A mortgage valuation report is not a survey!
August 7th, 2013
A MORTGAGE VALUATION IS NOT A SURVEY……….
Many homebuyers commit to buying a property based on a mortgage valuation report under the illusion the property has been examined through the eyes of a surveyor, not realising the mortgage valuation is not a building survey. Only one in five purchasers actually commission a building survey and yet four out of five think they do, because they get a mortgage valuation.
A property, whether your first house or a buy to let investment is most likely to be the biggest investment you’ll ever make in your lifetime, yet the statistics on how easily we commit to purchase without seeking professional advice or assistance is shocking. Considering the expense of buying a new home or investment property the argument for not receiving professional advice is unconvincing. In reality you’re contractually agreeing to spending the next 25 – 30 years of your life paying back a mortgage at roughly 3-4 times more than the sum you originally borrowed. This is a huge level of commitment and those who chose to be ‘penny wise but pound foolish’ during purchase often face the consequences of not insuring themselves with professional advice, at which maximum wouldn’t have cost more than a week or two’s wages.
Too many buyers rely upon a basic valuation report and a pile of historic documents provided by vendors containing years of invoices from building work as a form of guarantee the property is in a sound, well maintained condition. Not knowing the difference between a mortgage valuation report and a building survey or saving money on professional services could result in you inheriting problems you never knew existed.
One in four buyers who purchased a property and never commissioned a survey or thought they had after a valuation report inherited building problems to the cost of £2,500.00 to correct issues, for one in ten it was more than £10,000.00. Those buyers who actually did commission a building survey at the average price of £500.00 the purchase price was reduced on average by £2000.00 (Statistics – Which? May 2008).
Buildings are complex with walls, floors, ceilings and roof structures constructed using various different building materials and techniques. Services and systems incorporated are also complex too, including drainage, water supplies, gas and electric, each with their own industry standard codes of practice and regulations.
A valuation report does not require an inspection into floors, walls, roofs or an inspection of drains or rain water removal services. Carpets and furnishings are not moved and a valuation will only comment on the availability of services and not upon their condition. Comments may be passed on damp and decay if easily visible as these issues can affect the structure, fabric and internal decorations of the building affecting its value, although rarely is a diagnosis provided or estimate cost for the repairs.
It is also wrongly presumed by most that modern buildings should be free from defects due to their recent construction. Buildings tend to have specific issues relating to their era of construction which are mostly due to construction materials and practices used at that time. Damp and decay however can affect any building old or new, although is generally more common in older buildings, but that doesn’t mean modern buildings are exempt from the risk of flooding or water damage. In fact recent government schemes such as the green deal and improvements to building regulations have consequently lead to a rise in damp problems in modern buildings, the result of improved insulation levels and draught proofing, combined with poor design of heating, ventilation and the management of atmospheric moisture.
No building whether old or new is free from potential issues and as a buyer you should provide yourself with as much information about the nomenclature of buildings and defects that can arise before you commit to buy. Remember ‘knowledge is power’ when it comes to buying and negotiating costs, especially today in a buyer’s market. Even if you are stretching finances to purchase, a survey is essential to ensure your investment is sound and that you’re not inheriting unwanted issues.
So what type of survey do I need?
As we’ve explained not all surveys are the same and a valuation report should not be regarded as a survey. Following is a brief description of the type of surveys available and a guide price of expected costs.
A valuation survey does exactly as its name suggests: A valuation of the property. A valuation report determines if the property you are purchasing is worth the amount you have agreed to pay based on current market value. In some cases the valuation report may not even include a site visit and may be determined by the sale of other properties in the area, known as a ‘desktop survey’. The purpose of a valuation report is primarily for the mortgage lender, to ensure their loan to you can be recovered if you fail to meet payments and the property has to be repossessed and sold. This type of report should not be relied upon regarding the condition of the property for purchase.
HOME BUYERS REPORT
The homebuyers report was introduced in July 2009 by the Royal Institution of Chartered Surveyors (RICS). The survey generally costs between £250 and £400 and includes an overview and summary regarding the condition of the property both internally and externally. The report also includes really useful and user friendly colour coded traffic light system used for condition rating aspects of the building to ensure you are easily aware of the seriousness of any problems identified.
A homebuyers survey also includes a market valuation of the property and an estimate of the insurance rebuild costs. In addition, useful information is provided about what action you may need to undertake next regarding legal advice prior to exchange of contracts and recommendations for further inspections/reports (if necessary) such as damp and timber, roof, gas and electrical.
A FULL STRUCTURAL BUILDING SURVEY
A full structural building survey is in truth essential if you are buying any property over 50 years old, if the property has been extended, refurbished or has had severe issues such as movement, regardless of whether this has been repaired or appears historic. A full structural building survey usually cost up to £1000.00 dependent upon the size and price of the property and will take considerably longer to produce rather than the 1 – 2 hours it takes to perform a homebuyers survey, therefore expect the findings of the report to take longer to be returned to you, plan in advance.
A full building survey is the most comprehensive of all regarding the general condition of the entire property and includes an inspection to every aspect of the building which is readily accessible to assess the condition of structural materials and the quality of construction.
The report will provide category damage ratings and costing for any defects identified as well as additional advice where further investigations are required which are outside the scope of the survey and require independent specialist advice. A full structural survey should provide you with all the available information you’ll need to make an informed decision as to whether or not you want to proceed with the purchase.
Independent reports by specialist surveyors/contractors are usually instructed on the recommendation from a either a homebuyers survey or a full structural building survey. This doesn’t however mean that you cannot instruct an independent report on your own accord. Commissioning various independent reports from specialist contractors is a cost effective way of obtaining critical information about the quality and lifespan of the services and condition of the property quickly.
The purposes of these reports is for surveyors with specialist in depth knowledge within a particular field to investigate further and provide necessary advice and recommendations/costing for repairs (if required).
It is essential however that if you instruct an independent report that you choose your surveyor carefully and ensure they are fully accredited by the relevant trade / government associations. Independent reports are usually cheaper than a home buyers survey and can usually be turned around within a week as they only focus on one particularly subject.
A list of the most likely independent surveys you may require are below;
Gas Inspections – Regulated by the ‘Gas Safe Register‘ – The official list of gas engineers who are registered to work safely and legally on boilers, cookers, fires and all other gas appliances.
Electrical Inspections – Regulated by the ‘ National Inspection Council for Electrical Installation Contracting – NICEIC’ – The leading voluntary regulatory body for the electrical contracting industry, engineers who are registered ensure high standards and their work is checked against the IEE Wiring Regulations and other standards.
Drainage Inspections – In most situations your drains are likely to have been adopted by your local water service provider (Yorkshire Water etc) and inspections/ repair can usually be performed free of charge.
Roof Inspections- Leading Trade Association – The National Federation of Roofing Contractors Limited (NFRC) – the UK’s largest roofing trade association, representing over 70% of the roofing industry.
Damp & Timber Inspections – Leading Trade Association – The Property Care Association – The Property Care Association formerly part of the BWPDA, is the leading trade body for structural waterproofing, wood preservation, damp proofing, flood remediation and structural maintenance in the UK.
DAMP AND TIMBER REPORTS
If you are a potential purchaser looking to buy a property and anxious to know about the condition of your future home before you buy you may need the assistance of a professional company for advice, diagnosis and repair?
Dryfix Preservation Limited are ‘Yorkshires Leading Damp & Timber Specialists’ providing professional reports and repair solutions for; damp, woodworm infestations, wet rot, dry rot, condensation and other building defects.
We provide professional and credible reports undertaken by experienced and fully qualified remedial surveyors for damp, decay and building issues. Our reports come with a comprehensive assessment of any problems identified during our survey along with our recommendations and costs for repairs, if necessary. Our reports include edited pictures and detailed specifications along with category damage ratings to assist your understanding about the urgency of any repairs needed.
Our surveys are only undertaken by experienced and qualified remedial surveyors who hold the C.S.R.T qualification. This recognition is only awarded by the Property Care Association (PCA) formerly known as the (BWPDA) British Wood Preserving and Damp Proofing Association our industry body. This proves that our surveyors have been independently examined and tested proving their extensive knowledge and expertise. Dryfix Preservation Ltd are full members of the Property Care Association.
Our surveys are carried out in accordance with The British Standards Code of Practice and our surveys compiled in comprehensive, detailed and edited reports available in both printed or digital media.
Our surveyors carry the most advanced and sophisticated diagnostic and inspection equipment onsite, including thermal imaging and fibre-optic cameras to examine hidden cavities, highlighting blockages and bridged damp proof courses. Salt analysis testing and equipment for in-depth moisture analysis of masonry walls and plaster is also available. Photographic evidence of our findings is recorded and included within our report, so you can be sure of correct diagnosis.
Our survey fees are extremely competitive starting at just £90.00 (+vat), which will provide you with all the necessary advice you need regarding the condition of the property before you buy. Considering the average price of a two bedroom terraced property in York is approximately £130,000.00 this is less than .1% (.083%) value of the property, a survey form Dryfix is a sound investment to ensure your investment is sound.
When in need of expert advice for damp diagnosis and repair don’t hesitate to ask, call “Yorkshires Leading Damp & Timber Specialists” Dryfix Preservation Ltd
Regards and best of luck with your purchase
C.S.R.T / I.S.S.E
Dryfix Preservation Surveyor