Buying a Property – Part 2 - The Real Value of a Building Survey

Never be tempted to cut corners when considering the purchase of a property because even if you think a building survey is expensive …… it often proves to be much more expensive not to have one

Source: Daily Mirror

In my last article I discussed the limitations of a survey that would be instructed by a mortgage lender (a mortgage valuation survey) and how a purchaser should not rely on this as means of assessing the condition of a building. This is because the primary purpose of this type of survey is to establish the value of a property and to be confident that in the event of any default on behalf of the borrower, that the lender can re-coup what they are owed. The objectives of a purchaser however are very different in that they want to be satisfied that the building they plan to buy, and often live in, is not concealing anything that they are not aware of. I say ‘not aware of’ as it is perfectly feasible and acceptable to proceed with the purchase of a building as long as you are fully aware of any potential issues/problems. Let’s face it, buildings, particularly older buildings are highly unlikely to be free from defects and in fact many of us will accept buildings with issues/problems at a lower price, as a way of trying to get a bargain, this is particularly true of property developers.

Not all of us are property developers and the vast amount of residential property transactions that take place each year are by members of the public who in many cases have little to no knowledge of buildings and therefore rely on professional guidance. It would therefore seem sensible, particularly due to the large investment involved that prospective purchasers commission a survey so that they can establish if there are any issues/problems with the building they are considering buying. However, you may be surprised to learn that the vast majority of purchasers choose to ignore this very important part of the purchase process. 

Source: RMA Surveyors

The Royal Institution of Chartered Surveyors (RICS) recently reported: ‘Results from an RICS’ survey of home buying consumers, released today, show that many homeowners who did not take out a home survey are left with a property they regret buying and an average of £5,750 in repair bills. The survey of 1,017 buyers across the UK found that consumers are clearly aware of the need for independent advice, with 94% of respondents agreeing it is important to commission a survey. However, nearly a third failed to do so. This means buyers are left ignorant of issues with the property, such as structural defects, dry and wet rot, subsidence and many other faults, only for these to become serious matters at a later date. The new homeowner may then be unable to afford, or may lose the desire, to fix the faults and may be left with a property they may no longer want to live in but are unable to sell to recoup their losses'. (Source: http://www.rics.org/)

Over a third of those surveyed failed to have an independent survey commissioned. We could speculate on why, however as 94% of respondents agreed that it was important to commission a survey, I think it is reasonable to discount ignorance as the primary reason for this. I suspect that cost may be a significant contributing factor, where many prospective purchasers see this as a cost they can do without and hope that they ‘get lucky’ and purchase a property with no issues/defects, that they were not aware of.  However, trying to save money at this point is a false economy. True, a comprehensive residential building survey may cost on average between £700 and £1000 (costs will vary depending upon the size and complexity of a dwelling and the survey selected), however, this is always money well spent. In fact, purchasers should be asking themselves if they can afford not to have a building survey undertaken rather than thinking about how much they will save by not having one done.

A level 3 Building Survey (see below), will provide a prospective purchaser with a comprehensive assessment of a dwelling and highlight not just significant issues, but anything that the Surveyor thinks is relevant. Armed with this information, the prospective purchaser may decide you try to negotiate the sale price with the seller (to reflect the findings of the survey) or maybe even decide to discontinue their interest and look for alternative properties. Either way, the information provides the purchaser with choices, where decisions can be made before contracts are signed rather than having to deal with the consequences when the property comes into their legal ownership. I am sure that in hindsight many of those who took part in the RICS research above would have regretted not spending £700 to £1000 on a Building Survey, as they ended up with an average repair bill of nearly £6000. Never be tempted to cut corners when considering the purchase of a property because even if you think a building survey is expensive you can see from above that it often proves to be much more expensive not to have one. On the flip side, the Building Survey may not identify any significant issues. Even in this scenario this represents good value for money as you now have piece of mind that the property you are considering is in reasonable condition and you are likely to avoid any nasty surprises. The lesson here is very simple: Always commission a Building Survey before exchanging contracts!

The information provided by RICS below summaries three different levels of survey that you may consider when purchasing a dwelling: RICS surveys are available to suit the particular circumstances of the client and the property:

Level 1 - Condition Report

Provides an objective overview of the condition of the property, highlighting areas of major concern without extensive detail. This option is ideal for buyers purchasing a modern house in good condition and for sellers and owners.

Level 2 - Home-buyer Report

Is most suitable for standard older and modern properties that are in an apparent reasonable condition. It provides a concise report with advice detailing any significant problems that could make a difference to the value of a property.

Level 3 - Building Survey

The ‘flagship’ service providing a detailed report on a property. It is particularly useful for older, larger or non-traditional properties, or one which is dilapidated and has been extensively altered or if the buyer is planning a major conversion or renovation. (Source: http://www.rics.org/)

Author: Gary O’Neill

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Buying a Property – Part 1 – The Limitations of a Mortgage Lender’s 'Survey'

A Mortgage Lender’s 'survey' is for the lender only and should not be relied upon by a purchaser as a means of accurately assessing the condition of a property

Source: The Telegraph

Buying and selling of property can be one of the most daunting experiences of our lives. The complex process of dealing with Solicitors, Surveyors, Estate Agents, Mortgage Providers, Vendors (the person/s selling the property) and the like is something that the vast majority of us do not undertake on a regular basis, and is therefore something that often proves to be very stressful. First time buyers in particular will often feel overwhelmed by the whole process and will rely heavily on their advisors to guide them through the process. Once a decision has been made to purchase a property, buyers will work out their finances and decide how much they can afford to borrow and then try to secure a mortgage or at least a mortgage guarantee before beginning the process of house hunting. 

For most of us purchasing a property will be the largest financial investment we will make in our lives. It is therefore essential that we know exactly what we are buying before we exchange contracts because it is at this point that a property comes into your legal ownership. At exchange of contracts the law assumes that you have made all of your enquiries and that you are fully aware of what you were buying. If subsequently you find problems with the property, then these problems become your responsibility to deal with (unless you feel that you have been advised inappropriately and that you can prove this). It is therefore advisable to be as thorough as you can be to establish the full extent of any issues with a property before you exchange contracts. A range of different surveys can be carried out during the conveyance process for which the inexperienced, particularly first time buyers often do not understand the purpose or scope of the range of different surveys available. For clarity, this article will consider conveyance in respect of a residential dwelling.

Source: Stringinfo

Firstly, if you apply for a mortgage, a survey will be carried out by the lender on the property you are considering purchasing. Do not be misled by this survey. This survey is for the lender and not the purchaser. The purpose of the survey is for the lender to be satisfied that in the event that you default in some way on your repayments then in a ‘worst case scenario’ they will be able to sell the property and re-coup the money they have borrowed to you. This is all about the lender assessing their risk. These types of surveys are not intrusive and in fact they are extremely brief and in most cases are completed in approximately 20 to 30 minutes. The ‘Surveyor’ will make a brief internal inspection looking in the roof space if possible (usually from the top of a ladder). The inspection will also look for visible signs of timber decay or woodworm, and also consider the electrical installation amongst other things. This will be followed by an equally brief external inspection where the roof, chimneys, external walls etc will be inspected. As the Surveyor undertakes the inspection, a two or three page proforma (paper or electronic), mainly consisting of tick boxes will be completed.  The ‘report’ will then be returned to the lender and will indicate whether the property is worth the agreed sale price and also detail any urgent remedial works. It is from this report that the lender will decide whether they will borrow the agreed amount to the buyer or withhold a certain amount for any works the surveyor has identified as affecting the value of the property. I have a personal dislike for these types of surveys because in my opinion ‘surveyors’ are far too cautious in what they report. They often recommend timber and damp surveys and electrical inspections as standard without any real grounds for doing so, and often inaccurately report other issues. This is hardly surprising given the very brief inspection undertaken, however this cautious approach is more likely to be a result of the litigious world we now live in, where ‘surveyors’ provide ‘their own safety net’, and therefore try to reduce the risk of being sued. To a certain extent this is understandable, but this should never be at the expense of accurate reporting.

I few years ago I bought and sold a property. The surveyor for the lender of the prospective purchaser of my former house reported damp problems and an issue with the chimney. A timber and damp survey was recommended (by the surveyor) with a £1000 retention sum for repairs to the chimney. The prospective purchaser tried to use this to negotiate a reduction of the purchase price, however as a Chartered Building Surveyor I knew that this was completely inaccurate and unnecessary. I tried to challenge this, however as it was not my lender (it was the purchasers of my house), I continually hit a brick wall. My purchaser became unnecessarily nervous about buying a house which they now thought was riddled with damp and with a chimney that was about to collapse! In the end, and to ensure that we did not lose the sale, through gritted teeth, I agreed to a £500 reduction, even though this was completely unnecessary. I am sure that many reading this will have similar experiences, which I am also sure is one of the reasons why some property transactions fall through at the last minute, which is extremely frustrating.

This demonstrates that lenders rely on the advice of ‘surveyors’ who carry out such a brief inspection that it is almost laughable, who then recommend further inspections and remedial works that are often not necessary. Remember, a mortgage lender’s survey is for the lender only and should not be relied upon by a purchaser (mainly for the reasons stated above), as a means of accurately assessing the condition of a property. A much more comprehensive inspection is therefore required and I would recommend that a Building Surveyor is instructed to undertake a full, comprehensive survey of a property prior to contracts being exchanged. Although this will have a cost attached to it, you will often find that a building survey will prove to be extremely cost effective as it will highlight possible defects/issues which can either be used to negotiate the sale price, or possibly allow the buyer the choice of pulling out of the sale, before contracts are exchanged. This is something I will discuss in my next article.

Author: Gary O’Neill 

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10 Tallest Buildings in the World - In Pictures

The World's 10 Current Completed Tallest Buildings (at May 2016)

In last week’s article I discussed the human desire to construct high rise buildings and posed the question: Is there a limit to how high we can build?’.  The Council on Tall Buildings and Urban Habitat (CTBUH), have formulated a list from their database (link) which shows completed, under construction and planned ‘skyscrapers’ over the coming years, demonstrating that construction and demand for high rise buildings is on the increase.   This week I wanted to publish details of the 10 current completed highest buildings in the world, as detailed the Council on Tall Buildings and Urban Habitat (CTBUH) database:

Number 1

Burj  Khalifa  - Dubai - UAE  - 828 Metres  - 2717 Feet - 163 Floors - Completed 2010 

Source: foundtheworld.com

Number 2

Shanghai Tower - Shanghai - China - 632 Metres - 2073 Feet - 128 Floors - Completed 2015

Source:www.latimes.com

Number 3

Makkah Royal Clock Tower Hotel - Mecca - Saudi Arabia - 601 Metres - 1972 Feet - 120 Floors - Completed 2012

Source: www.independent.co.uk

Number 4

One World Trade Centre - New York - USA - 451 Metres - 1776 Feet - 94 Floors - Completed 2015

Source: www.aecom.com

Number 5

Taipei 101 - Taipei - China - 508 Metres - 1667 Feet - 101 Floors - Completed 2004 

Source: www.taipei-101.com.tw

Number 6

Shanghai World Financial Centre - Shanghai - China - 492 Metres - 1614 Feet - 101 Floors - Completed 2008

Source: www.telegraph.co.uk

Number 7

International Commerce Centre - Hong Kong - 484 Metres - 1588 Feet - 108 Floors -Completed 2010

Source: www.architecturalrecord.com

Numbers 8&9 

Petronas Towers - Kuala Lumpur - Malaysia - 452 Metres - 1482 Feet - 88 Floors -Completed 1998

Source: blog.123hotels.com

Number 10

Zifeng Tower - Nanjing - China - 450 Metres - 1476 Feet - 89 Floors - Completed 2010 

Source :skyscrapercenter.com

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Is there a limit to how high we can build?

On May 6th 1954 when Roger Bannister broke the four minute mile, there were many who thought that this would never be beaten.  The record has been broken a further eighteen times since then..... This also seems to be the case with high rise buildings, motivated by our human desire ‘to go one better’ than the previous best.

Burj Khalifa Tower - Source: www.youtube.com

Sometimes we have to stand in awe at the creativity and innovativity of the human race, where we are constantly stretching the boundaries of possibility. This is well demonstrated around the globe with the large amount of high rise buildings that are either in the process of being constructed, or have actually been completed. Demand for high rise buildings is on the increase, which is demonstrated by the Council on Tall Buildings and Urban Habitat (CTBUH), who have formulated a list from their database which shows completed, under construction and planned ‘skyscrapers’ over the coming years.  Click on this (link) to take a look at this list where you will notice that if all of the proposed and under construction buildings are completed, then by 2021, only three of the current top 10 buildings (Burj Kalifa, Shanghai Tower and Makkah Royal Clock Tower), will remain in the top 10 buildings, and in fact only five of the current top 20 buildings, will still appear in the top 20 by 2022.  These statistics are staggering, however they demonstrate our inate desire to build big.  At the top of the list of proposed tall buildings is the Kingdom Tower in Jeddah, Saudi Arabia. This is now under construciton and projected for completion in 2018. It is expected to cost in excess of $1.2bn, and form the first phase of a wider Kingdom City scheme that is estimated in the region of $2bn.  Kingdom Tower will rise to 1000 metres, which will exceed the current completed tallest building (Burj Kalifa – Dubai), by a further 172 metres.

The tallest building in the European Union is currently The Shard’ in London. Completed in 2012. The building stands at what now seems to be a modest 309.6 metres, when you take into consideration the buildings on the CTBUH list.  In fact if all of the under construction and planned buildings on the list are completed, The Shard will not even appear in the top hundred and fifty buildings in the World by 2021, even though it currently sits as the 80th highest completed building in the World.

Kingdom Tower, Jeddah - Under Construction - Source: www.youtube.com

There are a number of reason that may motivate investment in a high rise building, including, scarcity of land in large cities (often their central business districts), increasing demand for business and residential space, economic growth, human aspiration to build higher, innovations  in structural systems and products and ultimately prestige. However, planning and constructing a large building comes with many challenges that are less of an issue for smaller buildings.  This includes things such as finance, planning restrictions, energy use (although many new buildings are adopting renewable and other technologies), structural considerations, circulation in what effectively becomes a vertical street, external façade (fixing, maintenance and cleaning), internal environment to achieve human comfort, and so on.  The more high rise buildings that are built, then the more these issues are better understood, however as we stretch the boundaries and construct even higher, then we are likely to encounter further obstacles that we may not have previously contemplated.

As an example let us consider one of the fundamental needs, water supply, in a very high building.  If we consider the provision of a water supply pipe from the bottom of the building to the top, it is easy to imagine why this could prove to be problematic.  As previously stated the current highest building in the World is 828 metres high.  Therefore trying to ensure that the water supply travels such a long distance in a vertical direction and can be used at the right pressure when needed is never going to be straightforward:

‘Plumbing is one of the more challenging problems to solve due to the loss in pressure as water travels up a vertical pipe. Plumbing engineers found out that as you lift water above a datum, you lose 1 pound per square inch for every 2.3 feet of elevation. This small but incremental loss makes achieving high water pressure at the top of a water column very difficult. Most water fixtures require at least 25 psi to operate or flush properly, so measures to ensure consistent water pressure throughout the building must be implemented. As the building get taller, another problem arises as the water pressure at the bottom of a vertical pipe becomes too great for safe operation and building codes’
                       
‘The early solution to this problem was a water tank mounted on the top of a building with fill pumps at the bottom of the building.  Water is supplied to occupants through a simple gravity down feed system.  Today, a system of pressure-reducing valves and sub-risers are used to manage the inconsistent water pressure throughout a skyscraper. Pressure-reducing valves reduce the pressure at the bottom of the building, while sub-risers increase the pressure for the skyscrapers upper floors. Today’s systems lack a main tank, but rather integrate the whole system within a buildings walls and basement’ (Source: http://www.allaboutskyscrapers.com/)

The above discusses a single issue to demonstrate the complexity of design issues in respect of building higher. Other issues such as sewage, lifts, emergency escape, fire fighting provision, earthquakes (and many others ) etc. could equally have been selected, as they pose significant design challenges for very high buildings.  Despite this it appears from buildings on the CTBUH list, that these issues are not standing in the way of buildings becoming evermore higher. This then poses a question. ‘Is there a limit to how high we can build?’ Well, at present it appears not, but surely there has to be a limit?  On May 6th 1954 when Roger Bannister broke the four minute mile, there were many who thought that this would never be beaten.  The record has since been broken a further eighteen times since then, with the current record being held by Moroccan, Hicham El Guerrouj achieving a time of 3.43.13 in Rome in 1999.  This also seems to be the case with high rise buildings, motivated by our human desire ‘to go one better’ than the previous best.

Who knows what human ingenuity will produce in the future? The possibilities seem endless. In fact take a look at the list of ‘all’ tall buildings on the CTBUH database and you will see that there is a ‘vision’ to build at a height of 4000 metres in Tokyo, Japan. This is four times higher than the Jeddah Tower which will become the new highest building in the World when completed in a few years time. This vision appears hard to believe however I am sure many thought the same about a human being running a mile in less than four minutes prior to 1953, so you never know……..

Try to take the time to look at this fascinating documentary which shows how the current highest building in the World was constructed.

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World’s Tallest Buildings of the near future – By 2020! – In Pictures

It is staggering to think that by 2020 only one of the current top ten buildings in the World will still remain in the top ten!

I published an article in February 2013 which illustrated in pictures the top ten tallest buildings in the World at that moment in time.  You can view the article from the following link: ‘10 Tallest Buildings in the World - In Pictures’.  It is staggering to think that by 2020 only one of the ten buildings highlighted within that article will still remain in the top ten!

I thought that it would be interesting to show you (in pictures) how the 10 tallest buildings in the World will look in 2020 as detailed on the Council on Tall Buildings and Urban Habitat (CTBUH), database. When you look at these images consider the fact that 2020 is only six years from now and demonstrates our human desire to stretch the boundaries of engineering and construction to a point where we can make what may appear to be impossible, into a reality.

The top 10 highest buildings in the World in 2020

Number 1

Kingdom Tower  - Jeddah - Saudi Arabia  - 1000 Metres  - 3281 Feet - 167 Floors - Estimated Completion - 2019 

Source: http://www.skyscrapercity.com/

Number 2

Sky City  - Changsha - China - 838 Metres  - 2749 Feet - 202 Floors - Estimated Completion - 2014

Number 3

Burj  Khalifa  - Dubai - UAE  - 828 Metres  - 2717 Feet - 163 Floors - Completed 2010 

Source: Google Images

Number 4

Suzhou Zhongnan Center  - Suzhou - China - 700 Metres  - 2297 Feet - 138 Floors - Estimated Completion - TBC

Source: http://www.skyscrapercity.com/

Number 5

Ping An Finance Center  - Shenzhen - China - 660 Metres  - 2167 Feet - 115 Floors - Estimated Completion - 2016

Source: http://www.skyscrapercenter.com/

Number 6

Burj 2020  - Dubai - UAE - 660 Metres - 2167 Feet - 115 Floors - Estimated Completion - 2020

No image currently available

'Construction of the world’s tallest commercial tower, Burj 2020, will begin in Dubai in 2015, the executive chairman of Dubai Multi Commodities Centre Authority revealed.

Ahmed Sultan Bin Sulayem said that the project had been put out to tender, with the architect to be announced this year. 

“Construction will start in 2015,” said Bin Sulayem, who was speaking at the Destination Dubai 2020 conference held at JW Marriott Marquis Dubai.He said that the building — which was first announced in July 2013 and named Burj 2020 after Dubai’s successful Expo 2020 bid was announced on 27 November — would be the world’s tallest single-use tower'                                   Source: http://arabianindustry.com/ 

Number 7

Signature Tower Jakarta  - Jakarta - Indonesia - 638 Metres - 2093 Feet - 113 Floors - Estimated Completion - 2020

Source: http://skyscrapercenter.com/

Number 8

Wuhan Greenland Center  - Wuhan - China - 636 Metres - 2087 Feet - 125 Floors - Estimated Completion - 2017

Source: http://inhabitat.com/

Number 9

Shanghai Tower - Shanghai - China - 632 Metres - 2073 Feet - 128 Floors - Estimated Completion - 2015

Source: http://skyscrapercenter.com/

Number 10

Lanco Hills Signature Tower - Hyderabad - India - 604 Metres - 1982 Feet - 112 Floors - Estimated Completion - TBC

Source: http://www.skyscrapercity.com/

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10 Tallest Buildings in the World - In Pictures

World's 10 Current Tallest Buildings

In last week’s article I discussed the human desire to construct high rise buildings and posed the question: Is there a limit to how high we can build?’.  The Council on Tall Buildings and Urban Habitat (CTBUH), have formulated a list from their database which shows completed, under construction and planned ‘skyscrapers’ over the coming years, demonstrating that construction and demand for high rise buildings is on the increase.   This week I wanted to publish details of the 10 current highest buildings in the World, as detailed the Council on Tall Buildings and Urban Habitat (CTBUH) database:

Number 1

Burj  Khalifa  - Dubai - UAE  - 828 Metres  - 2717 Feet - 163 Floors - Completed 2010

Source: Google Images

Number 2

Makkah Royal Clock Tower Hotel - Mecca - Saudi Arabia - 601 Metres - 1972 Feet - 120 Floors - Completed 2012

Source: Google Images

Number 3

Taipei 101 - Taipei - China - 508 Metres - 1667 Feet - 101 Floors - Completed 2004

Source: Google Images

Number 4
Shanghai World Financial Centre - Shanghai - China - 492 Metres - 1614 Feet - 101 Floors - Completed 2008

Under Construction - Source: Google Images

Number 5

International Commerce Centre - Hong Kong - 484 Metres - 1588 Feet - 108 Floors -Completed 2010

Source: Google Images

Number 6

Petronas Towers - Kuala Lumpur - Malaysia - 452 Metres - 1482 Feet - 88 Floors -Completed 1998

Source: Google images

Number 7

Zifeng Tower - Nanjing - China - 450 Metres - 1476 Feet - 89 Floors - Completed 2010

Source: Google Images

Number 8

Willis Tower (Formerly Sears Tower) - Chicago - USA - 442 Metres - 1450 Feet - 108 Floors - Completed 1974

Source: Google Images

Number 9

KK100 Development - Shenzhen - China - 442 Metres - 1449 Feet - 100 Floors - Completed 2011 

Source: Google Images

Number 10

Guangzhou International Finance Centre - Guangzhou - China - 439 Metres - 1439 Feet - 103 Floors - Completed 2010 

Under Construction - Source: Google Images

 

Information/opinions posted on this site are the personal views of the author and should not be relied upon by any person or any third party without first seeking further professional advice. Also, please scroll down and read the copyright notice at the end of the blog.