You have found the property you love; you have the mortgage in principle and arranging the solicitors to move with the purchase of your dream home. You think all is done until you hear the dreaded question – have you arranged the property survey yet?
I have heard many people struggle with the idea of actually “needing” the property survey. Why? It looks ok, they say. The property might look in the right order but when you excited about the property you might miss the signs of something serious. It is only logical that you will invite someone qualified to assess the property you will spend your money on.
I will explain below, what a survey is and what is covered.
There are four types of surveys:
- Valuation survey for the mortgage application, this can be a physical viewing or a desktop valuation
- Condition report
- Home Buyer report
- Building survey
When applying for the mortgage, the lender will arrange a valuation report for the mortgage security. They will need to know if the property you want to purchase is worth the price you are willing to pay and how much it will cost to reinstate the property if something has happened to it (for example would be destroyed in the fire).
The valuation report is mainly for lenders view only and is defined as “the identification of the most likely exchange price in the marketplace at a particular point in time.*” (*According to RICS).
The valuation can also be made online, as a desktop mortgage valuation. This is theoretically not a survey but is many circumstances will be enough for the lender to assess the value of the property.
A condition report is the first level of the property survey type. It is very basic and is recommended for the newer property in relatively good condition. The condition property survey report includes (RICS Home Survey Level 1):
- The construction and general condition of the property on the date it was inspected
- Any defects that need urgent attention or are serious
- Things that need further investigation to prevent serious damage to the fabric of the building and
- Serious defects or issues that may be hazardous to safety and where further enquiries are needed.
The inspection will be only visual, inside and outside. The rating will include the traffic light system, where green is good, amber will need attention but is not serious and red will need urgent attention.
The homebuyer survey is the most popular option for the buyers as it is an affordable survey that will cover the most issues. It covers everything included in the condition report plus other details including the surveyor opinion on the state of the property, what work would need to be done, location and facilities.
The inspection is non-invasive, which means they will not lift the carpets, look behind furniture or under floorboards. They will however try to access the attic and look for dampness and signs of subsidence. They will identify issues that are on ‘surface level’ that might be a problem in the future.
Both Condition report and Homebuyer report will include legal issues for the financial advisers and risks.
The RICS Home Survey Level 2 aims to provide advice to:
- make a reasoned and informed decision on whether to go ahead with buying the property
- take into account any repairs or replacements the property needs,
- consider what further advice you should take before committing to purchasing the property.
The building survey is the most comprehensive and expensive option for the property buyer. I would recommend the building survey if you have identified any visible issues with the property or if you are planning to do substantial refurbishment work, e.g. large extensions. A building survey is a structural survey providing the most thorough and detailed report, including checking under the floor coverings and energy-related matters like insulation, heating, ventilation and lighting.
The report aims to advise on:
- help you make a reasoned and informed decision when purchasing the property, or when planning for repairs, maintenance or upgrading the property
- provide detailed advice on the condition
- describe the identifiable risk of potential or hidden defects
- propose the most probable cause(s) of the defects, based on the inspection
- where practicable and agreed, provide an estimate of costs and likely timescale for identified repairs and necessary work,
- make recommendations as to any further actions to take or advice that needs to be obtained before committing to a purchase.
The costs of the surveys will vary depending on where you live and the surveyors you choose. Most of the solicitors will insist on the survey as a precaution and security of the investment.