Conveyancing Myth Busting: Volume 1 – The difference between the mortgage valuation and a survey

During my conveyancing days, when I would ask clients to confirm whether they were having a survey conducted on the property they were purchasing, I would often receive the same response:

“I didn’t think you needed to have a survey if your mortgage lender has conducted a valuation. Aren’t they one and the same?”

 Myth: The Lender’s Valuation covers the same aspects of a structural survey. If the Lender has carried out a valuation and it has been valued at the price being paid, then the property should be fine with no underlying issues.

Fact: The Lender’s Valuation is a value focused assessment. It is for the Lender’s benefit only and cannot be relied upon by the buyer. Usually, the Valuation is produced using a ‘Desktop Valuation’, which is essentially a computer-based valuation. Some Lenders will send a Valuer to the property to conduct a brief inspection of the property to verify the valuation or purchase price. It is not a physical examination of the property condition, structure etc.

What is a survey?

There are three main types of property surveys that can be instructed when purchasing a property in England and Wales:

• Level 1 (Condition Report) – A more basic and visual inspection of the property which aims to identify significant defects and possible legal issues for the conveyancer to look into.
• Level 2 (Home Buyer Report) – A more detailed inspection than the Level 1 which may also include potential advice on condition timescales and potential repairs/maintenance needs.
• Level 3 (Building Survey) – An in-depth and even more thorough survey than Level 2, this is also sometimes referred to as a “full structural survey” and may be best if there are any concerns regarding potential structural defects.

In summary, from a legal standpoint, it is always better to have more information about the property being purchased, than less. Surveys are designed to give peace of mind and to allow buyers to make informed decisions regarding costs of potential repairs, renegotiations on price, or even to walk away from the purchase if a defect is identified that may affect their ability or willingness to proceed. This therefore forms an integral part of the due diligence process when purchasing a property in England and Wales.

Ultimately, it is the buyer’s choice and responsibility to instruct a survey on the property if they wish for one to be conducted. The principle of ‘buyer beware’ applies.

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.