Worrying new research from Direct Line Home Insurance has revealed that nearly 100,000 home sales were completed in the 2019/20 financial year without a survey of the property.
Despite 42% of surveys uncovering issues with a property, 9% of homeowners did not have one completed. 25% of homebuyers were later hit with an unexpected bill for repair work, at an average cost of £3,676.
Research conducted by the insurer revealed that Britons have concluded more than 2.8 million residential property sales without the completion of any kind of survey, accounting for around 8% of all property transactions in the UK. With nearly 1.2 million properties sold in the 2019/20 financial year, this could mean that as many as 98,000 of these transactions took place without any form of survey being conducted on the premises.
Of the 11.7 million homeowners who had a survey reveal issues with a property, 40% used this to negotiate a reduction in price or arrange for the issues to be rectified ahead of the sale progressing. However, 38% of buyers had issues raised but continued with the sale without asking for a reduction in price. A further 8% were unsuccessful in securing a price reduction but proceeded with the sale anyway. 14% of buyers opted to walk away from the property completely, either due to the complications raised in the survey or the inability to negotiate an agreeable discount.
New research amongst estate agents reveals purchasers save on average £5,744 (2.4%) when they use issues raised by a survey to negotiate a discount on the purchase price. Agents also revealed structural (55%) issues and subsidence (31%) are the two concerns raised on surveys most likely to lead to buyers attempting to negotiate a reduction in the house price, followed by electrical (29%) and roof issues (23%).
When it comes to reasons for property sales falling through completely, estate agents name structural issues (56%), subsidence (23%) and roofing problems (14%) as the top three. 24% of estate agents say that buyers don’t factor in the cost of repairs or improvements highlighted in a survey when thinking about the total cost of moving.
When it comes to who is responsible for a property survey, 44% of UK adults think it should be the seller who arranges this, while 30% believe it is right that the buyer commissions a survey.
In England and Wales, it is up to the buyer if they wish to commission a survey, however, in Scotland, the seller is legally required to produce a Home Report when putting a property on the market. More than half of Welsh residents believe the system should fall in line with Scotland’s where the seller is responsible for the home survey, with 43% of people in England thinking the same. In Scotland, 22% want to abandon the current model and switch to the buyer being responsible for the Home Report.
Despite more than 20 million people saying they would pull out of a deal if subsidence was raised in a survey, almost 550,000 homebuyers say that they would not do anything about it. More than 600,000 people say that they would not do anything to resolve an issue with asbestos raised in a survey, 580,000 wouldn’t do anything about Japanese knotweed and 340,000 wouldn’t do anything about structural issues.
Estate agents revealed Brighton and London as the cities with the highest proportion of buyers who try to negotiate a discount on price following a survey. Liverpool and Newcastle came a close second with Birmingham completing the top five.
According to estate agents, just under two-thirds of buyers are successful in negotiating a price reduction, with those in Liverpool the most successful, managing to knock an estimated 3.7% off the total value of the property – a saving of £5,000.
Buyers in London are viewed as the least successful, securing a discount just 59% of the time. When they do, they also only manage to negotiate a discount of 1.7%. However, due to higher London house prices, this still translates as more than £8,000 off the value of the property.
Dan Simson, Head of Direct Line Home Insurance, comments:
“Investing in a survey before purchasing a property can save a huge amount of money and hassle in the long run. Surveys are there to protect the buyer, enabling them to get a better idea of any repairs that might be needed and any problems to look out for in the future. It is important people also research the types of survey available, they range from; basic traffic light reports with guidance on property condition, too detailed reports with advice on defects, repairs and maintenance.
“It is also important homeowners inform their insurer of any structural or subsidence issues, as well as any major building work taking place, to ensure the right cover is in place on the policy.”