The RICS (Royal Institution of Chartered Surveyors) introduced the new RICS HomeBuyer Report (HBR) in July 2009. Initially this ran alongside the previous RICS Homebuyer Survey and Valuation (HSV) which had been in use for a number of years. The HSV was phased out in March 2010 and the new HomeBuyer Report became the only one that was licensed by the RICS.
The report was quite a radical departure from earlier formats and was developed following considerable market research and feedback from the general public. It was designed to be a user-friendly report with the minimum of technical jargon. The most significant change was the introduction of colour coded Condition Ratings usually referred to as the 'Traffic Lights System'. The surveyor must rate each element of the property using one of the following Condition Ratings.
- Condition Rating 1 (green) - No repair is currently needed. The property must be maintained in the normal way.
- Condition Rating 2 (amber) - Defects that need repairing or replacing but are not considered to be either serious or urgent. The property must be maintained in the normal way.
- Condition Rating 3 (red) - Defects that are serious and/or need to be repaired, replaced or investigated urgently.
The report is now quite lengthy, usually in the region of 25 pages, but it is divided into easily readable and logical sections as follows:-
- A. Introduction to the report
- B. About the inspection
- C. Overall opinion and summary of the condition ratings
- D. About the property
- E. Outside the property
- F. Inside the property
- G. Services
- H. Grounds (including shared areas for flats)
- I. Issues for your legal advisers
- J. Risks
- K. Valuation
- L. Surveyor's declaration
The report will also include a number of appendices which provide useful information about what the purchaser needs to do next and, particularly in the case of leasehold properties, any enquiries that legal advisers need to make prior to exchange of contracts. The new format also allows the surveyor to add photographs to the report.
Section C is particularly useful to the buyer as it gives an overview of the Condition Ratings for each element of the building and includes a fairly concise section giving the surveyor's overall opinion of the property. This will include a comment as to whether or not the surveyor considers the agreed purchase price to be reasonable. Normally this will be the section that the client turns to first.
Section D includes a brief section related to energy efficiency and will include reference to the Energy Performance Certificate that must be prepared before a property is marketed.
Section G will give an overview of the condition of the services based on a visual inspection. However, the surveyor will not test the services. If the property is vacant the services may have been turned off or disconnected. The surveyor will generally not be able to turn services on unless the vendor is present and is able to turn them on for him/her. The surveyor will recommend further investigations if these are considered appropriate. Often it will be necessary to have the gas, electric and central heating systems tested in older properties.
Section J is a new element of the report and is used to identify risks to the building, grounds or occupants. This could cover such problems as potential flooding, the presence of asbestos based materials, an unprotected pond that could be a danger to small children or lack of safety glazing to doors.
The feedback received to date indicates that the new Homebuyer Report has been well received by the general public and that the Condition Rating System, in particular, is considered to be very helpful to potential purchasers.
The RICS also offer a product called a 'Condition Report'. This is a simplified version of the Homebuyer Report and includes many of the elements discussed above, including the 'Traffic Lights System' for flagging up defects. The Condition Report does not, however, include a Valuation or advice on future repairs and maintenance. The Condition Report can be commissioned by vendors, prior to putting their property on the market, to prevent unforeseen issues cropping up when their potential purchaser has a mortgage valuation or survey carried out.
Content provided by Justin Burns BSc MRICS of Peter Barry Surveyors