When buying property could be the single largest financial transaction in your life, it is always prudent to get a survey done on the property you hope to buy. A little money spent wisely on a survey before a property transaction could save you a whole lot time and money after the deal is done.
A property survey will give you all the facts of the land up front and highlight structural nuances of the property that could make or break your decision to go ahead with the purchase. The condition of the floors, wiring, roof, plumbing, water supply etc will not affect the survey report, but they will definitely be commented on. It is your safeguard against a fraudulent deal and truckloads of trouble in the future. So, ideally you should brace yourself for the expense of the property survey and conduct it before the exchange of contracts.
Property surveys conducted by licensed professional surveyors will give you an accurate geographical description of the property complete with salient physical features and legal boundaries. This is essential to help prevent disputes in the future. Surveys of residential properties will also show the location of the house, position of sheds, garages, driveways and fences on the property and will mark municipal easements (areas where the city needs to access for maintenance and repair).
The surveyor would not comment on any legal documents. So there may be issues in the reports that need to be handled by a conveyancing solicitor. So it is advisable to send the copy of the survey report to the conveyancing solicitor acting on behalf of you to have an in-depth look and identify issues at the initial stages of the transaction itself.
Who requires a property survey?
Property surveys could be required by law before the property changes hands. In the case of a buyer, it is essential for a professional property survey to be conducted as the onus is on him to find defects that may not be apparent on a superficial inspection of the property by a layman.
Mortgage lenders and property title insurers also demand a property survey so that they are assured of the value and condition of the property they are going to be lending against or insuring. Old property surveys don’t hold much value; lenders and insurers only accept surveys that have been conducted in the last six months. Recent surveys will show all the latest changes and additions to the property and give everyone involved in the property transfer a clear picture of what the land holds.
People who plan on building/renovating on their existing property should consider getting a property survey done to get their boundaries demarcated, lest they unknowingly encroach on their neighbour’s land and cause unwarranted disputes. These disputes can easily be settled with a detailed property survey, but sometimes you run the risk of a court settlement. So it’s always safer to have a professional property survey in hand to know the limits of your property and the easement areas before you embark upon any renovation work.
Residential property surveys
As a buyer, you can opt to rely on your lender’s valuation or the Home Condition Report furnished by the seller. Or you can conduct an inexpensive ‘house location’ survey or go in for a cadastral land survey which is very detailed and expensive.
A regular ‘house location survey’ or ‘drive-by survey’ is the most basic survey which highlights the location of the house and other structures on the property such as sheds, pools, fences etc and where they are positioned on the property in relation to one another. Such a survey may be adequate for lenders and undisputed land transfers.
Detailed surveys become mandatory in boundary-dispute cases where a licensed professional is called in to re-establish the boundaries. Such a survey is expensive as it involves precise measuring and marking of the property and examining of old records to determine the location of original boundaries with the help of prior markers such as metal spikes or stakes in the ground.
What types of surveys are regularly conducted?
The Royal Institute of Chartered Surveyors (RICS) recognises two main types of surveys. One is the Homebuyers Survey and Valuation (HSV) and the other is the Building Survey.
Homebuyers Survey and Valuation (HSV)
This survey gives the buyer an authentic perspective of the condition of the property. The RICS has laid out a specific format in an exhaustive form that covers all the prominent portions of the property that should come under the surveyor’s eagle eye. Instead of detailing every aspect of the property that is plain to see, the survey will identify questionable areas that may require further investigation. As wiring, piping, drainage, gas, water supply etc. do not fall under the purview of such a survey, buyers are advised to carry out separate tests on these aspects as well.
If the property you plan to buy is conventional, under 2000sqft, less than 150 years old and in a reasonable living condition, then the Homebuyers Survey and Valuation will suit you perfectly. Think of HSV as value addition and not wasted expenditure and you’ll have no regrets.
Your surveyor will…
- Check on the overall condition of all permanent structures that fall within the boundaries of the property and assess faults that could affect value of property
- Assess whether any of the prominent defects need immediate repair and what it will cost
- Check whether there is dampness present in the woodwork and walls, and the existence of woodworm
- Assess the condition of insulation moisture-proofing and drainage (but drainage will not be tested)
- Provide a cost-estimate for rebuilding the house in case it is destroyed, primarily for the benefit of insurance companies
- Recommend additional surveys or investigation that needs to be conducted before contracts are exchanged
- Provide a valuation of the property based on open market rates
Building Survey
There is no survey more exhaustive and comprehensive in its detailing of the property’s condition than the Building Survey. This survey will examine all visible parts of the property and any particular areas of the property you want specifically assessed. It is ideal for all categories of properties whether they are huge, old and unusual, not constructed with brick and mortar, extensively altered, have proximity to features like mines, rivers, clay sub-soils etc. If it is a place where you want to carry out extensive renovations, then this is the survey to choose. Your surveyor will also give you his valuation of the property in the open market, if you ask for one.
The price of this survey depends on many variables such as size and condition of the property, approximate value, location and the surveyor you hire.
The Building Survey includes:
- Highlighting all defects found in permanent structures on the property and its implications on the house
- Confirming demarcated legal boundaries
- An approximate cost for repairing defects
- Testing for presence dampness in walls and woodwork and analysing test results
- Testing for presence of woodworm and analysing test results
- Assessing the condition of insulation, moisture-proofing and drainage (though drains will not actually be tested)
- Technical information relating to structure and the materials that were used during the construction of the buildings
- Details about where the property is located and proximity to local facilities
- Recommendations for any other inspections and related work which may need to be done on the property
- A valuation, only if you request one
Both these surveys are conducted in all fairness and impartiality so you can be rest assured of its authenticity. The buyer gains most from these surveys as they help him make a well-informed decision about the property he hopes to purchase.
Basic Valuation Mortgage
A Basic Mortgage Valuation is a fundamental requirement for any mortgage lender before they sanction you a loan. The lender organises the valuation, but you pay for it based on the size and purchase price of the property. Though, there are some lenders who will waive their fee for the valuation as an incentive to get you to take out a mortgage with them.
The concerned lender will send a valuation specialist to determine whether the value the property is worth the amount you have negotiated to borrow, and whether it is a viable deal for the mortgage lender. These valuations can be based on ‘drive by’ valuations or a more detailed inspection of the property. But you must remember that the valuer is only concerned with problems that might affect safeguarding the lender’s loan. He is not obligated to check or reveal any structural problems to you.
This valuation is essentially the lender’s surety that the property you plan to buy is authentic and actually worth the loan amount. If by some quirk of fate you are unable to repay the mortgage, then the lender should be able to regain his money from sale of the property. As such, this mortgage valuation is a pre-requisite he cannot afford to overlook.
This valuation is very sketchy and will not give you a comprehensive look into the overall condition of the property, both structural and otherwise. Hence, the Council of Mortgage Lenders advises buyers to carry out more extensive surveys to get an accurate valuation of the property so that they are not shortchanged in the transaction.
How long do the surveys take?
A Basic Mortgage Valuation will only take a few hours, a HSV survey can be completed in a day and a Building Survey can take anywhere between two days or a week to complete.
How much do the surveys cost?
Whichever type of survey you opt for the cost tends to vary depending on the value of the property, its size and location, accessibility and the extent of problems the property has.
The average price for a HSV is between £300 and £420 for a house that costs between £150,000 and £200,000. At the same time, a Building Survey may cost you anywhere between £560 and £730 for houses in the same price range.
How do I find a surveyor?
You must ensure that the surveyor you hire is a member of RICS or the Incorporated Society of Valuers and Auctioneers (ISVA). If he is not a licensed surveyor, then your property survey will not be legally binding and could cause you problems in the future.
You can scour the RICS website for chartered surveyors registered with them, or request your conveyancing solicitor to recommend a licensed surveyor, or you could even go with your mortgage lender’s surveyor.
How to instruct your surveyor
- Be clear about the type of survey you want conducted so he can come prepared
- Clarify what all will be included in the type of survey you choose
- Tell the surveyor beforehand if you want to know any specific information about the house or construction.
- If you have specific reservations about the property, you can ask him to make them the primary objective of the survey. Be explicit in your instructions, because you cannot claim against damage if it did not fall under the scope of the initial survey
- Confirm whether your surveyor is qualified test the drains or check for woodworm etc. If not, you may have to hire another expert to do the required tests
- Go through the terms and the conditions of the survey with a fine-toothed comb clarify all doubts. If you suffer a loss due to negligence in the survey, the surveyor could be held liable
- The surveyor should be informed if you plan on making structural changes to the property. He will be able to give you an informed opinion about the feasibility of making the changes based on the present condition of the structure and will give you suitable recommendations.
Property surveys may seem like an additional burden during the time of transaction, but it is well worth the time, effort and money to get one done by a licensed surveyor to secure your property investment.
