Without the right survey on the property, you might think you’ve found your dream home only to realise later that it’s riddled with problems. Getting the right survey before buying your property is extremely important.
Standard Mortgage Valuation Reports
A standard mortgage valuation report is a physical inspection of a property that is carried out by a Chartered Surveyor on behalf of your lender to ensure the value asset for which they are providing the finance is high enough to secure the loan. For example, if you want to borrow £100,000 on top of a £20,000 deposit to buy a house at a total purchase price of £120,000 but the mortgage valuation suggests the property is only worth £90,000 then many lenders may decide not to proceed with your mortgage application.
The important thing to remember is that this standard valuation may tell the lender what they need to know, but it won’t consider any potential future structural problems or costs that the property could present. Furthermore, some lenders won’t show you the report at all unless you request to see it even if you pay for it!
The lender uses this to get an independent perspective of the property that they trust. A surveyor will visit your property, have a look around, and do some research on the general condition and valuations of properties in the area. The standard mortgage valuation report is then compiled for the lender, all of which can take a couple of weeks.
If you’re lucky, your lender might carry out the valuation for free, as they are legally obliged to do it anyway. Otherwise, fees may vary but you should be able to find out in advance how much it will cost as most vary their fees depending on the value of the property. The Money Advice Service estimates that most valuation fees are from £150 to £1,500, which could be quite a shock! Make sure you check with your lender before a survey is conducted and make sure you budget for this cost if you need to.
The whole process is a bit different if the property is in Scotland. North of the border, a mortgage valuation is actually the vendor’s responsibility to do before putting the property up for sale. This Home Report must include a survey by a qualified surveyor, much like in the rest of the UK, but also an Energy Performance Certificate and a Property Questionnaire to give the buyers all the facts and figures they’ll need to know about the property.
A standard mortgage valuation report is only required if you are borrowing money that requires security against the property e.g. a mortgage. It is an essential valuation however once complete, there are several other surveys to consider conducting that can help you better understand the property you’re interested in purchasing, minimising the risk of any nasty surprises later on.
All mortgage lenders need the basic valuation, so this is instructed by the mortgage broker, adviser, or bank. There’s nothing you really need to do, but it’s good to know what’s happening.
When it comes to more in-depth surveys, most lenders only offer a basic or homebuyers survey. If you want a full structural survey you might need to find one independently.
Homebuyer Survey Report
A homebuyers survey report is an in-depth survey that’s perfect for normal properties that don’t appear to be in bad condition. This is the next step up from the mortgage lender’s valuation report; it’s going to give you an idea of the problems the property has without going into too much detail. It’s ideal for properties that have been kept in good condition, as this report can just confirm what major problems the property has, if any.
But bear in mind there’s still quite a lot that this report doesn’t do. It’s a casual report, the surveyor will take a look at the property and point out any glaring errors or issues that need to be fixed imminently. This survey isn’t going to look under floor boards or assess the plumbing and wiring of the property, nor is the surveyor likely to highlight the future risks from any little issues that could become problems in the future.
As you might expect, the price of a homebuyers survey is a bit more than just a valuation with prices starting around £400 on average, but once again can vary depending on the surveyor and the value of the property. You might be able to negotiate a discount with your lender or surveyor for both a homebuyer report and a standard mortgage valuation report if purchased together.
A new-build survey is another kind of basic survey that you can find. It’s suited for new-builds and the surveyor will inspect the property for common new-build faults.
This survey is often relatively superficial but many home buyers find that anything more comprehensive is unnecessary with brand new properties. The report will consider the general construction of the property. As you might expect with New Build properties there often has not been enough time for any real problems such as damp or roof damage to arise like they might in older properties.
This survey will happen in a similar way to the other surveys, however after the survey has been completed, the developer of the new build site should fix the faults highlighted by the report before you move in.
Costs are smaller for this survey than others, as there may be less to document with a new-build. Average costs tend to be around £300, depending on the size and location of the property.
Full Buildings or Structural Survey
A full buildings survey, also called a structural survey is the most intense, in-depth property survey you can commission. It will give you a detailed report on both the current issues with the property and those that could arise in the future to enable you to budget and prepare yourself.
They only things this survey can’t do is fix the problems and foresee the future for you! While they might give a good prediction of what could go wrong, no one can really tell for sure what could happen to the property in the future.
This type of survey can cost upwards of £600, or is calculated on the price of the property. When considering what emergency repairs to your property could cost, it could be worth paying a little bit extra now to have some warning. In some cases, Housebuyers have been able to use the findings of a Full Building Survey to renegotiate the purchase price of the property to reflect the cost of repairs that would be necessary upon completion.
This depends on the type of property you’re interested in, your budget, and the reason for which the survey is being conducted.
Many buyers of newly built properties feel that a new build survey is sufficient for their own peace of mind but also reserve the right to request a copy of the mortgage lenders valuation. For extra care a Homebuyers report may give you additional confidence in the condition of your property purchase.
For many properties built within the last 50 years, many buyers feel that a Homebuyers Survey provides the level of detail and understanding they need to make an informed decision. If the property is surrounded by very similar properties, it might be worth researching or asking around the neighbourhood to find out what problems these properties have experienced in the past. This is especially true for terraced and semi-detached properties as often, although not a rule, attached neighbours’ properties will experience many of the same issues as your property – if any at all.
Many experienced buyers and investors find it necessary to opt for a full structural survey for properties that are particularly old, unusual or damaged. A full structural survey will be able to tell you if that dreamy old property you’re interested in will withstand another 100 years of weathering or if it’s unique architecture is full of flaws, meaning your property could be just one winter away from collapsing.
A full structural survey is the most comprehensive survey available and therefore regardless of the property age or construction, this survey will look in most depth at it.
As mortgage brokers we can only give you facts and information regarding surveys and what they do, none of what we have written counts as advice. If you have any questions or doubts then seeking professional advice from a surveyor would be sensible.
A lot of lenders will find a local surveyor or recommend one for you from their approved panel. Many lenders offer the basic valuation for free, and only ask that you pay the difference to upgrade to a homebuyer report. Depending on your lender there may be an option to book a full structural survey through the surveying company that is recommended to you.
In cases where a surveyor is not recommended to you, the first port of call for many buyers is the Royal Institution of Chartered Surveyors. This is an accreditation organisation that demands certain standards from their members so you can be confident in the survey you receive. If your lender (or anyone else) recommends a surveyor for your consideration, you can check that they are on the RICS register just to be safe.
A good surveyor not only has a good knowledge of properties, but also of the surrounding area. You can search for surveyors in your area here.
First you need to decide if you still want the property. Are you willing to take on all the problems that have been highlighted, or would it be better to ditch this property and find another?
If you’ve gone for a cheaper, less detailed survey, it might be a good idea to get a professional tradesman to assess the damage and give you an estimate of how much repairs will cost. That will enable you to decide whether the purchase is worth to additional costs.
It can often be difficult to think about problems when you feel like you have found your dream home. When issues are flagged on your perfect property by a surveyor, some buyers feel that asking the opinion of a third party is beneficial, such as that of a friend or family member whom understands your circumstances. They could advise you as to whether realistically the additional stress and heart ache on top of the usual home-moving hassle is something you should be taking on. Better yet, ask a financial adviser for some advice before you start altogether.
Remember, you might be in a position to negotiate if the cost of repair is significant enough to devalue the property. This could potentially mean that you could save money during the mortgage process allowing you to make repairs that you wouldn’t have been able to do before.
Overall, just be realistic and try to be cautious. A mortgage is a huge commitment, and making sure you understand the immediate and potential future demands of the property is important for you and your lender. Get the right survey for your property to minimise the risk of any nasty surprises by talking to a professional surveyor and getting advice.