What type of home survey do you need?

What type of home survey do you need?

Is a full building survey worth the money or are you better off with a cheaper option?

lovemoney staff

Mortgages and Home

lovemoney staff
Updated on 1 February 2017

Buying a home is a massive financial commitment, so it makes sense to find out a little about the property you're thinking about purchasing before signing on the dotted line.

After all, many of us spend a lot of time and effort researching smaller purchases, such as a new car, to make sure we don’t end up with insufficient boot space or poor fuel efficiency. And who hasn’t checked out a potential holiday destination on the internet to read other people’s reviews before making a final decision?

Unfortunately, unless you’re a surveyor you are unlikely to spot all the problems with a property before it’s too late and you’re living there. Your new home could have serious problems, from structural failings to dodgy wiring, so even if you are a specialist in one of those areas, you still can’t be sure you haven’t missed something else vital. That’s what chartered surveyors are for.

Of course the more detailed the survey you get, the more it costs, and a criticism of surveys is that they sometimes raise more questions than they answer. Even surveyors can’t give you a cast-iron guarantee that your property is fine – often carefully wording their report to make its limitations clear (after all, they need to cover their backs against future claims).

All of which leaves you a bit confused. Is it worth forking out for a full survey, or should you save your money and go for a cheaper alternative?

Below we run through your options, with typical costs based on a £200,000 property, but prices vary between lenders and surveyors.

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Basic valuation – £150

If you are getting a mortgage to buy your property your lender will insist on a basic valuation as an absolute minimum. Usually they expect you to pay for this but some will throw in a free valuation as an incentive. Costs will vary depending on the size and value of the property but start from £150.

This is not a survey and you shouldn’t treat it as one. It is done for the lender’s benefit only, to assure them of the value of the asset they are lending against.

Having said that, valuations are a bit more thorough now than pre-credit crunch, since lenders and valuers have woken up to the fact that property prices can actually fall. The bad old days of ‘drive-by’ valuations where the valuer didn’t even set foot inside the property are behind us.

As a result the valuation will probably pick up major structural failings or other serious problems. But it should certainly not be relied upon in any way, and you may not even get to read it, depending on your lender.

Indeed, according to the Royal Institution of Chartered Surveyors (RICS), 25% of those who only got the basic mortgage lender’s valuation had to carry out some form of unplanned work on their property in the first 12 months of moving in, amounting to an average cost of £1,100. Borrower beware!

RICS Condition Report – £250

It’s highly recommended that you upgrade to something more than the lender’s valuation and the most basic (and cheapest) level of survey is a RICS Condition Report.

This is only suitable if the home you are buying is what's called a standard construction – such as a house, flat or bungalow built using common materials, like bricks and mortar. It should also be in reasonable condition. In other words it’s not going to be sufficient for a beamed cottage built in the 1600s, but it might be suitable for a 1980s three-bed semi that looks in pretty good nick.

The Condition Report uses traffic light ratings for different parts of the building, the services and the garage to highlight problems and the degree of attention they require.

It also gives you a summary of the risks to the condition of the building as well as noting any issues that your solicitor needs to investigate further, such as checking planning permission is in place for an extension.

An RICS Condition Report does not automatically include a valuation, but your surveyor will probably be able to do one as an extra. However, your lender will almost certainly insist that you additionally arrange a valuation through them, so you may have to pay the costs for both.

Homebuyer Report – £400

This is popular with many purchasers because it offers more detailed information on the property. Your lender may let you upgrade its valuation to a Homebuyer Report, or you can shop around for your own, in which case be prepared to have to pay for the lender’s valuation in addition. Costs start from around £400.

It is still only suitable for conventional properties that seem in reasonable condition, so if you are buying a very old home you will probably need a more thorough survey.

The Homebuyer Report looks at the condition of the building and services, and the surveyor will conduct a fairly-detailed investigation – taking a couple of hours. This should uncover structural problems like subsidence and damp.

It also uses the traffic light system which is easy for buyers to understand. Green means no work is needed, yellow means repairs need doing but they are not serious, and red highlights defects that should be investigated urgently.

The surveyor will note down any issues that could affect the value of the property and advise you on repairs or maintenance that need to be investigated further.

You’ll also get a valuation as standard as well as an insurance reinstatement figure for the property (which is different to its market value).

Depending on your perspective a Homebuyer Report offers the best of both worlds, or the worst. It’s a thorough look at the property and should catch most major problems. However, it won’t claim to offer any guarantee on the state of the property (actually no survey will do that).

If you have ever had one you will notice repeated reference to the limitations of the inspection, so you pay a premium over a Condition Report but some would argue you don’t actually get that much more for your money.

Building Survey (full structural survey) – £600

The crème de la crème of home surveys, and you should seriously consider one if you are buying an older property, a property that has been significantly altered (or you are planning large alterations), or an unusual home.

It will give you very detailed information about the structure and fabric of the property and the surveyor will spend a number of hours examining the building and land.

You will get a detailed report describing visible defects as well as potential problems caused by hidden flaws, advice on repairs, the consequences of doing nothing and advice for your solicitor.

You won’t get a valuation as standard but your surveyor may be able to add one as an extra.

The document will be hefty and every surveyor will tell you that they almost never do a full building survey without uncovering something. So be prepared to be shocked when you see all the things that are seemingly wrong with the home of your dreams, and don’t make any rash decisions before speaking to the surveyor.

In fact, one good thing about a full survey is that the surveyor is usually happy to explain things to you over the phone after you have digested the report.

Is it worth the money?

As thorough as a building survey is (and it really is), there will be limitations. A surveyor is the best placed professional to give an overall appraisal of a property but they are not specialists in damp or timber, nor are they structural engineers.

The reality is that if they spot a potential problem they may not have the knowledge to fully diagnose it, and may advise that further reports are carried out (which means more expense). This will be familiar to anyone who has spent a lot of money on a building survey only to find it asks more questions than it answers. It can be annoying to get a report back telling you to get a damp, timber or roof specialist in to investigate further, because you wonder whether it would have been cheaper to call them in the first place.

But remember that a damp specialist won’t be able to tell you anything about the electrics and an electrician won’t have a clue about subsidence.

Try to think of a surveyor as a highly-qualified jack of all trades (in a nice way). They can’t be master of everything, but they are the best person to give an overall appraisal, and on many properties further investigations won’t be needed.

While these surveys are very expensive, they do offer valuable information on a property that is costing you hundreds of thousands of pounds. It’s got to be money well spent to avoid a potentially life-changing mistake, hasn’t it?

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