For many, a new year signals taking a leap into something new. An exciting decision is made and you look forward to success around the corner. However, if you’ve decided to invest in property in 2021, it’s vital to take a more measured approach. A pre-acquisition survey is a key place to start – giving you peace of mind that your investment is worth every penny.
In this blog post, we will delve into what you need to know when it comes to surveys – whether you’re investing in residential or commercial property and whether your goals are personal (I want to live here) or commercial (I want to lease this property residentially or commercially). As experts in surveys and property consultancy, we aim to help you understand the key benefits of surveys – so you come away feeling confident about your next move.
Need to arrange a survey now? Get in touch with our experts today.
Firstly, what is a pre-acquisition survey?
Before we delve into the benefits of surveys, let’s ensure we understand exactly what a survey is.
In short, a survey is an effective way for you as a buyer, tenant or investor to receive information on a state of a building, before you go ahead with the purchase.
Pre-acquisition surveys will analyse the building condition and the risks and liabilities of a property. Overall, think of a survey as vital “due diligence”.
What does a survey cover?
There are different levels of surveys you can choose from that go into varying levels of detail. What you opt for will be influenced by the type of property (new, old, commercial, residential etc.) you’re hoping to invest in or buy and your motivations (personal use, long-term investment, short-term investment etc.).
The main thing is that on completion of the survey, your initial questions are answered and you feel confident in your decision going forward – even if that means seeking out further advice.
Surveys for residential properties
For residential property buyers who are looking to live in the property, we’d always recommend the RICS homebuyer survey – which we’ll delve into more during this blog post. Speak to us about our RICS homebuyer survey services.
Surveys for commercial properties
If you’re a commercial property investor or looking to invest in residential property to add to your portfolio, a more in-depth survey may be required. Speak to our consultants to learn more about this.
Undisputable benefits of undergoing a pre-acquisition survey
1. Have an informed general overview of the property
Buying a property cannot be based on appearances alone. In fact, there’s a whole load of points to consider – and a survey helps you gain clear insight into these elements.
From top to bottom, a pre-acquisition survey can establish everything from the detection of damp right through to the condition of your roof. At Mounsey, we offer the RICS homebuyer report – which is ideal for residential properties. As a physical inspection, it is largely appropriate for a homebuyer – and will spot any issues that a homebuyer will need to investigate further with specialist expertise.
This survey also inspects the condition of boundary walls, fences, permanent outbuildings and areas in common (shared) use too.
2. Know for certain how serious issues are
Did you suspect an issue like rising damp? A survey will answer this for you and often establish its seriousness and give recommendations on a course of action.
For instance, the RICS homebuyer survey uses a traffic light system for your ease of understanding. Known as a ‘condition rating’, each inspected element will give you a number 1 – 3 which covers the following:
- Condition rating 3 – defects that are serious and/or need to be repaired, replaced or investigated urgently.
- Condition rating 2 – defects that need repairing or replacing but are not considered to be either serious or urgent. The property must be maintained in the normal way.
- Condition rating 1 – no repair is currently needed. The property must be maintained in the normal way.
- NI – not inspected. This is used where it is impossible to inspect a part of the property that would normally be inspected.
3. Gain the ability to plan and prepare
A survey enables you to make fact-based decisions. In the majority of cases, the vital information you receive means you can budget for any repair work and maintenance needed.
For residential property buyers, this could impact the offer you want to put forward. A RICS homebuyer report will give you both the following:
- Market value – “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion” Source: Description of the RICS HomeBuyer (Survey & Valuation) Service
- Reinstatement cost – “the cost of rebuilding an average home of the type and style inspected to its existing standard using modern materials and techniques and in line with current Building Regulations and other legal requirements. This includes the cost of rebuilding any garage, boundary or retaining walls and permanent outbuildings, and clearing the site. It also includes professional fees, but does not include VAT (except on fees). The reinstatement cost helps you decide on the amount of buildings insurance cover you will need for the property.” Source: Description of the RICS HomeBuyer (Survey & Valuation) Service
If you intend to lease the property for commercial purposes, this could impact how your repair obligations are written into a contract – so it’s essential to not skim over it.
4. Learn of statutory compliance issues
Depending on the building’s intended purpose, you will need to adhere carefully to certain regulations. A survey can uncover what tests need to be carried out to comply. The easiest way to explain this is to think of your survey as your ‘health check’ that you’d get with your regular doctor or GP – then if anything is flagged up for further investigation, you will need to see a specialist – a consultant, even.
Such tests could include asbestos, hazardous materials and any potential land contamination issues. You may also need to understand up-to-date fire compliance, building regulation codes and zoning and planning codes.
5. Negotiate on stronger ground
On the caveat of a survey’s finding, you may want to renegotiate your offer. In cases where issues are flagged up, you’ll likely need to invest significantly more than you originally anticipated. This will reduce what you’re willing to pay for the property.
A survey is a clear-cut fact-based document that positions you well to renegotiate your offer if needed.
6. Review if you want to proceed
Finally, the survey is a large part of deciding whether you’ll go ahead. In most cases, it’s favourable to renegotiate your offer, but in some cases, it can uncover expensive issues that force you to walk away.
Whatever the case, it’s important to be clear on your objectives – the big reasons why you want to buy this property. The survey will give you the facts you need to consider in line with these objectives – so you can decide if it’s worth going ahead or better to walk away.
The takeaway: Surveys pay for themselves many times over
As you can see, there are a myriad of benefits that no homebuyer or property investor can forfeit. Above all, it’s crucial to note that surveys will always represent value – and do truly pay for themselves. Imagine you were to buy a property without one and be unaware of the cost associated with its necessary repair. Already your investment would suffer, and you’d be out of pocket.
With a survey, you have that insight to make smart financial decisions – which will pay off dividends.
Get survey advice tailored to you
What survey you need will depend on what property you are buying – commercial or residential – and your buying motivations.
Residential property surveys
Looking to buy your dream home? Discover our residential survey and valuations service for more insight on the RICS homebuyer survey and more.
In-depth commercial property advice
If you’re a commercial landlord or commercial property investor, discover how our commercial agency services can advise and support you. At Mounsey Chartered Surveyors, our expertise in this field is what we are known for – and we are here to help you improve every aspect of your property model for overall better profits.
Questions about which pre-acquisition survey is right for you?
Don’t hesitate to get in touch – our team of experts is here to help.