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Home > Services > Residential & Agricultural Property > Guide to surveys
Guide to Residential Valuations and Surveys
House buyers are often unsure about the types of inspection which a surveyor may carry out on a property. At HBJ Gateley Wareing we feel that clarification of this matter will benefit all concerned in property transactions not least the client who in many instances is not sure of the choice available.
There are three basic types of inspection, each one having a distinct purpose, namely: - The Mortgage Valuation Report:
- The Home Buyer's Survey and Valuation;
- The Building Survey (formerly the Structural Survey).
This leaflet explains the differences between the three types of inspection, and suggests the situation in which they should be used.
THE MORTGAGE VALUATION REPORT ("SCHEME 1")
The Valuation for Mortgage Purposes is a limited report made for building societies, banks and other lenders before a loan is made on property. It is not a survey.
The report is used to guide any lenders on the value of the property for loan purposes, and is carried out for this purpose alone. Although the inspection will be carried out by a valuer who will usually be a qualified surveyor it is not a detailed inspection of the property, and only major visible defects will be noted.
The surveyor will inspect the exterior of the house from ground level only and comment on any visible major defects apparent at that time. He will also make an interior inspection but only inspect readily accessible parts of the walls, floors, ceilings and roof spaces to the extent visible from any access hatch only. Roofs, chimneys and so forth will only be reported on in so far as visible from ground level.
You should note what the surveyor will not do. He will not go up onto the roof or use a ladder to examine roof coverings closely. He will not test or report on all minor repairs normally occurring in older type property. He will not move floor coverings or heavy furniture to gain access and no under floor inspection will be made. The surveyor will also assume that walls, fences, drains and mains services are in satisfactory condition. These will not be specifically tested. In the case of a tenement, no attempt will be made to gain access to communal roof spaces or other mutual parts within the common block. For the purposes of the valuation, these will be assumed to be in good condition. There are various other restrictions on the scope of a valuation report which your surveyor should be happy to explain if necessary.
The surveyor may recommend that a part of the loan be retained by the lenders until such time as particular repair works are carried out. This sum may not reflect the actual cost of the work. Similarly the report may suggest that the borrower should undertake to carry out certain repairs or commission more extensive investigations where hidden defects are suspected since these may have a material effect on the value of the property. It is advisable to obtain any estimates for repairs prior to submitting an offer.
Many people rely on the Mortgage Valuation Report in the mistaken belief that it is a detailed survey. It should not, however, be relied upon as a report of the condition of the building. The report is written primarily as a guide for lenders only to enable them to decide the level of loan to be made. It may be instructed by the client direct but the same limitations apply.
In summary, a mortgage valuation is merely a valuation based on a restricted inspection to meet the requirements of lending institutions.
THE HOME BUYER'S SURVEY AND VALUATION ("SCHEME 2")
The main difference between this type of report and the Mortgage Valuation is that it is instructed by house buyers for their own use and gives them a direct link with the surveyor concerned.
A standard form of report has been produced by the RICS, which can be used for houses and flats. If the surveyor considers that the standard form is not suitable, then a private report can be prepared, which allows more flexibility for the surveyor in detailing the type and condition of the property. The scope of the inspection is, however, the same.
The report here will again advise of the surveyor's opinion of the state of repair, condition and value of the property being surveyed. They will inspect as much of the surface areas as practicable but will be under no obligation to raise fixed floorboards or inspect those areas that are covered, unexposed or not readily accessible. Any inspection will therefore not include the roof space if there is no roof hatch or the outer surfaces of the roof if it cannot be readily seen. Similarly, inaccessible flat roofs over ten feet above ground level will not be inspected. The surveyor will not be responsible for arranging the testing of services unless specifically instructed to do so.
In all cases where they detect timber defects, for example woodworm or rot, in any part of the house, they will recommend that a full timber specialists' report and estimate be obtained covering the whole property. The report will not express any opinion about the condition of uninspected parts nor it will list minor defects which do not materially affect the value of the property.
Once again, however, the surveyor will not remove fitted carpets or heavy furniture nor carry out any tests of drains or mains services. These, however, will be commented upon. The surveyor will not climb onto sloping roofs or open locked hatches nor inspect or report on snow or frost covered roofs. Again, as with a valuation, there are other restrictions or assumptions on the scope of such a report which your surveyor should clarify within the report itself.
As you will see therefore whilst the report provides a great deal of information, it will still be limited by the degree of access which the seller of the house is prepared to make available and that should obviously be borne in mind.
This report and valuation is likely to cost around twice as much as a mortgage valuation, but provides considerably more information on the condition of the building. Given the amount of money which is involved in buying a house, it is advisable to be well informed beforehand of its condition. House buyers are strongly recommended to consider the benefits of this type of report.
THE BUILDING SURVEY ("SCHEME 3")
This type of survey is rarely used in Scotland, partly because of the speed at which house purchase normally takes place. The owner of the property is unlikely to allow a building survey to take place unless there is a limited market for the property and a very strong interest has been expressed by a possible buyer. It would, however, be very sensible to instruct such a report on, say, a very old or individual type of property.
This is a very detailed report; the inspection takes several hours and may involve some limited disturbance to the building itself. The surveyor will examine closely the structure and condition of the building and, in some cases, may recommend specialist reports for drainage, electrical systems, central heating and timber diseases.
Some restrictions may still exist to prevent complete inspection (such as fitted floor coverings, limited roof access) but within these limitations the survey will be complete. In recognition of the work required for this report, the buildings survey is considerably more expensive than any other type of report. A building survey will not normally include a valuation - if one is required it should be requested at the time of the instruction.
INSURANCE
Reports prepared for lenders normally include a buildings insurance figure calculated for their requirements.
Usually it is an approximate estimate of the likely cost of reinstatement of the property and, where appropriate, will include allowances for outbuildings and garages, demolition and site clearance and certain professional fees. While it will reflect local knowledge and available statistical building cost information, it is not a definitive statement of the exact cost of reconstruction and is provided for the purposes of general guidance only.
PRIOR ALTERATIONS
As you are probably aware, there has been a growing concern for the past number of years, particularly in Edinburgh, regarding the difficulties caused by prior alterations to the subjects of purchase. In many cases properties have had the benefit of alterations carried out to them but often without the necessary Local Authority consents and permissions being in place. This has resulted in either purchases falling through or at the very least delays and additional expense for all concerned in the transaction. This has often arisen even when the alterations have been historic being as much as 20 or 30 years old and possibly of what can only be described as a trivial nature.
The problem has been compounded by the fact that although surveyors are obliged to report only on alterations which have a material effect on the value so far as lenders are concerned, a trend had developed of going beyond this statutory duty and reporting all alterations whether or not they had a material effect on value and whether or not they were recent or significant. As stated such a development has in general terms not been of benefit to either sellers or purchasers.
In order to address this problem therefore, surveyors within Edinburgh have now agreed that with a view to assisting the speedier conclusion of missives to the benefit of buyer and seller alike, that they will now in essence revert to their statutory duty. This will mean that when they report upon a property (whether it is a Scheme 1 or Scheme 2 report) a surveyor will only be required to comment upon alterations if these are considered to be of a recent significant nature unlikely to have a material effect upon the value of the property. In addition surveyors amongst themselves have agreed on which alterations would have a material effect, those which may have a material effect and those which are clearly of a trivial nature. Surveyors will not comment on historic or minor alterations and in turn solicitors will not be made aware of the existence of such works. It follows that no demands will then be made for sight of building warrants or other Local Authority paperwork in respect of such matters.
This is now the basis on which surveyors are carrying out their reports and for our part, we are happy as a firm to recommend this approach (and, indeed, unless we hear from the client to the contrary, this is the basis on which reports will be instructed). If, however, you have any concern with this or require it to be explained in further detail, please do not hesitate to contact the partner dealing with your transaction.
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