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Surveys and insurance – Things to consider when buying a property

Do I need to have a survey carried out?

A well known legal saying is “Buyer Beware”.

Did you know that under English law the onus is on you to satisfy yourself that the property you are buying is both physically and structurally sound? Indeed, the contract will state that you purchase the property in the physical condition that it is in at that time. It is therefore important that you have a survey carried out before contracts are exchanged, as it is unlikely that you will have any comeback on the seller for compensation if defects are subsequently found.

You probably do not need to have a full structural survey unless you suspect there may be fundamental issues with the building or are planning major works. Usually, a Homebuyer Report will suffice. This Report will give you a good idea on the condition of the property as well as a valuation. If you are unsure about the type of survey you need, then you should discuss it with your surveyor who will help you.

If you require a mortgage, the lender will have a valuation report carried out but that will be limited in its scope and is only likely to reveal any major defects in the Property. It is also likely that you will not be able to rely on it as it was prepared only for your lender. It is not therefore a substitute for having your own condition survey carried out.

Do I still need a survey if I am buying a new build property?

If you are buying a new home, then a condition survey is of no real benefit. In many cases the property may not even be built when contracts are exchanged. In such circumstances the developer will be obliged to carry out the construction in accordance with planning and building regulation approvals and usually the property will have the benefit of a 10-year insurance backed guarantee that will cover defects in the first two years and major defects for the remaining period.

Even so, it is important that you:

  • have seen the detailed specification before contracts are exchanged so you know what the finished home will be like;
  • do not just rely on a visit to the show home. Do what you can during the construction to check the progress and quality of the build;
  • ensure you inspect the Property thoroughly when it is complete to agree with the developer “snagging” items that need rectifying. These are minor cosmetic defects for example chipped paintwork or a dripping tap;
  • consider using a professional snagging surveyor to inspect the property for you. There can be advantages as they are used to dealing with snagging, they will almost certainly be more thorough than the average buyer, they know what to look out for and will spare you any awkwardness you might feel when dealing with the developer.
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What happens about Buildings Insurance?

Your lender will not be concerned about contents insurance so you should make sure you have the cover you require with effect from the day you move in.

It is usual for the purchase contract to state that the risk of the property being damaged passes to the buyer when contracts are exchanged. This means that if the property is damaged before completion by fire for example, then the buyer must still go ahead and complete the purchase. As a result the general rule is that you should insure the property from the moment contracts are exchanged unless:

  • you are buying a flat where the building will be insured by the landlord or managing agent; or
  • you are buying a new build property where the developer will unsure up until completion.

Should I insure through my mortgage lender?

The short answer to this is that it is up to you. Where you are purchasing with a mortgage your conveyancer will need to make sure that the property is insured when contracts are exchanged (or completion if you a buying a new build property). If you are insuring with your lender, then this will not be an issue.

If however, you are making your own insurance arrangements then your conveyancer we will need from you before contracts are exchanged (or completion in the case of a new build), evidence that buildings insurance cover is in place. This should include:

  • a policy number;
  • confirmation the lender is noted on the policy;
  • the amount insured – which should be at least the amount required in your mortgage offer;
  • fully comprehensive cover;
  • only a reasonable excess (we suggest no more than £1,000);
  • public liability cover; and
  • the amount insured should be index linked.

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