Home surveys overhaul: a new single standard

Could a new home survey standard prove effective in bringing a greater level of protection to house buyers and sellers and improve transparency in the process? That’s the aim of a new, mandatory standard recently launched by the Royal Institution of Chartered Surveyors (RICS).

The move is one of the first concerted steps taken to improve the conveyancing process – at least, one element of it.

The new Home Survey Standard, a professional statement of mandatory requirements for all RICS professionals, amounts to a major overhaul of the home survey system and follows an RICS consultation conducted through 2019.

The mandatory requirements will become effective on 1 June 2020; and the RICS said the standard will have an emphasis on consumers being able to fully understand the importance and benefits of commissioning a home survey before buying a property. The RICS says the process and language has been simplified; consumers will be able to better understand the process; and survey offerings will be standardised.

It also states that the standard will become the best practice benchmark in promoting and enforcing the highest standards in the residential sector.

Paul Bagust, RICS Global Property Standards Director, believes that the new Home Survey Standard will bring vital standardisation and clarity to the process, “where RICS professionals can work effectively to meet the changing needs of the market".

What are the issues?
For a long time, there has been widespread confusion among consumers in relation to surveys, for example, as to the differences between - and purposes of - the mortgage valuation and building surveys; and there were demands from both consumers and building surveyors for greater clarity.

The RICS therefore undertook a questionnaire-based consultation followed an extensive review of the existing guidance. It sought the views of both consumers and the property industry, including lenders. The institute also conducted consumer research and discovered that:

  • One in four recent homebuyers failed to procure any kind of home survey before buying their property;
  • 21 per cent of recent homebuyers bought some type of home survey but could not remember what it was;
  • There is a lot of confusion about home surveys, with vast numbers of people paying huge sums on the basis of uninformed choices.

The upshot of the consultation was the view that a set of mandatory requirements was necessary to ensure consistency with changes in the market; and to improve the residential conveyancing process and build trust.

Mandatory
Once it comes into force, the standard will replace and harmonise all previous RICS guidance notes and statement for all levels of home survey. It will be the mandatory standard for all RICS surveyors in the UK and sets out a series of concise mandatory requirements which establish ‘benchmarks’ around which surveyors can “design and deliver services” to meet their clients’ needs.

The professional statement will establish a clear framework setting minimum expectations and mandatory requirements for RICS members and RICS-regulated firms who deliver residential property surveys.

The standard covers condition-based residential surveys at all service levels:

  • Survey level one: designed for clients seeking a professional and objective report on the condition of the property at an economic price.
  • Survey level two: for clients seeking a professional opinion at an economic price and therefore less comprehensive than a level three survey. The focus is on assessing the general condition of the main elements of a property.
  • Survey level three: designed for clients seeking a professional opinion based on a detailed assessment of the property.

In addition, all the requirements are divided into three main areas of home survey services: setting up the service, carrying out the service and the report itself.

Under the standard, RICS members and regulated firms are expected to have a clear understanding of clients’ needs and have the appropriate knowledge, including the locality and relevant factors such as leaseholds and other properties with shared facilities. They must have the skills and experience to provide the agreed service, and ensure potential clients understand the nature of and differences between the levels of service offered so they can make an informed choice.

They must also agree the full details of the terms of engagement with the client before the service is delivered.

Other features and issues that may impact on the subject property and require further investigation by residential conveyancers must be included, for example, flying freeholds, rights of way and boundary issues.

What does this mean for conveyancers?
It is important for property solicitors and residential conveyancing lawyers to familiarise themselves with the requirements of this new professional standard. This will enable the conveyancer to look at the report and identify whether the client’s needs have been fully met or whether the survey falls short of the mandatory requirements.

Though the standard requires the surveyor specifically to ensure the client understands the differences between the levels of service, the limitations of each option and the range of options they can offer (together with the key features and benefits of each), this does not negate the professional obligation on solicitors to advise the client of the need to have a survey carried out. They must also comply with the requirements of the Mortgage Lenders’ Handbook if the buyer is buying with the aid of a mortgage.

As the standard states: “The legal adviser is responsible for checking the relevant documents but will not be familiar with the property. The RICS member will be the ‘eyes and ears’ of the legal adviser and so should identify apparent and specific items and features that have possible legal implications.

“It is unlikely the legal adviser will read the whole report so the RICS member must clearly highlight the relevant legal matters and remind the client they should bring these matters to the attention of their legal adviser. A separate legal section in the report is an effective way of achieving this. Where appropriate, if the situation can be physically resolved, the RICS member will describe what needs to be done (for example, removing/improving unauthorised work, rebuilding a boundary wall or cutting back an overgrown hedge).”

This, as the standard states, will enable the client’s legal adviser to explain in greater detail how these matters may affect ownership of the property.

The RICS standard can be found here.

 

 

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