Posts Tagged ‘Buying A Home’

Buying a home is already clouded with obstacles so why do we put up with additional hurdles introduced by some Lenders? This article outlines just one way the paying customer can be placed second to corporate practices that serve to mystify what should be a simple process.

I was speaking to a loan valuer recently and he mentioned a bizarre situation that cost a purchaser many hundreds of pounds in fee costs.

The Valuer (Bob) was sent a property loan valuation instruction on a Victorian house in the south of England. On inspection Bob noted that the rear kitchen/bathroom wing of the building was constructed in half-brick form, common for the period in that district. Technically this part of the home was below habitable standard notwithstanding these walls had been weather-proofed externally and set internally with a dense render. The ratio of sub-standard wall to cavity full-standard walling was about 20 per cent.

Bob prepared his report in accordance with that Loan Company’s Valuers Manual and they accepted it and offered the client purchaser loan finance accordingly.

Unbeknown to Bob as his report was being considered the client purchaser decided to change lenders for a better interest rate just announced by Company B. Ten days later Bob received, by pure chance, the instruction to value the same home again.

Bob prepared another report. However, this second report was very different from his previous report. The second report simply said that the home did not comply with that Loan Company Valuers Manual criteria and was declined as being acceptable security. In other words no loan could be offered.

The reason behind this change in adequacy of security was stated as being that the wall construction was sub-standard and the Loan Company did not lend on sub-standard forms of construction.

Bob had been paid £400 in total for his two inspections. The client had paid over £700 in total mortgage application fees. Estate Agents in the property chain were many thousands of pounds out of pocket on lost commission charges. The rippled effect caused these individuals, and many others, massive loss of revenue, waste of time and effort plus related stress and disappointment.

Who was to blame for this bizarre situation?

It may be unconventional but I believe it is the Loan Companies en-mass. The Council of Mortgage Lenders, the body that regulates loan lending, considers allowing individual companies the right to have differing lending criteria is satisfactory even if the public are not told these vital policies.

I am sure each Lender is, in the small print somewhere, under a duty to publish their leading criteria and so “it is not their fault that customers choose not to read lending terms given to them”.

So what can be done about this bizarre situation?

This is the easy bit but is something that seems to always be talked about but never completed.

How about we properly regulate Estate Agents including the introduction of standard examinations upon a syllabus that includes construction recognition and general property compliance issues to Lenders Valuer Manual criteria. OR…….

The Council of Mortgage Lenders should be granted the power to issue only one set of lending criteria to all Valuers on behalf of all Lenders.

Any system, as is currently in place, that throws the emphasis on to a non-trained ordinary member of the public to decide matters of technicality of construction, is fundamentally flawed and unfair.

I believe the Office of Fair Trading are failing in their duty to provide effective monitoring and regulation in a marketplace that is well known for its protectionist and monopolistic tendencies that operate against the best interests of the consumer.

I also believe the Royal Institution of Chartered Surveyors has too long buried its head in red-tape to accept the real challenges before it: why have they not recognised this simple fundamental market flaw that places their membership is a rather strange relationship with the end client, the home buyer.

By the way — if the Home Information Pack scheme had had a Sellers Survey (like the system that currently operates in Scotland) included then none of this nonsense would be possible. Oh well, we cannot expect too much from weak Government and less than fully impartial market Regulators, can we?

Surveyors get told to do all sorts of things and at all sorts of times but do you know the options available to you? Do you know how to get the best out of a Surveyor? Do you know when it might be best to speak to a Surveyor?

Everybody seems to think differently when it comes to what to expect of a House Surveyor. Here I outline what I think you might need to know for the most common case scenarios.

1. Thinking of Selling? One option is to consider placing a Home Condition Report (HCR) within the Home Information Pack (HIP) on your home. The same Surveyor could also complete the Energy Performance Certificate (EPC). The HCR is something a potential purchaser, and the Mortgage Valuer/Company, can rely upon and sue the Surveyor if it is negligent. You may think a HCR is a good idea if you wanted to prove your home was in good condition OR if it had serious problems and you wanted to define those problems so bidders did not make over-cautious purchase bids to you.
2. If you own a home that is “System Built” (or is registered under the Defective Premises Act 1972) again you may wish to consider the benefit of a Sellers Survey (HCR) to attempt to remove some of the stigma that can attach to such homes.
3. If you are considering buying a home at Auction you have a greater number of survey options. On the one-hand you don’t want to waste too much money and so you might wish to consider simply asking a Surveyor to walk around the home with you to discuss what he is seeing and to verify no major defects exist. Such a “look around” is not a proper survey but provided you can accept that the Surveyor will not produce a written report and cannot accept any liability for such a restricted inspection then you are on track to buy that bargain and have reduced your risks considerably. Alternatively, you could ask a Surveyor to produce a R.I.C.S. Homebuyers Report (that includes a Valuation opinion).
4. Buying any type or size of Home – remember you always have the option to ask a Surveyor to take an informal look around for you (often with you so you can ask questions etc…). This may be termed a pre-survey meeting at the premises. PROinspect have 15 inspections products and so we can cover nearly every customers request for surveys.
5. Buying a fairly simple, modern home – The most popular survey product in the UK is the R.I.C.S. Homebuyer Report (2010 version) – termed the HOMEBUYER REPORT (HBR). This is a product designed by the Royal Institution of Chartered Surveyors (RICS) and is the middle-tier product designed to be brief but factual. It includes a proper site inspection, survey report on condition, market valuation and an estimate of the Rebuild Cost of the building for insurance purposes. The HBR is termed a Level 2 survey product.
6. Buying a larger, expensive or Period home, perhaps in a Conservation Area or one that is Listed – Your options are a Level 2 survey product such as the Homebuyer Report (if the Surveyor thinks this is wise) or a full Building Survey with or without Market Valuation and/or Rebuild Cost assessment. A Building Survey is a top-of-the-range product and I add a word of caution- (1) only experienced surveyors should be completing such products and (2) many products exist that look like Building Surveys but are not. MAKE SURE your Surveyor comes recommended and that you have spoken to the Surveyor – one to one – before you proceed so you can get some idea of his Professionalism and general attitude.

The Golden Rules are –

• Instruct a Surveyor when your solicitor gives the OK after your loan valuation has been completed and your mortgage finance is verified (not simply offered, subject to terms).
• Always speak to the Surveyor who is to inspect your new home: do not be palmed off with only speaking to a secretary, junior assistant or office manager.
• Ask for a survey product recommendation AFTER you have provided full details of the property you are buying (age, price, number of bedrooms, address, etc…).
• Make sure your Surveyor is locally based, knows of the property construction type and is generally experienced both professionally and locally.
• Make sure you will be able to speak directly with your Surveyor after he has delivered your Report.

If your home/property is in southern England I invite you to call me to discuss your exact needs. Stuart Parrett +44 (0)1489 896 174.