The property market is finally on the move but a shortage of surveyors and valuers means big delays for buyers.
Houses are selling, prices are rising, mortgage lenders are starting to lend again and it’s all looking rosy for the housing market, right? Wrong. A serious shortage of surveyors and valuers means sales are being delayed or falling through.
We’ve taken a look at why there’s a shortage of surveyors and what this means if you’re trying to move house.
What’s a survey/valuation?
Firstly, it's worth rememberting that there is a difference between a mortgage valuation and a survey. A valuation is carried out on behalf of the mortgage lender so it can make sure the property is worth the money it is lending.
Without a valuation the lender can’t progress your mortgage offer so it’s important the valuation is done as quickly as possible. Most lenders use a “panel” of surveyors to carry out the work.
A survey is for the buyer’s benefit. It’s not mandatory to get one but it is advisable. There are different levels of survey – the older the property is the more important it is to get a full structural survey.
If the survey comes back detailing problems, it could be the buyer’s cue to drop out of the purchase or renegotiate the price.
Big delays
Mortgage brokers are reporting big delays – up to five weeks – in getting a mortgage valuation done in some areas of the country. Without the valuation the sale can’t proceed. In some cases, sellers are getting impatient and either accepting another offer on the property (so the first buyer is gazumped) or putting it back on the market.
[SPOTLIGHT]For buyers, losing their dream home can be devastating. It can also end up costing them money if their solicitor has already started conveyancing work when the sale falls through.
Normally a valuation will take place around a week after the mortgage lender has instructed the valuer – but some buyers are currently waiting more than a month for a valuation.
Savills Private Finance says London is particularly badly hit by the surveyor shortage as well as parts of Brighton. One broker said:
“We are experiencing delays in valuations in BN and RH postcode areas. Delays can be by up to two weeks. As lenders tend to underwrite a case before even instructing the valuation it seems to vendors that it can be up to a month from sale agreement to a valuation being done. This has caused issues, with some vendors actually insisting the property goes back on the market.”
Another broker said: “Colleys seem to be struggling - had a valuation instructed on a BM Solutions case 17 June and the earliest they can do it is today - five weeks later. The property is in Guildford which I am told is particularly bad at the moment.''
Trade magazine 'Mortgage Strategy' reported that some of the biggest surveying firms stopped accepting new instructions altogether last month while they battled the backlog. In an investigation carried out by the magazine, Connells and E.Surv, two of the biggest surveyors in the UK, both said they couldn’t take on a valuation in London SW15.
What’s causing the delays?
Basically surveyor and valuation delays are down to two things: the credit crunch and housing market crash, and the cost of surveyors staying in business.
E.Surv says that in 2007, during the last boom, there were 7,000 Chartered Surveyors actively working in the UK. The subsequent problems caused by the property bubble bursting meant there was less call for surveys due to the massively slowed down market. E.Surv says there are now there are between 1,500 and 2000 surveyors, a decrease of almost 80%.
But the Royal Institution of Chartered Surveyors denies there’s a shortage of surveyors and says it’s “unsustainable market conditions” that are to blame for valuation delays.
Basically the past few years have seen many surveyors subject to negligence claims from lenders, a number of which have ended up in court. As a result, many insurers have increased premiums for Professional Indemnity Insurance - compulsory for all valuers - which increases the cost of valuers staying in business.
Meanwhile the amount valuers are paid per job by the lender has fallen to such an extent that it’s often not worth them taking on the job and carrying the risk.
So, in short, there are surveyors and valuers out there but various factors mean they’re not keen on going to work.
RICS has said it will investigate the problems in the property valuation industry and look at solutions.
But for now if you’re trying to buy a house you could be in for a long wait…
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