Residential Surveys

There is much confusion and mystery over the various options and types of Survey available to the prospective house purchaser, so I will try to demystify it once and for all.  It is however correct to consider there being three main categories.

Valuations

Red Book Valuations - Private Valuations- Scheme 1 (S1) - Mortgage Valuations - Re Mortgage Valuations - Further Advance.  For the purposes of clarity, all the above are the names attached to a report type and include a valuation figure.

All valuations carried out by a member of the RICS must comply with the Red Book Practice Statements and Guidance Notes (hence, Red Book Valuation).  The process of gathering and recording of data is essentially the same, and the reporting must comply with certain standards.  Therefore the only real difference in the above Valuations, is who the client is and what the report is to be used for.

Each Mortgage Lender has their own report format and specific requirements as to what is to be reported on and with what emphasis as to different aspects of the property.  This will depend upon the Lender's individual lending policy, tolerance to risk and proposed use, (such as Buy to Let mortgages). 

Despite the common misperception, Mortgage Valuation Reports are not designed for the prospective purchaser to make an informed decision, as to whether or not they should proceed with their property purchase.  They are for the client (Mortgage Lender) to understand the risk in deciding whether to lend or not.

It is therefore recommended that as a Purchaser, you should always commission your own Survey Report, written with your requirements in mind ie a Red Book Valuation/Private Valuation.  Whilst this provides only the most basic inspection, the report will highlight whether there are any major misgivings, and this will be reflected in the Valuation figure provided.

RICS HomeBuyer Report (HBR)

Firstly let me mention the Home Condition Report (HCR), originally intended to be a mandatory document of the Home information Pack (HIP).  It is now an optional feature, but since it is paid for by the Vendor, it is an option that is seldom used.

Many lenders have their own pre-purchase Survey Reports designed to be the equivalent of a HBR .  When it is combined with a Mortgage Valuation (MV), it is commonly known within the industry as a Scheme 2 (S2) and could also be a HBR. Purchasers may think they are paying for and receiving a Building Survey, and instead be obtaining a HBR equivalent.  The Survey element can be given any name and is often referred to simply as a Survey (which of course it is).

The new HBR is based around the HCR and also includes a valuation.  It goes into a great more detail than a Valuation Report, but in a non technical easy to understand way.  It covers all the main aspect of the building structure, house fabric, services and includes the garage and grounds.  It also touches potential Legal Issues and Health and Safety considerations.

The HBR can be seen as a straight forward easy to read and understand report that covers all the same aspects as a Building Survey, but perhaps in less detail.  It is suitable for most types of property, but should not be used for older buildings, pre Victorian or some non conventional structures.  It allows the prospective purchaser to make an informed decision as to whether or not to proceed, or whether to re-negotiate and perhaps proceed subject to conditions.  

Building Survey (BS)

When carried out in combination with a Mortgage Valuation, is sometimes referred to as a Scheme 3 (S3)

It is often quite wrongly referred to as a Structural or a Full Structural by both people inside and outside the industry.  It was decided sometime ago by the respective professional bodies that the only people entitled to use this terminology are the Structural or Civil Engineers.

Likewise a more detailed investigation and report of the whole property, carried out by a member of the RICS for the purposes of determining the condition, is called a Building Survey.  BS are more technical and more suitable where a bespoke report is required possibly where the building is more unusual because of its age (quite possibly being listed), type of construction or proposed use.

Footnote

Irrespective of what type of pre-purchase report you commission, you should always speak to your Surveyor before he proceeds, to ensure that your Surveyor not only has an understanding of what your requirements are, but that your expectations are realistic and that he is able to meet your expectations.