At the very least both you and your mortgage lender need to know whether the property is actually worth the amount of money you have agreed to pay for it. In order to establish the property's worth you will need a mortgage valuation. Besides this most basic form of survey, there are two main types of survey: the homebuyer's report and the buildings survey (also known as the full structural survey).
The only time that a survey is not required, is when you are buying the property entirely in cash as all lenders require a mortgage valuation. However, it is strongly advised that you also have an independent, more detailed survey carried out as the mortgage valuation will only show up any obvious problems that you will probably have noticed yourself. The level of survey you need depends a lot on the individual property you are buying.
A survey might seem to cost a lot at the time, but it will cost you more in the long run if you have to pay out thousands of pounds for major repairs that you didn't know about when you bought the property. If major defects are uncovered you might decide to pull out of the purchase, or you could be in a position to renegotiate the purchase price. In the end, a survey could save you thousands of pounds and a big headache.
If problems do appear later on which the surveyor did not point out, you may be able to claim compensation.
All lenders require a basic mortgage valuation. The surveyor is looking to establish that they are not lending you more than the property is worth, and that if you sell it off you will get at least as much money back as you paid for it. Although this is often referred to as a survey, it is really more of a valuation.
The valuer arrives at a value by comparing the property with similar ones, taking factors such as age, condition and location into account. Estate Agents and surveyors call these similar properties, "comparables". Your estate agent should provide the surveyor with comparables to establish that the sale price is correct. The valuation also points out any very obvious major faults which could affect the property's value, but is very brief and is not nearly as detailed as a real survey.
The mortgage valuation is commissioned by your mortgage lender, and is for their benefit, but unfortunately it is the buyer who must pay for it. If the house is valued lower than the purchase price this is called "down-valuing". To find out more about down-valuing and what you should do if it happens to you, click the link.
This type of survey is much more detailed than the mortgage valuation, and is for your own benefit rather than the mortgage lender's. A large majority of people opt for a homebuyer's report when buying a new home, and it is definitely worth it to be sure that your new home is in good condition. It allows you to evaluate whether you want to continue with the purchase at the present price, and to consider any urgent problems with the property.
The homebuyer's report is recommended for houses that are under 50-75 years old, conventionally constructed, and in generally sound condition.
While less comprehensive than a full structural survey, a homebuyer's report gives a good indication of the state of the property and its level of repair and maintenance. The surveyor reports on all visible parts of the property, such as the condition of the roof, pointing out particularly any areas that will need work straight away or at a later date. Further specialist surveys will be recommended if required. Any issues to be discussed with your solicitor, such as parking spaces or rights of way, should be noted in the report. An estimation of the value of the property is also included. The contract will specify exactly what will be examined, so do check this carefully.
It is easiest, and often cheapest, to ask your mortgage lender to arrange for the surveyor doing the mortgage valuation to carry out a homebuyer's report at the same time. However, if you prefer, you can find your own surveyor.
This is the most comprehensive – and the most costly – type of survey. It is suitable for any building, but is especially recommended for older buildings (75 years and upwards); those constructed out of unconventional materials such as timber or thatch; and properties which have had lots of alterations or extensions, or which you intend to alter or renovate.
The surveyor will check the property thoroughly, looking at everything that is visible or easily accessible to examine the soundness of the structure, its general condition and all major or minor faults. More specialist surveys can also be carried out on aspects such as foundations, damp proofing, or tree roots, either by a specialist within the firm of surveyors or by an independent specialist surveyor.
The report you receive will be extremely thorough and very long, as surveyors are legally obliged to inform you of all the findings of the survey. Don't necessarily be put off if it seems that endless defects are listed – every house has some defects and surveyors tend to show the worst-case scenario for anything they discover. You should be provided with a list of prices for repairs and maintenance work, which will also tend to over- rather than under-estimate prices.
If you would like to be referred to an independent and reliable surveyor, contact Northfields Estates on 0208 840 6666 or e-mail us at [email protected]