Although buy-to-let residential property has recently made good returns there are concerns over its future performance, in contrast the outlook for commercial property which seems set to do well over the next three to five years………This will have implications for the modern surveyor

Separating the residential survey

‘Surveying the Surveyors’ by Malcolm Hollis and Keith Bright is key research that examines the perceived concern about the quality of residential surveys and suggests a higher rate of sub standard reporting within residential surveys. In a recent controlled test of Homebuyer Reports only one out of three surveyors found the real defects to do with a property.

Building Surveys or Structural Surveys provide a full picture of a construction under terms of engagement for a prospective buyer.  These types of surveys are considered to be the premium of the bunch and are the surveys that 1stAssociated.co.uk specialise in. All major and minor defects are covered in these surveys and they are regarded as more superior to Homebuyer Surveys and Mortgage Valuations, which do not go into so much detail. Mortgage Valuations cannot provide a buyer with advice on whether a property should be bought. Mortgage reports only allow purchasers to determine whether a mortgage will be provided. A Homebuyer Report is for conventional types of constructions. Essential repairs are commented on however not in major depth. A Building Survey is therefore superior in the residential market. Recently the commercial market has also been very buoyant.

Commercial growth

‘Residential/commercial property sectors have shown 11 and 17 percent annual income growth respectively over the last two years'.‘The FPD Savills survey indicated that most of this growth flowed from the rising demand for housing and workspace and a population shift from urban to rural areas by people with above-average incomes.‘With the rise of personal mobility and convenience and purpose built shopping centres more and more demand has arisen commercially. This could range for leasing or buying outright an industrial space or a bar. This has led to an increasing number of commercial surveys and expertise to assist.

Survey down the ladder

I am a trainee surveyor at 1stAssociated.co.uk; since commencing my work with the Chartered Surveyor I have accompanied him on a variety of residential and commercial surveys which is helping me to gain experience.  I am therefore now able to draw on the similarities and differences of these types of surveys in this report.

The Chartered Surveyor is a specialist in commercial surveys. To be able to bridge back the skill to completing a residential survey is easier than asking a sole residential surveyor to take on a commercial survey. Many surveyors cannot provide the residential client with the service they need, aside that of a brief home report.

My article highlights some greater issues that need looking at when carrying out a Commercial Building Survey.

Dilapidations = Disputes?

Dilapidations are a main feature of commercial surveys of industrial units, pubs, bars etc. We recently experienced this with a survey of a unit in Leamington spa. The new buyers were waiting for the owner to settle dilapidations with a long standing old tenant.   When I entered the building with the Chartered Surveyor we noted that it needed some work.

There were leaks and problems with the wiring.  The survey for the asbestos roof which had been encapsulated was still not provided. Unbelievably this was the second time 1stAssociated.co.uk had visited the building to see if any progress had been made on dilapidations. The new buyers were asking for us to write a report to help in negotiations. In simple terms this is to restore the standard of repairs required by a lease covenant.  You’ve guessed it, this causes disputes and is long winded.

We had to deal with a third party property manager for the ex-lessees; he argued he didn’t have any kind of benchmark on which the surveyor could base their subjective view.  By subjective view I mean an idea of what state and condition the building should be given to the new occupiers. Without this we could not state the way the building should be provided. However we were able to assist in providing advice and negotiations on the overall condition, like for a residential survey.  The benchmark we really needed was a Schedule of Condition.  

Schedule of Condition - What it ought to be

At a recent survey of a bar called Latin Fusion in Fulham, The surveyor provided a Schedule of Condition as an extra part of his service. He was not asked to do this, however I understood, having been to the Leamington survey mentioned above where there was no previous Schedule of Condition, how important this document is.   If you do not have a benchmark when a survey is carried out on the condition of the bar when you take over the Lease, how can you state what condition it should be in when the Lease is finished and you vacate the premises?  At 1stAssociated.co.uk we can assist by producing a Schedule of Condition and assist in Dilapidations. Most firms specialise in Dilapidations and even Commercial Surveys but we at 1stAssociated.co.uk have an all round team ready to tackle all kinds of surveys.

Schedule of Defects - like home?

Most of the defects we find in homes are similar to those found in commercial properties. Examples of things mentioned range from deterioration of ceilings, paint, to defects in a cavity wall and roof leaks. An asbestos roof was interesting to find in Leamington, like so many of the homes built in the 70’s and garages, warehouses are similar but the problem of asbestos can extend to the roof! The new occupiers were verbally told there was an asbestos survey for this but without it they wouldn’t achieve the premium of owning it.

A Schedule of Condition was better than a Building Survey for the bar in Fulham, however we had the benefit of giving both to our client. I asked the surveyor later how many firms could provide this. All full photos taken during the survey and a detailed description are given.

A Commercial Lease must be read

A Lease is a vital part of commercial surveys. Unfortunately the Lease was not available at our Leamington survey to compare with a Schedule of Condition; they should work hand in hand and are a valuable tool for us in a commercial survey. The key for a commercial surveyor is to be able to interpret this in the best way possible. This will allow the surveyor to advise the owners on the way the building should be provided to new occupiers.

On the Dilapidations forum for the RICS I recently read a RICS member comment ‘a surveyor will need training on relevant case law and standard of repair for these purposes’, like at 1stAssociated.co.uk, but why?  This is to do with the different implications of repair covenants contained in a Lease which have to be assessed in relation to the age, character, and type of the building. This has to be done according to case statute law. The wording for example can be confusing; hence this is the Chartered Surveyors work.

The Lessee is not to provide the building back in a different condition as to when it was provided at the start of the Lease. These are referred to as FRI’s (full repairs and insurances).  When examining repairs we look for damage, there must be deterioration from a previous condition and this must be the subject of a repairing covenant. The 1927 Landlord Act covers the limited amount that can be claimed.  This is based on producing two valuations of the building repaired and one of it minus any repair.

The fact is that before a Lease is signed many commercial firms, who may be just starting out on a new business venture and do not have the funds, do not seek legal advice or the advice of a company like 1stAssociated.co.uk.  This can mean that they are not aware of the financial implications and the potential future costs that they may be liable for.  The end result is that the advice is needed in the end anyway. The Independent Chartered Surveyor has experience of surveying established companies and new properties occupied.

Book a commercial survey while you grow

At 1stAssociated.co.uk we can offer you a commercial advice and surveys including: 

Valuations
Schedules of Condition
Assessment of Dilapidations
Building Survey
Defects
Expert Witness

A lot of residential surveyors are not structural surveyors in the slightest. They can base a report on passing a valuation for a bank or just touching on a few points. 

1stAssociated.co.uk will go the extra mile. Call us for a free consultation….!

0800 298 5424