Property Surveys.

Mortgage valuation - RICS Home buyers report - Full Structural Survey

Once you have found a property you would like to buy, it is sensible to consider having an independent survey carried out before you exchange contracts.

A survey can help you understand the condition of the property, identify defects and estimate whether significant repairs may be required. The information may affect your decision to proceed, the price you are prepared to pay or the enquiries raised by your conveyancing solicitor.

Buyers commonly confuse a mortgage valuation with a property survey, but they serve different purposes.

What Is a Mortgage Valuation?

A mortgage valuation is arranged by a lender to help it decide whether the property provides sufficient security for the proposed mortgage.

Its main purpose is to assess the value of the property for the Lender. It is not a detailed inspection of the building and should not be relied upon as confirmation that the property is structurally sound or free from defects.

In some cases, the valuation may be completed remotely or using an automated valuation model, without a surveyor conducting a full physical inspection.

Even where the buyer pays a valuation fee, the report is generally prepared for the Lender rather than for the buyer. Buyers who want information about the property's condition should consider arranging their own independent survey.

RICS Home Survey Levels

The Royal Institution of Chartered Surveyors, commonly known as RICS, provides three principal levels of home survey. The appropriate level will depend on the property's age, construction, condition, and complexity.

RICS Home Survey Level 1

A Level 1 survey is the most basic RICS home survey. It is generally intended for conventional properties built from common materials that appear to be in reasonable condition.

The survey provides a concise overview of the property and uses condition ratings to identify areas that require attention. It may highlight visible defects, urgent problems and matters requiring further investigation.

A Level 1 survey does not normally provide detailed advice on repairs, the likely causes of defects, or the cost of putting them right. It is therefore unlikely to be suitable for an older, altered, unusual or visibly neglected property.

RICS Home Survey Level 2

A Level 2 survey was previously commonly known as a HomeBuyer Report or HomeBuyer Survey.

It is suitable for many conventional houses, flats and bungalows that are built from standard materials and appear to be in reasonable condition.

The report is more detailed than a Level 1 survey and may include:

• an assessment of the general condition of the property;
• visible defects that could affect its value;
• problems requiring repairs or further investigation;
• advice about ongoing maintenance;
• issues that should be referred to the buyer's conveyancer; and
• condition ratings showing the seriousness of identified defects.

A Level 2 service can be commissioned either as a survey only or as a survey with a market valuation and an insurance reinstatement figure.

A Level 2 survey may not be suitable where the property is particularly old, extensively altered, constructed using unusual materials or in poor condition.

RICS Home Survey Level 3

A Level 3 survey is the most detailed form of RICS home survey. It was previously commonly referred to as a Building Survey or Full Structural Survey.

It may be appropriate for:

• older or historic properties;
• listed buildings;
• properties in poor or visibly neglected condition;
• buildings constructed using unusual materials or methods;
• properties that have been substantially extended or altered;
• homes where major renovation work is planned; or
• properties where significant defects are already suspected.

The Surveyor will provide a more detailed assessment of the property's construction and condition. The report may explain the likely causes of the defects, the consequences of failing to repair them, and possible remedial options.

A Level 3 survey does not automatically include a market valuation or insurance reinstatement figure. These may need to be requested and agreed separately with the Surveyor.

Which Property Survey Should You Choose?

The appropriate survey should be based on the property itself rather than simply choosing the least expensive option.

A relatively modern, conventionally built home in good condition may only require a Level 1 or Level 2 survey. An older, extended, listed, unusual or poorly maintained property is more likely to justify a Level 3 survey.

You should tell the Surveyor about any particular concerns before the inspection. These could include cracking, damp, roof movement, flooding, subsidence, drainage issues, previous alterations, or proposed building work.

A surveyor may also recommend separate specialist investigations, such as drainage testing, an electrical inspection, a structural engineer's report or an assessment of damp, timber decay or invasive plants.

Will a Survey Identify Every Defect?

No survey can guarantee that every defect will be discovered.

A survey is generally a visual and non-destructive inspection. Surveyors will not usually lift fitted flooring, move heavy furniture, open up walls or inspect areas that are inaccessible or unsafe.

The report should explain the scope of the inspection, any limitations and any areas that could not be inspected. Buyers should read these sections carefully and arrange further investigations where recommended.

Can a Survey Help You Renegotiate the Price?

A survey may identify defects or necessary repairs that were not apparent when the offer was made. The buyer may then decide to:

• continue at the agreed price;
• ask the seller to carry out particular work;
• obtain quotations for repairs;
• seek a reduction in the purchase price; or
• withdraw from the transaction before exchange of contracts.

A seller is not obliged to reduce the price or carry out repairs. However, in England and Wales, an offer is not generally legally binding until contracts are exchanged, so the price may still be renegotiated before that point.

Should You Use the Lender's Surveyor?

Your Lender may allow you to upgrade its mortgage valuation to a more detailed survey, but this is not always available.

You are generally free to instruct your own independent Surveyor to report on the property's condition. However, the Lender may still require its own valuation to be completed by a surveyor or valuation provider on its approved panel.

Before instructing anyone, establish:

• exactly what inspection and report are included;
• whether a market valuation is required;
• whether the report is being prepared for you, the lender or both;
• whether the Surveyor has appropriate experience of that type of property; and
• whether any additional specialist reports may be required.

What Is an Insurance Reinstatement Figure?

An insurance reinstatement figure is an estimate of the cost to rebuild the property after complete destruction. It is not the same as the property's market value or purchase price.

The figure may be included in a Level 2 survey with valuation, but should be checked with the Surveyor when obtaining a quotation.

Surveys for Flats and Leasehold Properties

A buyer purchasing a flat should still consider having a survey carried out.

The Surveyor will normally inspect the individual flat and any accessible common areas within the agreed scope of the inspection. However, responsibility for repairing the roof, structure, external walls and common parts may be governed by the lease.

Your conveyancing solicitor should examine the lease, service charge accounts, planned major works and management information. The physical survey and the legal investigation deal with different aspects of the purchase and are both important.

Surveys for New-Build Properties

A newly built property can still contain defects. Buyers may consider arranging a professional snagging inspection to identify incomplete work, poor finishes or construction problems.

A snagging inspection is different from a mortgage valuation and may not provide the same level of information as a full RICS home survey. The appropriate inspection will depend on the property and thebuyer'ss concerns.

Your Conveyancer and the Survey Report

A surveyor assesses the property's physical condition. A solicitor or licensed conveyancer investigates the legal title and the legal issues affecting the purchase.

You should send a copy of the survey report to your conveyancer where it raises matters such as:

• extensions or structural alterations;
• possible breaches of planning control or building regulations;
• rights of way or access issues;
• shared drains, walls or boundaries;
• Japanese knotweed or other invasive plants;
• possible listed building status;
• leasehold repair responsibilities; or
• guarantees, warranties or insurance claims.

Your conveyancer can then raise appropriate enquiries with the seller's solicitor. However, conveyancers do not inspect the property and cannot advise on its structural condition.

Choosing a Surveyor

Before appointing a surveyor, ask for written confirmation of the service they will provide, the fee, the inspection limitations and whether a valuation is included.

It may be sensible to choose a surveyor who:

• is appropriately qualified and insured;
• has experience of properties of a similar age and construction;
• knows the local area;
• can explain the findings after the inspection; and
• can recommend appropriate further investigations where necessary.

Obtain Advice Before Exchange of Contracts

Survey problems should ideally be investigated before contracts are exchanged. Once the exchange has taken place, the buyer will normally be legally committed to the purchase.

A suitable survey may involve an additional expense at an already costly stage of the transaction. Still, it can provide valuable information about the property and reduce the risk of discovering serious defects after completion.

Use Solicitors.com to find conveyancing solicitors who can advise on the legal aspects of buying a property and deal with any issues raised by the survey.

Important: This guide provides general information about property purchases in England and Wales. It is not legal, surveying or financial advice. Different procedures apply in Scotland and Northern Ireland.