When buying a new home there are a bewildering number of new terms that you will need to understand, from Stamp Duty Land Tax, to searches and surveys. The surveys can be confusing as there are two main types and these are for the benefit of different people in the process. In this guide, we will take a look at property surveys and try to shed some light on the confusion.
Mortgage survey
This survey is paid for by the person wishing to buy the property. The survey is, however, purely a valuation survey carried out for the benefit of the mortgage lender. This is where the mortgage lender instructs a chartered surveyor to carry out a survey with the intention of giving the mortgage lender a view on the true value of the property. This allows the mortgage lender to decide whether they are willing to lend on the property. Lenders can be cautious if the property is being marketed at significantly above or below the prevailing market rate. Although they pay for it, this survey is not for the buyer at all.
Property Surveys
These surveys are condition surveys and again are paid for by the buyer, unlike the mortgage survey these are for the benefit of the buyer as they give the buyer information on the condition of the property that they are considering buying. All surveys should be carried out by a chartered surveyor. There are, typically three levels of property survey:
This is an entry level survey and is suitable for properties which are new and appear in sound condition. The surveyor will carry out a physical inspection of the property internally and externally to see if there are any significant visible issues. The inspector will not lift anything (such as carpets) or move any furniture to inspect any aspect in detail. The inspector will write a report and give information around the condition of the property using a rating system from 3 – serious defects have been identified and should be addressed prior to purchase, 2 – defects that need repair but are not urgent and finally 1 – no defect found. The report will not discuss ongoing repairs or maintenance requirements
The Level 2 survey is perhaps better suited to older properties but which look in relatively good condition. This inspection includes everything that a level 1 survey has but also includes looking into the loft space, where safe access is available, to look at the roof structure internally. Like the level 1 inspection the surveyor will not lift carpets or break into the fabric of the property. The report gives condition ratings as per the level 1 inspection but also gives the inspector’s view on repairs and ongoing maintenance requirements. This survey can also be requested with a valuation service, where the surveyor will give their opinion on the market value of the property.
The level 3 survey is best suited for older properties (pre-war) or those that are unconventional, listed, have obvious needs for renovations or have had major works carried out on them. This is a much more thorough inspection which will give the purchaser detailed information on the condition of the property, the cause of any defects and the cost and timescale of any repairs or work required. With occupier consent the inspector will force open the fabric of the building to inspect things like flooring structures, electrical installations and the roof space. This is not always possible though. The report at the end will give the condition ratings as before but will also cover the costs and timescales of any required repairs as well as the probable cause of the issues.
As mentioned, the mortgage valuation survey is for the mortgage lender only and gives very limited detail on the condition of the property. A purchaser should not rely on this survey to give them an understanding of whether the property is a good investment. The property surveys are designed to give the purchaser an indication of the property condition. Which survey to use depends on the property and its age and visible condition.
