Buying a house is the most substantial transaction any of us are likely to make. It is also a transaction which involves a certain amount of risk, because the house you’re buying may have faults which you won’t spot. That’s why a professional survey is so important – to tell you about problems which need fixing.
To help you understand the role of surveys, in this article we look at:
- what a survey involves
- the risks of buying property
- surveys for new builds
- surveys for cash buyers
- mortgage valuations
- surveys for sellers
- the importance of surveys
What is a house survey?
A professional house survey is an assessment of the condition of a property according to the standards set down by the Royal Institution of Chartered Surveyors (RICS). A RICS survey can only be carried out by a qualified surveyor, which ensures that professional standards are followed.
There are three levels of RICS survey, designed for different types of property.
Home Survey (Level 1) is the most basic report, and provides a short overview of a property’s condition. Level 1 surveys are suitable for new and recently built homes.
Home Buyer Report (Level 2) takes a more detailed look at the inside and outside of the building, and record any defects. Level 2 surveys are usually the right choice for homes built after 1800, as long as they haven’t been empty for a long time.
Building Survey Report (Level 3) involves a thorough inspection of as much of the property is physically accessible, with the findings reported in detail. Level 3 surveys are advised for homes built before 1800, or if they are listed, renovated or built from unusual materials.
You can also add a market valuation report to a Level 2 or Level 3 survey, which can be useful for obtaining mortgage finance and buildings insurance. Both of these types of survey can also help in price negotiations.
Do I need a surveyor when buying a house?
There is no legal requirement to have a survey when you buy property, but you need to understand the implications if you decide that you won’t have one.
The importance of a house survey
Your interests are also protected by a survey. Without one, you may be buying a home with problems of many kinds which could cost a small fortune to put right. In other words, without a survey you are at risk of overpaying for your new home. Remember, that once the sale contract is signed there is no comeback to the seller. The decision to part with your money is yours alone, and the risks are yours too.
Is a survey necessary?
Unless you already have the funds to buy the property, you’re likely to be required by your mortgage lender to have one. It is usually a condition of the loan that the property is professionally surveyed to protect the interests of the lender, since they own a share of the property until the mortgage is paid off. In such cases, a survey is an unavoidable necessity.
The risks of not having a survey
What can go wrong with a property? The answer is, a lot. The main structure is the biggest issue, and whether it is sound and fit for purpose. Building standards in the UK are reliable, but there are always exceptions. Older properties in particular may have become unsound due to deterioration in roofs, walls or even foundations with the possible culprits including subsidence, poor materials or bad workmanship. There may also be deterioration from the long term effect of damp of tree roots. The more serious the problem, the higher the cost to put it right.
Even more minor problems can leave homebuyers out of pocket, such as rotten window frames or floor boards, or faulty electrics and other services. You need to know about issues such as these, and many others, before you commit to buying. If you don’t there’ll be no-one else to pick up the bill except yourself.
Do I need a survey for a new build?
Construction in the UK is legally required to meet the standards of Building Regulations set down by the National Housebuilding Control Council (NHBC). With NHBC certification, developers can provide reassurance to buyers that their new home meets the requirements for all aspects of the building including:
- Structural Safety
- Fire safety
- Site preparation
- Toxic substances
- Resistance to sound
- Electrical safety
- Workmanship and materials
NHBC certification allows buyers to proceed in confidence. From a survey point of view, however, it is always advisable (and usually obligatory for borrowers) to also have a RICS level one survey. With an NHBC certificate and a Level 1 Home Survey, buyers can proceed without worrying that there are any significant problems with the property.
What Can Building Surveyors Find on New-Build House Surveys?
In a Level 1 survey, surveyors will carry out a visual inspection, and report in the general condition of the property. Note that the report will not include advice on repairs.
What surveyors look for in new homes
The details covered will include windows, exposed floors, the roof space (viewed from the hatch) and an external visual assessment. While the survey won’t be comprehensive, it will be carried out by an experienced professional who will be on the look out for any evidence of defects. If any are seen, the survey report will recommend further investigation.
Issues found in new build homes
Possible defects in new builds could be cracks in walls, gaps in roofing, windows which don’t open and close properly or are draughty, and floors which don’t run properly up to walls. Minor issues such as minor cracks in internal plaster from settlement, or damaged surfaces on access roads and paving, can be taken up with the developer and will normally be put right.
Do You Need a Survey If You Are a Cash Buyer?
There is no obligation, legal or otherwise, to have a survey when you buy a property with cash. But that doesn’t mean you shouldn’t.
Why cash buyers should have a survey
The risks of a property purchase don’t change however you fund it. Any problems that come with your purchase are yours to put right, with all the attendant costs. Compared to the cost of property, the outgoings for a Level 1 Survey are relatively small (around £350 to £450). In return, you potentially save many £000s, and, just as importantly, buy a significant amount of peace of mind.
There is no difference between a RICS survey for a cash buyer and a mortgage buyer. It’s not the way you pay for a property that matters, but the type of property.
If you’re buying a more expensive, or older property, a Level 2 or even a Level 3 survey may be the right option. Prices will be higher, but then so will the amount you are spending, as well as the scale of potential problems. A survey is always money well spent.
Is a House Survey Different from a Mortgage Valuation?
Yes, very different. Mortgage valuations are used to verify the value of the property. They are used by lenders to make sure they are not lending money on a property which is worth less than the sums borrowed. Buyers can also have a valuation report undertaken by their surveyors to check they are paying a fair price for the property, and potentially to use as negotiating tool.
By contrast a survey is undertaken on behalf of homebuyers to protect their interests, even if they are required by the lender. Survey reports are given to homebuyers, and are usually also required by lenders. RICS surveys also conform to set standards and layouts, including the use of a traffic light system to provide a quick overview of the report.
Do I Need a Survey to Sell a House?
Homeowners are not legally required to provide a survey when they sell a house. However, surveys are a very good way of establishing the condition of the property as well as validating the asking price.
Sellers are perfectly able to commission a survey as an aid to selling the property. The survey can be shared with prospective buyers and can justify the asking price. A survey can also head off any request for a price reduction. Since all RICS surveys comply with the same professional standards, buyers can take them as an objective assessment of property condition.
If any problems are revealed in a seller’s survey, an open, honest approach with a realistic attitude to the selling price can also help the sale to proceed. If the survey comes before the house goes on the market, sellers have the very real advantage of either fixing problems, or of factoring in the costs into the asking price.
The case for buyers to have the reassurance and security of a survey is clear. Surveys are an effective form of financial protection, as well as a route to buying with confidence. The same is true for all types of property, including new builds, and whether you are a cash buyer or borrowing from a mortgage lender. Sellers too can benefit significantly from having a survey to help the selling process and price negotiation run smoothly.
The costs of a survey, especially for any cash-strapped buyers, may seem unattractive, but the cost of not having a survey could be astronomically higher. The risk simply isn’t worth taking.