More work for surveyors - or the demise of the building survey?

Citation

Hoxley, M. (1999), "More work for surveyors - or the demise of the building survey?", Structural Survey, Vol. 17 No. 1. https://doi.org/10.1108/ss.1999.11017aaa.001

More work for surveyors - or the demise of the building survey?

More work for surveyors ­ or the demise of the building survey?

Wide ranging proposals for changes in the way that houses are bought and sold in England and Wales are contained in a recent government consultation paper. The most significant proposal, from a surveyor's viewpoint, contained in The Key to Easier Home Buying and Selling, is that the seller should prepare an information pack ­ and that this pack should contain a survey report. The pack would be put together before the property is marketed and there would be fixed penalty criminal law sanctions for sellers (and/or their estate agents) failing to compile the pack.

The research carried out for the DETR paper found that the house-buying process in England and Wales is cheaper but slower than overseas. The aim of the current review is to speed up the stage of the process between agreeing a price and exchange of contracts. In England and Wales nearly 70 per cent of households own their own homes and owner occupation is the preferred tenure of about 80 per cent of people. Yet according to the research which underpins the paper, 28 per cent of buyers' offers accepted by sellers fail to proceed to completion, and fewer than half of buyers and sellers are satisfied with the buying and selling process.

At present, only about 40 per cent of house buyers commission an independent survey report. The other 60 per cent rely on the mortgage lender's valuation inspection or on an informal inspection. The government's proposals do not anticipate that the seller's survey would replace the mortgage valuation inspection and there would be no requirement for the survey to include a valuation. Instead, it would be "a survey report on the condition of the property, including requirements for urgent or significant repairs or matters requiring further investigation".

The paper articulates the advantages of having a suitable survey report available when a property first goes up for sale as:

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  allowing sellers to make better informed decisions, for example, about price, and, if they wish, to have any necessary work carried out before the property is offered for sale;

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  encouraging more accurate pricing, reflecting the true condition of the property;

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  allowing prospective buyers to make better informed decisions as to whether or not to make an offer and, if so, at what level;

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  helping to bring to light at an early stage potential problems which, in many cases at the moment, are identified only later by the lender's valuation inspection;

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  helping shorten the period of uncertainty between an offer being accepted and contracts being exchanged by removing a common ground for delay. At present, people may want to renegotiate or even pull out of a transaction after terms have been agreed because of defects to the property which may have been discovered later;

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  avoiding the waste involved in cases where each prospective buyer may commission a survey of the same property;

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  helping to avoid situations where the need for costly repairs comes to light only after the property has been bought; and

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  promoting better and more energy-efficient upkeep of the nation's housing stock.

The potential disadvantages are stated as:

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  additional costs of over £250 to £350 per transaction in those cases where none of the prospective buyers currently carries out a survey;

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  the survey inspection is carried out at a particular time and the accuracy of the report cannot be guaranteed over a long period. If it takes a while to find a buyer, that buyer might want to have the survey reviewed, so adding to the cost;

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  a survey of the physical condition of the property would not necessarily do away with the need for a separate valuation inspection by the mortgage lender;

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  in some cases the buyer may still want to get a more detailed survey;

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  some prospective buyers might not feel confident about the neutrality or reliability of a report prepared by a surveyor appointed by the seller; and

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  legal complexity ­ under the present arrangements the surveyor is liable only to the buyer who commissioned the survey. If the proposed new arrangements are to be effective, both the seller who commissioned the survey and the eventual buyer of the property would need to be able to take action against the surveyor if he or she had been negligent. In the event of such an action by the buyer, we do not feel the seller should be involved in any liability. We propose that liability for the content of the survey report should rest entirely with the surveyor, who would base his or her report on the findings of his or her survey.

Obviously this latter point will require some rethink of professional indemnity insurance policies, although in fact the Contract (Rights of Third Parties) Bill presently before Parliament is likely to have caused this rethink in any event. Other points included in the consultation paper are that only suitably qualified surveyors with adequate insurance cover should carry out the surveys and the seller will be required to disclose the reports of any surveys on the property carried out in the last 12 months.

So what type of surveys are likely to be carried out under these new proposals? The consultation paper favours the RICS/ISVA Homebuyers Survey but suggests that for houses that are "very run down, of non-traditional or unusual construction, which have been extensively altered or which require major conversion or renovation" it is better to have a more detailed survey. Since it is the seller who will commission the survey there are obviously problems here. Few people will be prepared to pay the extra fee for a full building survey unless an element of compulsion is included in the legislation. Unless this aspect is clarified before the proposals are enacted then it will be up to individual surveyors to decline to carry out the standard, economical homebuyer's survey of inappropriate property. Unless surveyors take such a stand we may be witnessing the death-knell of the full building survey.

The property professional associations were consulted during the research and presumably approve of the proposal for the seller to provide an information pack to include a survey. The Law Society has said that including a survey in the pack will "cause needless expense for the seller, especially as it is unlikely to be relied on by the mortgage lender or buyer". On balance, I welcome the extra work these proposals would bring surveyors, provided that there are safeguards to ensure that homebuyers' surveys are not carried out on unsuitable properties. Any comments on these proposals must be with the DETR by 31 March 1999.

Change of Editor

I was very pleased to have been asked by MCB University Press to take over the role of Editor of this journal, following Tony Poole's retirement. Tony has agreed to remain on the Editorial Board, and I am very grateful to all board members for their continued support. My "full-time" job is as Principal Lecturer in Building Surveying, at Staffordshire University, but before I became an academic four-and-a-half years ago, I was a partner in a small firm of chartered building surveyors and spent most of my 15 years in professional practice carrying out condition surveys of property. I am particularly keen to ensure that this journal remains relevant to surveyors, engineers and all professionals involved in the day-to-day inspection, conservation and adaptation of buildings and would welcome any comments from such professionals. Another issue which needs to be addressed is the title of the journal which I feel must be changed now that "structural survey" is an outlawed term. Any suggestions for a new title?

Mike Hoxley