Property Advice on Housing Surveys in NI
Surveys are essential for the protection of purchasers and their lenders. Whilst sellers are obligated to disclose information, or at least not tell lies through the legal process, the basic underlying legal arrangement is that the buyer takes the property as it is (caveat emptor are the legal buzz words which mean "let the buyer beware"). There are no warranties or guarantees as to condition and no remedies available if the property turns out to have damp, wet rot, dry rot, woodworm, electrical, plumbing, heating, weathering, structural or other problems. The seller cannot be sued on any of these matters unless deliberate deception or misinformation has occurred. Occasionally some warranties are available, such as the National House Builders Council ten year scheme if the property has been recently built, but these should not be completely relied upon without question.
There are three main types of survey:
- A Valuation Report is required by the lender to ensure that if a buyer defaults on their mortgage payments the property could be sold for enough money to pay off the mortgage. A member of the Royal Institution of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers will be instructed to visit and report on the property. The valuer's job is to compare the price with the value of other property in the area and check for any obvious repair or structural problems. Valuation visits usually take less than half an hour and give little protection to the buyer who has to pay the fee to the lenders. The fee could be anything from £100 to £250. Some lenders may offer free valuation reports as part of mortgage packages.
- A Home Buyers Valuation Report is prepared by a member of the Royal Institute of Chartered Surveyors and requires a thorough inspection of the property. The visit may be for between one and two hours and a detailed written report of perhaps up to fifteen pages will be produced. The interior and exterior condition and services, planning, building control and legal issues are reported on. A summary of both the present condition and recommendations concerning future maintenance are given. An assessment of the open market value and recommended insurance coverage figure (assuming full reinstatement) is given. However no assumption of risk or recommendation to purchase is made. Buyers are merely given better and more information upon which to make final judgment although further reports or estimates from electricians, plumbers, heating engineers, timber treatment companies, roofers or builders may still be necessary. The fee could be anything from £300 to £750 depending on the value of the property and the time taken by the surveyor.
- A Structural Survey is carried out by a structural engineer and is usually only commissioned to investigate specific problems identified in a valuation report such as cracking of external walls or unevenness in the roof. A report on a specific problem might cost £250 - £500 and a full structural survey on an entire property between £500 - £1250.
If a valuation or survey reveals problems with the property, a buyer can either withdraw his offer and start to look elsewhere or, if the problems can be remedied for an estimated cost, can use the survey results to ask for a reduction in the price to cover the required work. Any renegotiation in a rising market of course runs the risk of the seller considering the gentleman's agreement is at an end and accepting the original or a higher price from someone else.