Here, we review what a homebuyer’s report is and what it includes, along with why and when one is needed.
When considering buying a house, it is important to make the correct decision. This is no less the case with that all-important first step onto the property ladder. A mortgage valuation report is the minimum required – it is not a survey, but simply a quick assessment carried out on the lender’s behalf to ensure that the property being purchased will be adequate security for the mortgage loan, if granted. Although a valuation report will reflect any serious problems, it will not give a fuller picture of the condition of the property. It can be seen, therefore, that more detail would assist the potential purchaser in making a more informed decision.
A homebuyer’s report provides independent expert advice to help avoid unexpected repair bills – unfortunately, not an uncommon event. These can typically run to over £5,000 on a building if there are problems such as dry rot, subsidence or other structural defects. Although estate agents are able to offer general advice, they are not specifically trained and properly qualified in the inspection and evaluation of various types of buildings to detect possible problems. Additionally, as they are party to the sale and benefit from receiving commission or other fees on its successful completion, their total impartiality cannot always be guaranteed.
Homebuyers’ reports are produced by quantity surveyors who are members of the Royal Institute of Chartered Surveyors (RICS). If the building is large or old and non-standard, a full (structural) survey will be required. Statistically, only about one buyer in five usually requests this level of inspection. For a home that is either modern – or perhaps an older building but of normal construction and in reasonable condition – a homebuyer’s report will give ample information and should usually suffice. Additionally, although it will not contain as much information as a full structural report, the fees are considerably lower.
Basic mortgage valuations typically have a fee in the region of £200 and the fee for a homebuyer’s report fee is higher to reflect the extra work involved, information supplied and advice offered. A report will include details of any general repairs or ongoing maintenance that may be necessary, along with any obvious defects such as rot and subsidence, although it will not give estimated costs for any work required. Also included is the estimated insurance rebuilding cost. The work to prepare the report takes between two and four hours, although the surveyor does not look behind furniture, raise floorboards or drill holes in walls to view inside or take samples. Detailed advice on specific defects is not usually included, so properties that require alterations or repairs work or older non-standard properties are not suitable for this type of report; a full structural survey is recommended instead. Turning to the purchase of apartments and flats, a mid-range homebuyer’s report is usually thought sufficient – except when the property is part of a conversion of an older building, especially a listed one.
Condition reports are also available to the vendor (seller) of the property. These are simpler than homebuyers’ reports as they exclude insurance rebuilding valuations and details of likely ongoing repairs and maintenance.
Finally, some experts and buyer’s representatives consider that because the wording of homebuyer’s reports often contains numerous caveats and conditions, it limits the real value of the information offered.