EARLY next month the Monopolies and Mergers Commission will report on
the housing surveys industry. The report concerns a cost most house
buyers have to incur before they purchase a property -- a professional
survey into its physical condition and likely value. Such surveys vary
in cost and quality depending on what the surveyor is asked to do and
how well he or she does it. They are indispensable to buying most houses
secured on mortgages, for lenders would not advance their money until
they had some informed statement of a property's condition. That survey
has to be paid for by the borrower and, until recently, it was rare for
most lenders even to let the borrower see it, though for more than a
decade now most lenders have been at least willing to provide a summary
of the contents.
Lenders would also often say why they would refuse to lend when the
survey report was unsatisfactory, but really a would-be purchaser was
always best advised to commission a survey of his own. This is an
expensive process especially when it has to be repeated, for a positive
survey is no guarantee that a bid based on it will succeed. Many buyers
are faced with the cost of several surveys as the preliminary to bidding
for several houses. And what if the survey is inadequate, or even
fraudulent? Surveyors were rather slow to admit liability for errors in
the past, when the matter involved is more one of judgment than fact.
That has changed; surveyors are willing to accept some degree of
liability when they have made a glaring error. Fraud is a different
kettle of fish.
The Council of Mortgage Lenders has just called for the surveyors'
professional body to establish a compensation scheme, similar to that
provided by lawyers, to compensate victims of negligence or fraud in
this area. The Royal Institute of Chartered Surveyors rejects this and
favours buyers adopting the two-survey system (as their needs are often
quite different from those of the lenders). That is the expensive
option. Surely the same property should not require two costly surveys?
It is a contentious matter, but buyers will not be in much doubt about
its resolution. The MMC still has time to pronounce upon it
specifically.
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