15:25 PM, 30th June 2011, About 10 years ago
Buying a home or investing in a letting property are important financial decisions, but many buyers fall in to the trap of relying on the wrong information that could cost them dear.
Findings from the Royal Institution of Chartered Surveyors (RICS) revealed around one in four homebuyers picked up bills averaging £1,800 for unplanned building work after picking up the keys to their new property.
This quick guide looks at the main points to consider about property surveys and valuations:
Mortgage lender’s valuations are not surveys
A mortgage valuation established the open-market valuation of a property and is not a report that highlights any likely problems or defects of a property.
A recent court case proved property investors have no recourse to sue the valuer for negligence if they rely on the report for property valuation and rent assessment, as the valuer has no duty of care to them – only the mortgage lender.
In practical terms, that means if the valuation is wrong or the landlord cannot let the property at the expected rent and goes on to suffer a financial loss, the valuer cannot be sued for negligence.
Different levels of report
RICS has three levels of property survey – each with a different price:
• Condition report: Traffic light ratings of property condition basics that highlights urgent defects. The cheapest survey for buyers of newer homes.
• Homebuyer report: All the features of the condition report, plus a market valuation, insurance rebuild costs and advice on defects that may affect the property value. The surveyor will suggest any maintenance that needs carrying out.
• Building survey: A comprehensive report looking at defects, repair and maintenance options. This report is recommended for larger or older properties that may require extensive refurbishment or that have stood empty for a while.
Commissioning a survey
Many estate agents are RICS surveyors as well, but if you are buying a property from them, appointing an independent valuer is probably a better option. Find a local surveyor in the Yellow Pages or online at the RICS web site www.rics.org
Survey and valuation costs
Costs will vary from firm to firm, so contact two or three and opt for the cheapest. As long as the surveyor is a RICS member, the report will be the same as they have to follow the same standards and guidelines laid down by the organisation.
RICS membership can be confirmed through the web site.
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