Home survey

Over a fifth of home buyers who did not take out a home survey are saddled with a property they would never have bought had they been aware of its true condition before purchase, according to new research by RICS.

Results from RICS’ survey of home buying consumers, released today, show that many homeowners who did not take out a home survey are left with a property they regret buying and an average of £5,750 in repair bills.

The survey of 1,017 buyers across the UK found that consumers are clearly aware of the need for independent advice, with 94% of respondents agreeing it is important to commission a survey. However, nearly a third failed to do so. This means buyers are left ignorant of issues with the property, such as structural defects, dry and wet rot, subsidence and many other faults, only for these to become serious matters at a later date.  The new homeowner may then be unable to afford, or may lose the desire, to fix the faults and may be left with a property they may no longer want to live in but are unable to sell to recoup their losses.

  • 89% of respondents who did not commission a survey now think it is important to take out independent advice.
  • 73% of people who did commission a survey said it provided them with peace of mind and over 50% felt it was value for money.

Buying a home is one of the biggest decisions most people will ever make and yet many consumers are doing so blind to the facts. Serious faults are difficult to identify and costly to repair. By not being aware of them consumers are risking a potential home buying time bomb. This can cause extreme stress and financial strain on homeowners who are often stuck with a property they no longer want but cannot sell.

Results from the survey of home buying consumers also showed common misconceptions and lack of understanding amongst consumers. Nearly 60% of respondents incorrectly identified an estate agent’s primary responsibility with 1 in 10 mistakenly believing agent’s act for the buyer, whilst nearly 1 in 5 thinking they act equally for the buyer and seller.

The lack of understanding about the home buying process is putting consumers at increased risk as many fail to take out further independent, expert advice. Agents can and should offer advice to buyers, however, only a surveyor is trained to identify issues with a property. The cost of a survey is a small price to pay for this knowledge and peace of mind.

A glimmer of light at the end of the very long tunnel

My father was an estate agent and auctioneer and therefore I have been connected to the housing market for most of my life.   I have been through numerous recessions affecting the housing market but none as deep and as drawn out as this one.

With hindsight the first signs were the cooling off of the market around mid 2007 followed by the banking crisis in 2008 which brought about the demise of the Northern Rock and Lehman Brothers banks.  From that point onwards it was like a “pack of cards” as each bank had to be bailed out by the Government.  As a result lenders have had to build up their reserves and consequently have not had the funds or inclination to lend.   Businesses and the housing market have suffered as a result.

The first time buyer has not been able to buy unless they have had a substantial deposit, typically 20% to 25% and their credit standing had to be squeaky clean.  First time buyers have been renting and hence the rental market has been booming.  As the first time buyer is the catalyst for the housing market the market has been stagnating.

The solicitors, conveyancers, estate agents and surveyors involved with the housing market since 2007 have had a very difficult time and I have seen many companies, friends and colleagues call it a day.

The country needs a buoyant housing market.  A large part of the services sector as mentioned above is dependent on it along with removal firms, retailers such as those retailing white goods, carpets, DIY not to mention new build housing.  This would provide some of the much needed growth that the economists say is currently lacking.

However, we are now starting to see, dare I say it, some “green shoots”.

It has been reported that the number of first time buyers is at its highest level since 2007 and the number is rising faster than the overall number of house purchasers.

Researchers say that house price affordability is close to its best in almost a decade and the proportion of disposable earnings devoted to mortgage payments by the average first time buyer is standing at 27% as opposed to the high of 50% in 2007.

It was recently reported that buying a three bedroom house is £120 a month cheaper than renting a similar house.

On the mortgage front, the Funding for Lending Scheme (FLS) is beginning to have a positive effect on lending activity and a recent survey showed that it is now easier to secure a mortgage than at any time in the last four years.

The size of the deposit for first time buyers has been one of the main hurdles to putting a foot on the housing ladder.  In 2011 a survey showed that 70% of buyers regarded this as the biggest obstacle but this view has now fallen to 59%.  These statistics are supported with the knowledge that some major lenders have recently launched 95% mortgage products.

The Council for Mortgage Lenders recently reported that people with small deposits are getting access to mortgage deals and that one in 40 first time buyers are getting a 95% mortgage compared with less than one in 100 a year ago.

The Office for National Statistics reported that house prices rose 3.3 per cent in 2012 which was driven by a 6.4 per cent rise in London.  Although, we do not want spiraling house prices a steady rise in house prices is healthy as it  reduces negative equity, brings more houses to the market and creates a “feelgood” factor.

On the local front we have seen slight improvement in the numbers of surveys undertaken by Homesurv in the last 3 month period compared with the same time last year.  We are therefore optimistic about the forthcoming spring market.

Russell Francis FRICS Dip HI