This week’s blog post is an extract of the Irish Property Buyers Handbook 2015, by Carol Tallon, dealing with the structural survey:
THE STRUCTURAL SURVEY
Why it is important and what to expect
The structural survey is a comprehensive inspection of the property in question, carried out by a qualified surveyor, registered architect or chartered engineer at the request of the potential home-buyer. It should not be confused with the lender’s survey, which in reality is merely an independent valuation report. The purpose of the structural survey is to give the purchaser an unbiased evaluation of the overall condition of a property, and to highlight any aspects that may need upgrading, repair, replacement or ongoing maintenance. Crucially, the report arising from the structural survey will provide the buyer with the information needed to make an informed decision on whether to go ahead with purchasing the property.
Unlike the bank survey, which is mandatory, a structural survey is optional, although any property professional would advise that the buyer undertake one before making the single, biggest investment of their life. Undertaking this due diligence and attaining the knowledge of defects or issues needing attention may discourage buyers from proceeding with the purchase outright, or may help to plan for work that is likely to be necessary in the short and medium term. Armed with this survey, the buyer should save a significant sum of money on defects that the seller may now have to correct before the sale is agreed. Knowing the cost of even small repairs, which can run to thousands of euro, can be a great negotiating tool. Aspects of the property that are routinely checked in the course of structural survey are as follows:
External Areas, Internal Areas, Other
There are some limitations to the survey, which may vary from one survey to another. Buyers will be made aware of these limitations by the surveyor, either in advance of the survey or within the report document. If there is any ambiguity, buyers are advised to seek clarification and not to assume anything. The most notable limitations tend to be as follows:
The age of the building to be surveyed is a very important consideration. Buyers should not be fooled by a modern, well-finished home. The age is no guarantee of a sound structure. In fact, many experts maintain that the overall quality of new home construction over the past decade has deteriorated somewhat. Older houses have their own particular issues to contend with – for example, non-regulation windows or access – but they are generally well-constructed. When looking at the structural condition of the property, the engineer will pay particular attention to defects that are inconsistent with the age of the property. The engineer will issue a full report to the buyer, which will set out areas of the property needing attention and make recommendations.
Defects or areas needing attention may cause a re-negotiation of the purchase price. In addition, defects that are inconsistent with the age of the house should flag concern. For example, if the engineer finds a hole in the roof of a modern, three bedroom semi-detached house, a question mark may arise over the quality of the property. On that point, some buyers in the past have chosen not to request a structural survey where the house in question is less than 10 years old and covered under the original structural defect insurance scheme, usually HomeBond. This is nonsense. Protection against defects for 10 years is of little benefit if the buyer cannot identify those defects.
It should be noted, however, that very few buildings are without any defects. The surveyor will furnish a lengthy report, many pages long, that will list observations, opinions and recommendations on issues that would not necessarily be classed as defects, so buyers should be prepared for this and not panic. When issues or possibly defects are identified, it does not necessarily mean that it is not a quality property. The buyer must work through the surveyor’s report and determine which issues are consistent and to be expected, which issues are easily remedied and which issues are essentially deal-breakers. Whatever the outcome, knowing in advance is essential – forewarned is always forearmed.
Engineers’ fees may vary, depending on the age and extent of the property, together with the location, or specifically, the time and travel involved. A survey generally will take between one to two hours. Buyers should expect to pay somewhere in the region of €300 to €450 plus VAT. If the buyer is waiting to sign contracts of sale, the engineer usually will give a verbal assessment of the property on the day of the survey – the equivalent to a thumbs up or thumbs down. The written report generally will issue within a period of five days. By engaging a suitably qualified surveyor with professional indemnity insurance, buyers are assured that they are covered in the event that they suffer financial loss as a result of neglect, error or omission in the course of producing the structural survey.
A snag list will be necessary for buyers purchasing a newly-built home. It is not a structural survey, as discussed above, but rather a checklist of minor defects that the builder or developer must complete prior to the sale closing. The vast majority of newly-built properties are covered by a building guarantee or under a structural guarantee scheme, such as HomeBond or Premier, which protects the occupant of the home against specific significant defects for a period of 10 years. This protection applies to the property, not the owner; therefore, subsequent buyers will enjoy this protection for 10 years after the completion of the building.
The snag list consists of all the items that must be finished or fixed by the builder or developer before the sale is finalised. Builders have a poor reputation for after-sales service, so it is crucial that all outstanding items are dealt with before final monies are paid over. In certain circumstances, the sale might be allowed to proceed on the stated agreement of works to be carried out, but this leaves the buyer in a vulnerable position and is therefore not recommended. An exception to this might be the Irish weather causing huge delays in finishing the garden to specification. In this instance, the purchase might go ahead and close contracts subject to a small portion of the funds being withheld from the builder until such time as the garden works are completed.
As with the structural survey, a snag list is not mandatory, although it should definitely be regarded as essential by the new home-owners. Snag lists do not need to be carried out by a professional in order to be effective. In fact, some of the most comprehensive lists are carried out by the buyers, although engaging a professional engineer or surveyor has a number of benefits. Chiefly, their training and expertise suggests that they will uncover minor faults or needed finishing touches that the buyer might never have noticed. Secondly, they are likely to demand a higher quality finish than buyers might know to demand. Thirdly, buyers receive the benefit of professional indemnity insurance, as already discussed above. If any issue or defect is overlooked at the snagging stage, it may cost money to remedy it. By hiring a professional, that person is answerable to the buyer for any work carried out. Buyers who have some experience in construction or who have purchased property previously might feel confident about compiling a thorough snag list themselves. If so, there is now a wealth of information available through Irish and UK websites, where buyers can read tips, learn from other buyers and download comprehensive DIY snagging checklists. One good resource is www.snagging.org. If there is reason for concern, however, buyers should speak to a qualified engineer.
It is important to note, in the context of a survey or snaglist being prepared, that building, heating and electrical systems have become very complex with the introduction of renewable energy systems such as heat recovery units, ground source heat pumps and solar panel heating to name a few. It may be necessary to engage the services of a specialist to report on the conditions of such works in addition to the structural survey.
KEY POINTS FROM CHAPTER 17