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ISVA Chairman’s Christmas Newsletter

ell, what a year.  Got going up to March and stopped.  Then overnight, in May, the floodgates opened and for many of us we hit the ground running and have not stopped running since.  No doubt everyone is looking forward to a break at Christmas and the New Year, subject to being “jolly careful”!  I learn from many colleagues and members that they have been busy for a number of months and the key to the last few months has been client and time management.  Hopefully, in addition, due to the high demand for our services, surveyors/members have been able to increase and improve their prices for their services, in an effort to rebalance the books regarding risk and reward.  Who knows what the future holds as many of us have diaries being booked up into January next year.  Presumably, whilst the Government/country still supports the existing home/property owners and protects their wealth with the continued drive to keep market values either the same or growing, then no doubt our workload will continue, with the activity and drive of many to find their dream home.  There is still concern about the lower end of the market and the ability for younger persons to take a step onto the property ladder and, despite various different Governments over the years, I am not entirely sure that this has been successfully resolved – that is the subject for another article on another day.

Chairman’s Comments on Various Issues in the Last Year

Home Survey Standards

Thankfully RICS decided to extend the start date for HSS to 1st March 2021.  This has given us all more time to get our heads around the new standards/rules concerning residential survey work.  The ISVA has a Home Survey Working Group which has been working on templates including Terms of Engagement, Report Templates, Contract Letters, Practice Notes for both Levels 2 and 3 style surveys.  Despite our best efforts, we are unable to publish these templates to date, although they have been drafted and are now seeking outside consultation.  It is our intention to publish these documents and templates in the New Year, once a consensus has been reached on outstanding details, still giving us enough time to implement before 1st March 2021.  These templates and documents will be available to licensed ISVA members only.  We will send out another alert/email when available to all membership.

Without going into too much detail and opinion on the HSS in general, I will mention a few points in the sense that there has been difficulty in some areas finding the right balance between Level 2 and Level 3, in particular Section 4.3.2 of the HSS has caused problems and, in effect, watered down the differences between Level 2 and 3.  Personally, it would not surprise me if many members decide to offer Level 3 surveys only, thereby reducing their risks and also potentially increasing the value of their services.  It is my opinion that many members who are already up to speed and have kept up to date will not find it too difficult to adjust to the new HSS, but, once implemented, there will be little room for manoeuvre on perhaps other surveyors cutting corners or carrying out poor services as there will be fewer grey areas on the standards going forwards.  This, in turn, should be supported in the sense that it upgrades the standards of the profession overall.

Other Snippets

Flats/leasehold valuation

Members must remain careful in carrying out valuations on flats and leasehold property in tall buildings due to fire safety concerns and cladding. Further guidance has been issued recently  – Please refer to government press release:

https://www.gov.uk/government/news/government-steps-in-to-help-homeowners-caught-up-in-ews1-process

Repossession

Earlier this year, the Financial Conduct Authority (FCA) published guidance to help during Covid-19 pandemic. This included 3-month payment holidays and a hold on repossessions, regardless of what stage proceedings have reached. This previous guidance expired on 31 October and the FCA has since announced further guidance and support. It encourages lenders to take a bespoke approach to meet the needs of their customers who are in financial difficulty due to coronavirus. The FCA’s Interim Chief Executive Chris Woolard said: “Some consumers will continue to be impacted by coronavirus in the coming months or be impacted for the first time. This should help Consumers under circumstances.   See Link for details:

https://www.fca.org.uk/news/press-releases/fca-confirms-next-stage-support-mortgage-borrowers

New Build

As a warning, you are advised NOT to assume that new build property is built well and, instead, you are advised to be far more suspicious about the quality of materials used and workmanship.  Don’t forget, the Building Warranty is only for 10 years but, ultimately, once a surveyor steps inside, he is on the ticket for up to 15 years – in a sense we are taking on a longer liability and therefore a risk.  Making general vague assumptions about condition and workmanship can therefore no longer be accepted as best practice.

As a practical case example, recently I surveyed a property in West Dorset built in 2003 with a slate roof and, unfortunately, the owner/seller of the house has already had to replace the main roof covering due to impurities in the slate pyrites. Unfortunately, this was after the New Build Warranty had expired, therefore they had to pay for the new roof themselves.  Unfortunately, they did not bother to strip off and replace the slate roof to the two-storey rear addition, probably because it was fitted with solar tube panels on the roof making it more difficult.  As a result, this roof also requires replacement.  However, this example makes it clear that although builders are meant to put together residences with a minimum design life of 60 years according lenders guidance, very often the design and materials being used on modern buildings to the main building elements will no longer actually last 60 years and therefore these assumptions are very dangerous to make.

A further case example is a new build property with modern methods of construction with SIP panel construction and a single ply flat roof membrane (polyester single ply roof membrane) being used, with a design life of 20-25 years.  Quite how this passed scrutiny from a Chartered Surveyor is unknown and whether the property is mortgageable or not is not known to date as the purchaser was a cash buyer.  Furthermore, my personal opinion is that anybody surveying a new build property with modern methods of construction should be carrying out a Level 3 Building Survey and not a Level 2 Homebuyer report, otherwise clearly our clients will not receive comprehensive advice regarding shortcomings and consequences.

Thoughts on Hart -v- Large (2020)

We all know about asking solicitors/conveyancers to check building warranties on new build property, however, it seems, as a result of this case, it is imperative that we advise our clients to also check whether there is a “Professional Consultants Certificate” regarding less extensive work, where perhaps a property has been refurbished/altered but is not a new build, to provide adequate protection to the buyer regarding the quality of work carried out when there are no contractual rights against the architect/builders used by the seller.  Quite honestly, I very much doubt that a reasonable Chartered Surveyor, carrying out his duties, has regularly asked for a Professional Consultant’s Certificate, as they are very rarely available in today’s realistic world.  This therefore seems to be another additional risk for us to consider going forwards.

There also appears to be a clear warning to make sure that we spend nearly as much time mentioning/describing the areas and elements that we cannot see, as well as those that are visible when report writing.  Indeed, apparently, the judge made reference to “not inspected (NI) rating” and felt that this should have been used within the report by the surveyor, Mr Large.  Furthermore, there is warning that uncorroborated assumptions as to quality of good workmanship on something which has not been inspected cannot be made and a report should record facts and assumptions with foundation and not supposition.

Furthermore, it seems important to clearly set out the consequences of not gaining a Professional Consultants Certificate (PCC) before purchase, as it may result in a lack of legal recourse to put right underlying defects/shortcomings.

It does seem that the solicitors and architects involved in the case working for the buyer, who settled out of court, left the surveyor, Mr Large, holding the crying baby as it were.  My personal opinion is that it seems unfortunate that the judge came to the conclusion that the solicitors negligence was not so fundamental to the loss as to negate the surveyors actions and, in effect, break the chain of causation.  This would have been a more helpful result/judgement.  It also seems, yet again, the surveyor is left with full liabilities on such matters, especially with regards to setting out the consequences of a client not following our advice.  It is a shame the same can’t be said for other professionals involved in property transactions as I very much doubt other property professionals fully explained the consequences of not taking their advice.

Other lessons to be learnt include choice of service, e.g. Level 2 and Level 3-style survey report and the differences between these two styles of service clearly explained to clients beforehand.  There is also a call for clear parameters to be set with regards to responsibility to the client and setting out the surveyor’s role and how this dovetails into the legal transaction/conveyancing process.  There is therefore a level of engagement between the surveyor and conveyancer and, quite rightly, apparently the judge in this case noted “a real risk the concern that the solicitor thinks a surveyor is doing something and vice versa and the client not knowing which professional advisor is responsible for covering particular matters/issues.  This is currently a common shortcoming/problem.

It also seems quite clear that relying on Building Control certificates or Contractor Completion Certificates is a measure of safety and basic standards only and provides only a meagre measure of satisfaction regarding works.

Another sobering point is the importance of not just seeking Professional Indemnity cover for the very minimum £250,000.  Nowadays surveyors are generally advised to seek a minimum level cover of £1m.  Please seek advice from an insurance broker when renewing Professional Indemnity cover in future.

In summary, points to remember include the following –

  • Be clear about limitations on advice and inspection.
  • Remember to ask for PPC when the property has been altered/refurbished, as well as the new build which will obviously require a 10-year building warranty.
  • It seems this case will have a tendency to make us more negative and suspicious in our report writing, in effect, assuming the worth rather than assuming “it is alright” with no basis.

ISVA Website

The ISVA website is currently undergoing review and is due to be revised in the New Year with a more professional look.

Reliability of surveyors services

Watch out, we already know about previous examples, e.g. the collapse of Allied Surveyors in the past leaving a number of clients, General Joe Public, with no recourse – many of us wonder how many other corporate surveying organisations will survive or collapse, leaving clients with no legal recourse/reliable PI runoff cover in place.  Many have mentioned the recent ongoing Connells and Countrywide issue and some of us have mentioned that we would be surprised if Connells fully take on board the risk/liability of all Countrywide survey and valuation work, leaving many clients throughout the country without any recourse – a further reason for General Joe Public to choose an independent surveyor who takes pride in his work and sets up adequate protection for his client, in accordance with RICS PI policy practice guidance notes.

I wish you all well and safe and look forward to hopefully meeting up with the membership in a traditional way in the year 2021 – roll on the vaccine I say.

Don’t forget – Conference date: 13th May 2021 at the National Self Build and Renovations Centre in Swindon.

All the best – Merry Christmas and Happy New Year

Ian Vicary – Chairman

IMPORTANT NOTE REGARDING ALLIED SURVEYORS

ISVA members should be aware that comments in the Chairman’s recent newsletter referred to Allied Surveyors PLC which went into liquidation on 12th March 2010 and not to its successor, Allied Surveyors & Valuers Ltd which is a separate legal entity. We are advised “Allied Surveyors & Valuers Ltd provided retrospective cover for work previously carried out by Allied Surveyors plc for members of the public”.

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