Your home is likely to be the most expensive purchase you ever make, so you need to know as much as you can about it before you buy. A property that appears to be the house of your dreams could prove a nightmare if it turns out to need extensive and expensive work.
When you arrange your mortgage, your lender will commission a sur-veyor to do a basic valuation, which is a limited check on the property to ensure the property is worth the money the lender is lending you. You will probably have to pay a fee upwards of £150, depending on the size and purchase price of the property, although some lenders may waive the valuation fee as an incentive to secure your business.
This valuation is not a full survey and is unlikely to go into detail about the state of the property. There may be structural problems in the property that would cost a huge amount to put right that simply wont be picked up. The majority of homebuyers rely on the lenders valuation alone, but the Consumers Association and the Council of Mortgage Lenders strongly advise that you get a more detailed survey done before you buy.
John Archbold, head of surveys and valuations at LMS, one of Bri-tains largest national networks of surveyors and conveyancers, says a de-tailed survey ensures that you go into your house purchase really knowing what you are buying for your money warts and all.
It also enables you to identify any repairs needed to the property, and to negotiate a reduction in the asking price to cover the costs of those repairs which can often run into thousands of pounds, he says. In the worst-case scenario, a survey can save you from making a very expensive mistake.
Homebuyers surveys and building surveys
The Royal Institution of Chartered Surveyors (RICS) recommends that all homebuyers commission a homebuyers survey or a comprehensive building survey.
A homebuyers survey (also known as a homebuyers report) is a survey done to a standard format set out by RICS. Its most suitable for conventional properties built within the last 150 years and are in reasonable condition. Wiring, drainage and gas are not covered, so you may want a specialist to check these as well.
Homebuyers surveys are not usually suitable for properties in need of renovation, or if youre planning major alterations. Your lenders surveyor may be willing to do the valuation and the homebuyers survey at the same time to save on the cost of commissioning both separately.
The most thorough report is a building survey and is a full structural inspection of a property. It is suitable for all properties, especially: listed buildings; older properties; buildings constructed in an unusual way, however old they are; properties you plan to renovate or alter in any way; and properties that have already had extensive alterations. As with the homebuyers survey, if the surveyor you instruct is acceptable to your lender, the cost of a separate valuation may be avoided.
The-cost of your survey will depend on the value of the property. For an average £150,000 to £200,000 house, says Archbold, a homebuyers survey will cost between £300 and £420, and a building survey between £560 and £730.
The variations in price depend on the location and ease of access of the property, and prices for more expensive properties can seem prohibitive. Simon White, director of surveying firm Ashdown Lyons, uses the example of a four-bedroom London house valued at £650,000 in a suburb such as Clapham. He believes most lenders would charge a valuation fee of around-£350 for such a property. A homebuyers survey-would set you back in the region of £750, usually inclusive of a mortgage valuation, while a full building survey would be around £1,000, again inclusive of the mortgage valuation in most cases.
White says buyers must not be put off, and must look at the potential savings a survey could secure. I am constantly stressing to potential clients what good value a homebuyers report or building survey is, and in most instances the true cost is-significantly less than it appears as they would have had to pay for the mortgage valuation in any case, he says.
Home Information Packs
The process of buying and selling your house is set to change significantly over the next couple of years with the introduction of Home Information Packs (HIPs). In 2006 the government will introduce voluntary HIPs, with the intention of making them compulsory in 2007.
If you are selling your home you will have to have a HIP prepared before you put the property on the market. Included in the pack, along with searches, guarantees and planning permissions, will be a Home Condition Report. This is an outline survey and will not include a valuation.
Archbold believes many homebuyers will want a more detailed and independent survey of their own, over and above the HCR provided by the seller. It will still be up to you, the homebuyer, to understand fully the condition of the property you are buying. Caveat emptor buyer beware will still be the principle you need to live by, he says.
Jane Pridgeon, chairman of Halifax Estate Agents, thinks that the overall impact of HIPs will be positive as they will speed up the housebuying process, particularly the legal side. They will ensure that much of the legal work is carried out before the house goes on the market, so contracts can be exchanged in a matter of days rather than weeks, making it less likely that either the buyer or the seller will pull out of the deal, she says.
Simon Embley, group chief executive of Lending Solutions, agrees that HIPs will cut the abort rate buyers or sellers pulling out of the process which currently stands at 33 per cent in England and Wales.
Anything that speeds up the housebuying process, provides more certainty and takes out some of the stress, has got to be a good thing, says Embley. Others say it is a new cost for the customer, but Id challenge that. With HIPs, most of the conveyancing is done upfront, including searches and fees. It should be much simpler and quicker from the buyers perspective, especially first-time buyers.
How much HIPs will cost the seller is unclear, and it is possible that estate agents will bear the cost initially and charge the seller after completion. But, importantly, there will be no cost to the buyer, who stands to benefit most of all from the new system.
