about when you bought it. If major defects are uncovered you might even think again about your purchase, or you could be in a position to renegotiate the price. A home is a massive investment and it is worth paying a few hundred pounds for a survey at this stage as it could save you much bigger sums, and lots of hassle, later on. If problems do appear later on which the surveyor did not point out, you may be able to claim compensation. (see our Making Complaints section)
All lenders require a basic valuation. They need to know that they are not lending you more than the property is worth, and that if you sell it off you will get at least as much money back as you paid for it. Although this is often referred to as a survey, it is really too superficial to merit this title.
The valuer arrives at a value by comparing the property with similar ones, taking factors such as age, condition and location into account. The valuation also points out any very obvious major faults which could affect the property’s value, but is very brief and is not nearly as detailed as a real survey.
The basic valuation is commissioned by your mortgage lender, and is for their benefit, but unfortunately it is you who must pay for it. If the house is valued lower than the purchase price then your mortgage offer may be withdrawn, or offered on the condition that specified work is carried out on it first. If it does reveal that the house is worth less than the price you have agreed to pay for it, you may be able to renegotiate the price, but first double-check with the surveyor how he reached the value given and that he or she is certain you are paying too much.
The basic valuation takes about half an hour, and cost between around £100 to £300 depending on the price of the house. Some mortgage lenders waive the fee for the basic valuation as part of a package to attract your custom.
This survey is much more detailed than the basic valuation, and is for your own benefit rather than the mortgage lender’s. A large majority of people opt for a homebuyer’s report when buying a new home, and it is definitely worth it to be sure that your new home is in good condition. It allows you to evaluate whether you want to continue with the purchase at the present price, and to consider any urgent problems with the property. The homebuyer’s report is recommended for houses that are under 50-75 years old, conventionally constructed, and in generally sound condition.
While less comprehensive than a full structural survey, a homebuyer’s report gives a good indication of the state of the property and its level of repair and maintenance. The surveyor reports on all visible parts of the property, such as the condition of the roof, pointing out particularly any areas that will need work straight away or at a later date. Further specialist surveys will be recommended if required. Any issues to be discussed with your solicitor, such as parking spaces or rights of way, should be noted in the report. An estimation of the value of the property is also included. The contract will specify exactly what will be examined, so do check this carefully.
It is easiest, and often cheapest, to ask your mortgage lender to arrange for the surveyor doing the basic valuation to carry out a homebuyer’s report at the same time. However, if you prefer, you can find your own surveyor.
A homebuyer’s report inspection should be carried out no more than five days after you instructed it, and some surveyors will do it even faster. The inspection itself takes between one and two hours to complete, and you should receive the results three to five days later. The report comes on a standard report sheet and is normally between about 8 and 20 pages long. The homebuyer’s report costs from about £250 to £500, depending on the price of the house. For example, a homebuyer’s report for a £100,000 home would cost around £330.
Building Survey (formerly known as a Structural Survey)
This is the most comprehensive – and the most costly – type of survey. It is suitable for any building, but is especially recommended for older buildings (75 years upwards), those constructed out of unconventional materials such as timber or thatch, properties which have had lots of alterations or extensions or which you intend to alter or renovate.
The surveyor will check the property thoroughly, looking at everything that is visible or easily accessible to examine the soundness of the structure, its general condition and all major or minor faults. More specialist surveys can also be carried out on aspects such as foundations, damp proofing, or tree roots, either by a specialist within the firm of surveyors or by an independent specialist surveyor.
The report you receive will be extremely thorough and very long as surveyors are legally obliged to inform you of all the findings of the survey. Don’t necessarily be put off if it seems that endless defects are listed – every house has some defects and surveyors tend to show the worst case-scenario for anything they discover. You should be provided with a list of prices for repairs and maintenance work, which will also tend to over- rather than under-estimate prices.
A full structural survey normally takes much longer than the one or two hours required for the homebuyer’s report. The survey report can also take a long time to produce so this is a much lengthier process than for a homebuyer’s report. You will probably have to wait up to two weeks after the inspection for the report, for which there is no standardised reporting format. A buildings survey costs anything up to £1,000, again depending on the price of the house.
How Do I Find A Surveyor?
It is not hard to find a surveying company. Asking for recommendations from your lender, solicitor or estate agent is probably the easiest way of finding a reliable surveyor, or you could contact one of the professional trade associations for details of surveyors in your area. The Yellow Pages also lists many surveyors. If you need a specialist survey, make sure you instruct a surveyor with expertise in that area.
Shop around and get plenty of quotes as it costs a lot to get a survey done and prices can vary. The amount you pay normally depends on the cost of the property you are buying. It is important to discuss in advance how much you will have to pay and what kind of survey will be undertaken or you might find yourself being ripped off. It is possible that you may have to pay more than once for a survey, if the sale falls through or if you decide not to buy the property on the basis of the survey results and carry on looking.
You are advised to check up on the surveyor’s credentials if you are unsure that they are a qualified professional. All surveyors should be a member of the Royal Institution of Chartered Surveyors (RICS).
Always talk to your mortgage lender before instructing a surveyor as it is usually possible to get the basic valuation done at the same time, which will reduce your costs.
If you are not satisfied with your surveyor, see our Making Complaints section.