Surveyors issue consumer warning

Surveyors issue consumer warning



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Consumers are being warned of the dangers of not taking out private surveys when purchasing a new home.

A shocking report by chartered surveyors e.surv revealed that four out of five homebuyers consider private property survey an ‘unnecessary expense’, despite it typically costing less than 0.5 per cent of the value of the property.

The figures are being held down to confusion over the difference between a lender’s valuation and a private survey. Some professionals in the homebuying process are failing to offer appropriate advice and not making it clear that a valuation is for the lenders benefit and isn’t designed to spend potential defects that are of interest to the consumer.

Richard Sexton, Business Development Director of e.surv, said: “It’s vital that consumers are aware of the consequences of not getting a survey, and are given clear information about the range of survey options available to them. Lenders need to make it clear to their customers that a mortgage valuation won’t give them the full information about the property. We are working closely to help lenders offer more transparent advice to customers about private surveys. Giving better advice before, during, and after the home buying process will help lenders ensure they meet their ‘Treating Customers Fairly’ obligations.”

He added: “Educating consumers on the importance of a private survey, and the type of survey most appropriate to their situation, isn’t just of great benefit to them, it’s also in the best interests of the lender. A valuation protects their investment, but a private survey guarantees it. If borrowers are hit by unexpected repair costs as a result of not taking out a private survey, they are more likely to default on their monthly repayments – and that represents a business risk to lenders.”

On average a private survey will save a buyer £1800 in repair costs. In some cases this could mean equate to the cash that should be used to keep up with mortgage repayments.  

In addition to the savings achieved by the buyer, the lender also benefits from a private survey as it ensures that funds lent are a suitable investment.

Richard added: “Private surveys have been perceived by consumers as technical, overly-complicated reports that are an unnecessary expense in an already expensive process. Many of them are poorly advised by professionals and are not receiving suitable advice that takes into account their individual circumstances. They don’t realise that a valuation is not for your benefit but to help the bank assess how much to lend.

“Even those who do receive good advice can’t always see past the upfront cost of the survey. They baulk at the price tag and hope they’ll be fine without it, even though it’s an investment on the most important purchase they’ll make. Indeed, Section 4.4 of the CML lending handbook warns borrows not to rely on the lenders valuation and to seek independent advice.” 

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