Building Surveys: A Critical Tool for Property Investors and Bridging Finance

Building Surveyors

As savvy property investors, you know that understanding the ins and outs of a potential investment is crucial. That's where building surveys come in – and they're more important than you might think, especially when it comes to securing bridging finance.

A building survey, particularly the comprehensive RICS Level 3 survey, is your property's health check. It dives deep into the structure, identifying everything from major issues to those sneaky minor defects that could become costly headaches down the line. For older properties or those quirky finds with non-standard construction, this survey is your best friend.

But here's where it gets interesting for us bridging finance seekers. These surveys aren't just about knowing what you're buying – they're a vital tool in the underwriting process. Lenders use them to assess risk, value the property accurately, and make informed decisions about your loan.

Think about it – a detailed survey can reveal necessary renovations, compliance issues, or structural problems that could impact your project's timeline and budget. This information is gold for lenders, helping them structure loan terms that reflect the true risk and ensure you have sufficient funds to complete your project.

Cost-wise, you're looking at £500 to £1,500 depending on the property's value. It's a small price to pay for the wealth of information you'll receive and the potential it has to smooth your bridging finance application.

Remember, while building surveys cover a lot of ground, they don't include everything. Specialized assessments like drainage surveys or noise reports might be necessary depending on your property and plans.

Bottom line? If you're eyeing a property for investment and planning to use bridging finance, a comprehensive building survey isn't just recommended – it's essential. It's your ticket to understanding your investment fully and positioning yourself for a successful bridging loan application. In the fast-paced world of property investment, this knowledge isn't just power – it's profit.

This article covers what a building survey is, how it can affect your bridging finance, what to expect during one, the types, the purpose of one, and what's included. 

What is a Building Survey?

A “Building Survey,” also known as a “full structural survey” or a RICS Level 3 Survey, provides a structural assessment that identifies all issues with the property, including minor ones. RICS offers the following building surveys. 

RICS Level 1 (Condition Survey). Also referred to as a Level 1 RICS survey, a condition report provides an essential assessment outlining immediate risks and urgent defects in a property (this survey is also non-intrusive). It’s suitable for relatively new and in good condition properties.

RICS Level 2 (Homebuyers Survey). This survey offers a more detailed analysis of properties under 100 years old. It includes an assessment of the condition and a property valuation (typically for an extra charge).

RICS Level 3 (Building Survey). A RICS building survey, or Level 3 survey, comprehensively examines a property's condition. It offers advice on necessary repairs and maintenance alongside a valuation. This survey is ideal for older, large, or non-standard construction properties, unmortgageable properties, and undergoing substantial renovations.

What is a Building Survey Report? 

A “Building Survey Report” is a detailed document that provides a detailed evaluation of a property's condition, structure, and overall integrity. The report includes thorough assessments of all accessible parts of the property, highlighting any major and minor defects, with detailed explanations of their implications. It provides expert advice on necessary repairs, maintenance recommendations, and estimated costs and timelines for implementation. 

How does a Building Survey impact bridging finance?

Building surveys help underwriters evaluate the bridging finance application and provide comprehensive insights into the property's condition and value. These surveys are essential for lenders to assess risk accurately and make informed lending decisions. Here’s how building surveys impacts the underwriting process for bridging finance:

This table summarises the importance of building surveys in underwriting bridging finance.

Key Aspect

Description

Importance

Accurate Property Valuation

Provides a detailed assessment of the property's current market value.

Ensures the loan amount is proportionate to the property's worth, mitigating the lender's risk.

Identifying Structural Issues

Identifies existing structural issues, defects, or potential problems with the property.

Helps lenders understand the property’s true condition and potential repair costs, influencing loan decisions.

Assessing Renovation Needs

Outlines necessary renovations and associated costs.

Allows for accurate calculation of the loan-to-value (LTV) ratio and ensures sufficient funds for project completion.

Ensuring Compliance with Regulations

Verifies that the property complies with local building regulations and standards.

Prevents legal complications and additional costs, ensuring regulatory compliance.

Evaluating Marketability

Includes an assessment of the property’s marketability and potential resale value.

Provides lenders with confidence in the investment’s security by indicating high marketability and resale value.

Risk Mitigation

Helps identify risks that could affect the property's value and the borrower’s ability to repay the loan.

Allows lenders to take preemptive measures to mitigate risks, such as setting aside reserves for repairs.

Informing Loan Terms

Aids in structuring loan terms appropriately based on detailed property information.

Enables lenders to set realistic loan terms, interest rates, and repayment schedules reflecting the true risk involved.

This table captures the key aspects of building surveys and their importance in underwriting bridging finance.

Who conducts a Building Survey? 

A Building Survey is conducted by a Chartered Surveyor, a professional accredited by the Royal Institution of Chartered Surveyors (RICS). These surveyors have the expertise and qualifications to perform detailed inspections and provide these reports. RICS-regulated Chartered Surveyors adhere to strict standards of practice and ethics, ensuring reliable and impartial advice.

How much does a Building Survey Cost?

Building surveys cost between £500 and £1,500, depending on the property's value. Here are the typical costs for properties of different values.

Property Value 

Average cost for Level 3 Survey (£)

Up to £100,000

£500 - £600

£100,001 to £300,000

£550 - £700

£300,001 to £500,000

£650 - £800 

£500,001 to £800,000

£750 - £950

£800,001 to £1,000,000

£900 - £1,050

The data provided is based on average prices (2024) and is subject to change. It’s based on general market trends and typical costs observed in the UK for building surveys. These figures are compiled from various sources, including industry reports, surveyor websites, and consumer feedback.

What can you expect during a Building Survey?

During a Building Survey, you can expect a detailed examination of the property's structure, condition, and potential issues. Here’s what typically happens during the survey process.

  1. Exterior and interior. The surveyor will inspect the property's exterior and interior. They will examine the walls, roof, foundations, windows, doors, floors, and ceilings to assess their condition.
  2. Access to all areas. The surveyor will need access to all accessible areas of the property. This includes rooms, corridors, attic spaces (if accessible), basement or crawl spaces, and external outbuildings.
  3. Identification of defects. The surveyor will identify any defects or issues such as dampness, cracks, structural movement, timber decay, or signs of subsidence. They will document these issues in the survey report, their severity, and recommended actions.
  4. Photographic evidence. The surveyor may photograph areas of concern to include in the survey report. These photos are used as evidence of the condition and any identified defects.
  5. Specialist recommendations. Depending on their findings, the surveyor may recommend further specialist investigations. This could include damp, asbestos, or structural stability tests, which may require input from specialised contractors.
  6. Detailed report. After the inspection, the surveyor will compile their findings into a detailed report. This report will outline the property's condition, list identified defects, provide recommendations for repairs or further investigations, and include photographic evidence where necessary.

What are the Building Surveys types?

Building surveys vary in detail and are suited to specific situations, but they share a common purpose—to evaluate a property's structural integrity and look for potential issues. So, what are the three main types of building surveys, and where are they used?

Feature 

Building Survey (Level 3)    

HomeBuyer Report (Level 2)

Condition Report (Level 1)

Purpose 

Comprehensive analysis of the property's condition.

 

Typically used for properties over 50 years old, non-standard construction or dilapidated buildings.

Detailed assessment for standard properties

 

Typically used for homebuyers once they’ve made an offer on a property that has been accepted.

Basic overview of property condition.

 

Typically used for strategic estate management.

Suitable for

Older, more significant, or unusual properties; properties needing renovation.

Conventional properties in reasonable condition.

Newer homes or traditional properties in good condition.

Inspection depth

Thorough inspection of all accessible areas.

Standard inspection is less thorough than Level 3.

Basic inspection, surface level.

Structural examination

Detailed examination of structure, materials, and defects.

Identifies significant issues but less detail than Level 3.

Identifies obvious defects only.

Report detail

Extensive, with detailed descriptions and advice on repairs.

Moderate detail with a focus on significant defects and maintenance.

Essential detail, covering main aspects.

What are the other types of Building Surveys?

Building surveys are often adaptable to individual circumstances; here are three other building surveys that are commonly used. 

New-Build Snagging Survey

A New-Build Snagging Survey is an inspection of your new-build home to identify any defects or unfinished work. This type of survey has grown in popularity, with companies like New Home Quality Control showcasing issues with new builds and gaining significant attention on social media platforms like TikTok, which have amassed 2.7 million followers. The purpose of this survey is to ensure that the property meets the expected standards and that any issues are addressed by the builder before the buyer moves in.

However, newly built homes often come with a 10-year NHBC warranty for structural defects plus a developer's two-year warranty, covering repair costs.

Building Survey for a Bridging Loan

Lenders might require a Building Survey (as they can be adapted for certain property types) when applying for a bridge loan to ensure the property is a sound investment. This type of survey assesses the property’s condition, helping lenders determine the risk and the amount they are willing to lend. Properties need to be used as collateral for short-term financing.

Building Survey for a Self-Build

A Building Survey for a self-build project is designed to assess the condition and quality of work on a property you are constructing yourself. This survey can help identify any issues or defects during various stages of the build process, ensuring that construction adheres to regulations and quality standards. It provides peace of mind that the project is progressing correctly and helps avoid potentially costly repairs or adjustments later.


What is included in a Building Survey?

A Building Survey provides a clear understanding of a property's condition, covering structural integrity, damp and moisture, renovations, environmental factors and hazardous materials. 

  • Structural integrity. Examining supporting walls, potential subsidence issues, and any damage to masonry, roofs, or timbers, including woodworm or dry rot. This helps identify significant defects that could affect the property's stability and safety.
  • Damp and moisture. Also known individually as a “Damp Survey Report”, this test measures damp and moisture in walls, assesses the effectiveness of existing damp-proofing measures, and highlights areas prone to moisture ingress.
  • Renovations. The survey addresses renovations and alterations made to the property, verifying if these were conducted with the correct planning permissions and compliance with building regulations. This ensures that structural changes do not compromise the property's integrity or legal standing.
  • Environmental factors. For example, the proximity of large trees to the property is also considered, as they can impact the stability of the building over time.
  • Hazardous materials. The building survey investigates (and identifies) dangerous materials such as asbestos, offering recommendations on their management or removal to ensure occupant safety. 

Technical details regarding the property's construction materials and components are provided, offering insights into their maintenance requirements and expected longevity. 

Here are the four separate reports included or referred to in the building survey. 

1. Structural Survey Report

This includes a detailed inspection of the property's structural integrity. It identifies any issues with the foundations, walls, roof structure, and other load-bearing elements. The report recommends repairs or further investigations if structural defects are found.

2. Damp Survey Report

The survey evaluates the property for damp issues and condensation. It identifies the causes of dampness, assesses the extent of damage, and suggests remedies to prevent or mitigate damp problems.

3. Energy (advises you to seek specialist surveys) 

Although a building survey may touch upon energy efficiency aspects, it typically advises seeking specialist surveys for detailed energy audits or assessments. This includes recommendations for improving insulation, heating systems, or renewable energy options.

4. Asbestos (advises you to seek specialist surveys)

The Building survey may highlight the potential presence of asbestos-containing materials (ACMs). However, it recommends seeking specialist surveys for full asbestos testing and management plans. Asbestos surveys are crucial for older properties where asbestos may be present in building materials. 

While the survey thoroughly examines the property's structure and immediate surroundings, it typically does not delve into detailed assessments of heating or electrical systems. However, the surveyor can arrange for experts to inspect these areas upon request.


What's not included in a Building Survey?

While a building survey assesses many aspects of a property's condition, it typically does not include the following specialised surveys (but it will recommend what additional surveys may be needed).

Drainage Survey

A Drainage Survey involves thoroughly inspecting a property's drainage system to identify blockages, leaks, or structural damage. Surveyors can use CCTV cameras to examine the interior condition of pipes and drains without excavation. The survey typically includes.

  • CCTV inspection. Cameras are inserted into the drainage system to provide footage of the interior condition.
  • Structural issues. Identifying cracks, fractures, collapses, and other structural problems in the pipes.
  • Blockage detection. Locating blockages caused by debris, roots, or other obstructions.
  • Leak detection. Identifying areas where water is escaping from the system.

A Building Survey may mention visible drainage issues but does not typically involve a detailed inspection of underground drainage systems or sewage lines. Specific drainage surveys are necessary to assess the condition and functionality of drainage infrastructure.

Noise Survey Report

A noise survey is a systematic assessment conducted to measure and analyse noise levels in a specific environment. It involves using specialised equipment like sound level meters to quantify noise levels at various locations and times. The survey serves multiple purposes, including compliance with noise regulations, assessing potential impacts on health and the environment,

A typical noise survey includes the following.

  • Purpose. Explanation of why the survey is conducted and the specific areas or activities assessed.
  • Methodology. Description of the equipment used (such as sound level meters), measurement locations, and duration of measurements.
  • Noise Criteria. Comparison of measured noise levels against relevant standards or guidelines set by regulatory authorities.
  • Findings. Presentation of measured noise levels, including peak, average, and frequency spectra. Analysis may include temporal variations (day vs. night) and spatial variations (different locations within the survey area).

Assessing noise levels and their impact on a property is typically beyond the scope of a Building Survey (unless requested from the outset). Noise surveys are conducted separately to evaluate noise pollution levels, especially in urban locations.

Site Survey Report

A Building Survey focuses on the structural integrity and condition of the building itself. It does not encompass a comprehensive site survey, which includes land boundaries, topography, and environmental factors like soil conditions. Site surveys are essential for land development and planning purposes.

Electrical Survey (EPC survey) 

A Building Survey may comment on the general condition of visible electrical installations, such as wiring and sockets. However, it does not provide an Energy Performance Certificate (EPC), which evaluates a property's energy efficiency and environmental impact. EPC surveys are separate assessments required for property rentals, sales, or renovations.


Final thoughts

Building surveys are an indispensable tool for property investors, particularly those seeking bridging finance. These comprehensive assessments, ranging from basic condition reports to in-depth structural evaluations, provide crucial insights into a property's health and potential.

For bridging finance applicants, a thorough building survey can significantly impact the underwriting process, influencing loan terms and mitigating risks for both lenders and borrowers. While the cost of a survey may seem like an additional expense, it's a small price to pay for the wealth of information it provides, potentially saving investors from costly surprises down the line. However, it's important to remember that while building surveys cover extensive ground, they don't encompass everything. Specialized assessments may still be necessary depending on the property and your investment goals. Ultimately, for savvy property investors, a building survey is not just a precautionary measure—it's a strategic tool that can inform decision-making, streamline financing, and maximize the potential of your property investments.

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