This guide was last updated 12 July 2022
Valuations and surveys can be confusing topics when you’re buying a property.
When you buy a property or arrange some lending secured on a property, a valuation is usually required, but there are three levels of valuations and reports, so which one should you go for?
In this guide, we will look at the three levels and what they usually cover, and which level you should consider.
All lenders require a basic valuation and even if you are buying a property without a lender, it is usually advisable to get the property valued by an independent surveyor, just to make sure you are paying the right price!
This ‘basic’ valuation is often carried out by a qualified property surveyor who may visit the property and inspect it internally. The report they submit usually contains a valuation figure, an estimation of the rebuild cost (for the building’s insurance policy that may be needed), and some general remarks. In order to calculate the value, the surveyor will look for similar properties in the same area that were sold in the previous six months as comparisons before settling on a value.
Lenders will also require a recommendation for what is called ‘suitable security for lending’ or, in other words, does the property meet the lender’s requirements for a property being used for a mortgage?
The surveyor is expected to look for any significant problems with the property that a lender or buyer may have–e.g. subsidence, cladding, damp, or foam insulation. Basic valuations do not comment on the general state of the property or expected wear and tear, so sometimes a lender will not require an actual physical inspection of the property. Instead of sending a surveyor, they will ask a company to do an online valuation, sometimes known as a ‘desktop valuation.’ This can often be the case when remortgaging and a free valuation is offered by the lender as part of a special mortgage product.
The level up from a basic valuation usually costs a few hundred pounds more. It will usually contain a basic valuation, but it will also have a fairly detailed report, with photographs, as to the current state of the property outlining any areas that might need attention in the future. This can be very helpful to anyone buying a property as there could be signs of problems that could get worse over time, costing a lot to put right.
Not all surveyors are qualified to carry out a full structural survey, as this looks at the structural integrity of the building itself. It is quite a costly report, as it is a specialised service and is usually only recommended if someone has a specific requirement to have the building itself checked out. An example might be if the property has suffered from subsidence in the past, walls are bowing, cracks showing, or lintels are at odd angles. A full structural survey may not have a basic valuation as part of the report, due to the nature of the survey and the person carrying out the report.
As a general rule, if a property is less than ten years old, then it should be covered by a guarantee–e.g. National House Builders Certificate (NHBC). If so, then a basic valuation is normally all that is required unless you want someone to cast a qualified eye over it to look for things you may have missed whilst viewing the property.
If you are remortgaging a property you already own, then you should know what the state of the property is already and the lender will only require a basic valuation. Nowadays, it is likely the lender will only require an online valuation when remortgaging.
If you are buying a property that is more than ten years old, then a homebuyer’s report is recommended since any original guarantee is likely to have expired. Owning a property means you are responsible for the upkeep of that property and although some repair works can be relatively inexpensive (e.g. fixing a drain), other works can be extremely expensive (e.g. replacing a roof or correcting subsidence). Therefore, knowing up front if such things are likely is recommended.
Full structural surveys can be commissioned but generally only if there is a potential reason to do so. Examples of when you might wish to do so would be if the property is old and has shown signs of movement that should be assessed, or if you plan on doing some major structural work to the property and want it checked out before you buy it.
If you need any help to decide what level of survey you need, then please contact us to talk to one of our experienced advisers on 0207 220 5110 or arrange a call using the form below.
We can put you in touch with a qualified surveyor who can discuss your requirements and help with whatever you need.