Written by Malcolm Webb, Technical Director, Legal & General Surveying Services
You wouldn’t buy a car without checking its MOT history, so why do most people buy a home without a survey? Just one in ten home buyers invested in one in Q1, and while a home survey is not legally required, it is a powerful asset that can provide peace of mind and help negotiate a fair asking price.
Advisers already do a fantastic job in pairing buyers with the optimum mortgage product, but by highlighting and explaining the importance of home surveys they can go the extra mile in helping buyers to make informed financial decisions.
Home surveys are a critical step in the homebuying process
Buying a property is typically the biggest expense in a person’s life, so it’s crucial that they understand every inch of their new investment. Buyers typically opt for one of three types of RICS-certified home surveys: Level 1, Level 2, or Level 3. While all levels offer a physical inspection of a property, the level of detail and advice scales up. As such, Level 1 identifies defects, Level 2 identifies defects and provides advice on what to do, and finally, Level 3 is a more in-depth inspection and investigation of defects with advice more suited to older or extended properties. Additionally, a snagging survey is specifically crafted for new-build properties.
Surveys can cost anything from around £300 to over £1,000 depending on the level and provider. While this is clearly not a small sum, it pales in comparison to the potential costs that could follow later down the line without a survey. Issues such as asbestos are not visible to the human eye and could cost many thousands to rectify. And even if a buyer knowingly or unknowingly lives in the property without addressing any serious problems, the trouble isn’t over. If the buyer than sells the property later down the line, there is every chance that a prospective buyer could invest in a survey and negotiate a lower asking price or pull out of the purchase altogether. Brokers have an important role to play in ensuring that all buyers understand the homebuying journey, and the importance of a home survey within it.
Lack of awareness, financial strain, and misconceptions holding buyers back
This all begs the question: why are so many buyers happy to push ahead without a survey, with the benefits so clear? Firstly, there is a distinct lack of awareness around the money that could be saved with a home survey, or lost in the absence of one. With such a substantial amount of money at stake, advisers must ensure that every borrower understands the risks and benefits of their decision. Additionally, there is no doubt that affordability challenges play a significant role. Last year, Legal & General’s Bank of Family research found that almost half (47%) of all homes bought by those under the age of 55 will have been done so with the help of parents, grandparents or other relations. Meanwhile, the ONS puts the average UK property price at a whopping £285,000, with an annual increase of £6,000. With no legal obligation for a survey, it is understandable why many are keen to skip the cost.
And finally, we have the misconception that a valuation will either suffice as an alternative to a home survey, or that they are one and the same. The homebuying journey can be daunting to say the least, and especially so for first-time buyers not familiar with industry jargon. It is important that advisers take time to explain that a valuation is crafted for the lender, and aims to check the property is
adequate security for the loan – crucially, it does not tell the purchaser about repairs and maintenance that are required. It is the home survey that buyers need to take particular notice of to ensure they are not hit with a large, unexpected repair bill after moving into their dream home.
Often bypassed, home surveys help to safeguard against future financial strain and contribute to more secure homebuying experiences. Advisers play a key role in educating clients about the various types of surveys and their benefits, helping to bridge the awareness gap and dispel misconceptions. By understanding and using the value of surveys, buyers can confidently navigate the homebuying journey and secure a home that stands the test of time.
