Surveyors want FSA action over lender valuation ‘advice’

The Council of the Residential Property Surveyors Association (RPSA) wants an investigation into lenders over possible lack of advice over surveys.

The body has written to FSA chief executive Hector Sants over the issue.

Statistics show that only one in five homebuyers obtain a survey or condition report on the property they are buying, yet the RPSA argues that 80% of homebuyers believe that they get a survey. It explains that the main reason for the discrepancy is that most mortgage borrowers mistakenly believe that their lenders’ valuation is a survey.

The RPSA claims lenders do little, if anything, to disabuse their customers of this notion. It suggests that money could be behind this, arguing the net income to be as much as £100 million per annum.

The surveyor body says that lawyers tend to bury a clause recommending a survey in their terms and conditions or letter of engagement which most clients do not read. This is no surprise as so much of their conveyancing business is introduced by estate agents whose primary interest is in securing the sale.

Which? found in May 2008 that one in four homebuyers who did not get a survey averagely spent out more than £2,500 to put problems right that they would have known about with a survey. For one in ten people the cost was over £10,000. The RPSA says this means that every year homebuyers are paying out some £250 million to fix problems in their new home in the first year after moving. A recent report from the AA appears to suggest that the problem is worse than this, finding that across all homebuyers the average cost of repairing problems was over £1,000.

The Which? report also found that those people that did get a survey averagely achieved a reduction in the asking price of the property of £2,000.

RPSA Council Member Alan Milstein said: “It is time for lenders to take responsibility for providing their clients with proper advice. They should make it explicit to their borrowers that the valuation they procure is for their purpose alone and says nothing about the condition of the property. They should advise homebuyers to get a survey or condition report and take a written signed instruction to this effect.