Interview with Expert Building Surveyor
Jon Charters-Reid gives a direct and highly charged interview with property consultant Alex Goldstein. Jon walks through what could be next banking scandal to hit the UK and his prediction is that it will be larger than PPI. In addition, Jon’s years of experience prove to be invaluable when giving insight into the world of surveying, what to look out for and how to manage.
Interview with Expert Building Surveyor
Full transcript below:
Alex: We’ve got Jon Charters-Reed here in the studio, a very interesting chap indeed. Now Jon, just tell everyone, you’ve got a few accreditations to your name, which is a bit more unusual than most surveyors out there I think it’s fair to be said.
Jon: Yeah definitely, I began my career as a classically trained York Minster Joiner, went on to become a chartered surveyor, a chartered builder and I’m also a chartered building engineer.
Alex: You’ve got a lot going on there, a lot going on and I think what’s quite interesting is because you’ve got the building background I think there was quite a famous story involved in that as well.
Jon: There was, we’ve had a few incidents where properties have suffered from structural movement, no one didn’t know what to do or how to fix them, so we took our own digger, underpinned it and guaranteed it ourselves.
Alex: That’s what you call an in-house one-stop surveyor shop. I don’t know many surveyors that will go and survey a property and then go and fix it and guarantee it themselves, that’s pretty impressive stuff. I just want to talk through the different types of survey, I think there are a lot of home buyers and indeed home sellers who get themselves into a bit of a spin as to what level they require and what the actual differences are. Just talk everyone through that.
Jon: Ok well before we do let’s just look at the reason why you have a survey and at the moment it’s all the wrong way round because there’s a basic valuation which tells you what the property’s worth and in essence that’s a bank valuation usually, and you’re lucky if that’s one sheet of paper, you don’t normally get to see it as the property purchaser. Now it’s slightly incorrect as how do you know what the property’s worth if you don’t know it’s condition? For that reason, Alex, that’s why you should have a survey first before you get the valuation. I looked around a 1649 property a few weeks ago and it had horrendous defects and it does have an effect on value, needless to say the costs of repairs is not a straight forward deduction off the market appraisal.
Alex: No indeed and what are the survey types?
Jon: What we have is your basic survey, is the industry standard is the RICS home buyers report. It’s quite a restrictive report because it has traffic lights in it and we often do 4/5 surveys a week where someone’s had the RICS home buyers report, its not clear, its not easy to understand and we’ve been asked to do a subsequent report on it just to highlight effectively what the deficiencies are in there.
Alex: Is it often where banks offer that because sometimes they do this overall package where they will give you a survey and I guess very often because it’s a lower grade one it’s cheaper for them?
Jon: Exactly, so the banks are being rather naughty because one of the things I’ve said in my book, How to Be a Smarter House Buyer, is that the banks are not treating customers fairly, they are carrying out restrictive practices because if you go to the bank for a mortgage and they offer you a mortgage, they must give you the opportunity to get your own independent surveyor.
Alex: What is the next type or survey that you need to get?
Jon: Most individual private practices will offer their own version of that which is usually full of common sense and not standard phrases. So, you get your level 2 scheme which is one above evaluation, then you get your building survey which is suitable for older houses. What you must remember is that Yorkshire has got a plethora of terraced houses, most of them getting on for 120 years old and they too are likely candidates for a building survey.
Alex: So that is sort of the step 2, the next grade up, I think some surveyors call it an infrastructure survey.
Jon: Sometimes its got a number of names, its sometimes called a building survey, or a mains structure survey and you need to be extremely careful because there are a number of companies out there offering a building survey, charging a fortune and it’s four pages long.
Alex: How long are yours then?
Jon: 40-50 pages long and 40-70,000 words because the thing is that everyone needs to understand is, that your home that you are buying is ostensibly the family silver and so why would you skim on going for the cheapest survey on something that is literally worth thousands and it’s your future?
Alex: No, I quite agree. Again, I think there’s confusion over formal valuations and sometimes I think estate agents offer these. Under what circumstance would someone say I want a formal valuation? What are they and in what situation?
Jon: So formal valuations usually begin with a probate valuation or a valuation for tax purposes or a matrimonial valuation. The banks will ask for a valuation because its part of the banks and building society’s acts and regulations that the bank need a valuation to know the property’s value and so the banks are quite canny because they’ll charge the customers up to £600/700 for a valuation which literally is one to two pieces of paper and they’ll keep 60-70% of the fee but they won’t tell you that.
Alex: No indeed, but can you get involved if I needed a formal valuation?
Jon: There’s no reason based on what we’ve previously said about the council of mortgage lenders why a house buyer cannot insist on their own survey. If the bank turns around says you need to use our panel of approved surveyors, its restrictive practice and it’s tantamount to being illegal.
Alex: It is and if you, you’ve gone very specific and ruled out a lot of other options, at the end of the day the clients or the home owner or the house purchaser is actually losing out at the end of the day.
Jon: You can choose your own solicitor, you can choose your own accountant and you can choose your own mortgage adviser. We need to be quite clear that the banks have got to stop behaving like this. I have spent 5 years researching this plus my 25 years in the business in order to create the book that I’ve written.
Alex: So, this is the next horizon, the next sort of scandal in the bank world potentially, certainly sounds as though its heading that way.
Jon: Definitely, we’ve already spoke to a couple of law firms that are interested in setting up departments to actually tackle what is effectively almost an in-house type of mortgage fraud by the banks really.
Alex: So, its setting up a monopoly on it all?
Jon: Definitely and it needs to stop and hence the birth of the smarter house buyer because people have got a lot more savvy as to what’s going on in the world.
Alex: You mentioned your book, I know that’s just recently come out. Just talk where is it, what’s it about?
Jon: It’s called How to be A Smarter House Buyer. Its available in Waterstones and on Amazon, paperback and Kindle. In essence it highlights the deficiencies in the housing market which effectively after the recession became broken we’re still using similar methods for selling and buying houses and advising people how to get mortgages that we we’re doing 10-15 years ago. It gives people tips on how to choose a good estate agent and try to do a bit of mystery shopping.
Alex: That was certainly in an article I’ve just written actually and do mystery shop them, go in behind the scenes and see how well you’re greeted as perspective purchaser if you’re looking to sell a house, I certainly agree wholeheartedly with that. Again, another phrase that’s thrown up is RICS Red Book Evaluation, just to be clear this is formal valuation and it’s what you talk through effectively but what is it? How do you actually go about it?
Jon: Ok so the RICS Red Book its in essence a large book, its red and as thick as the London Yellow Pages and it’s got a whole load of practice statements and guidelines that we have to comply with in order to provide an evaluation. Now interestingly enough when the banks are instructing surveyors in this closed shop environment to carry out an evaluation a lot of companies are not complying to this evaluation. So, I’ll give you another example, a lot of companies will go and do a bank valuation on a house and they won’t look in the loft and there is some practice statements now that say surveyors don’t need to look in the loft on valuations. Now to me this is wrong because the loft, which is probably a third of the property and you know its often the Pandora’s box which can reveal an awful lot of stuff and again lets take the average house price, you know £289,000, you’re buying a house, you’re getting a valuation, you’re paying a load of money for it, you’re not even getting to see it, you don’t know anything you’re getting, they’ve not even looked at two thirds of the house, how can that be right?
Alex: I quite agree, you must have in your years of experience quite a few embarrassing stories for us surely?
Jon: One of my favourite stories is going into a property as younger surveyor, and going into the garden of the property and shall we say the lady wasn’t petite, and it was a summers day and the lady was in her birthday suit and all I could do was offer her my clipboard, but it didn’t serve a purpose in covering a awful lot up really.
Alex: You really need a bigger clipboard Jon. How can everyone get in touch with you? As I’ve said you’ve got a lot of accreditations to your name, where are you based and what are your contact details?
Jon: You can get in touch with our Leeds or Harrogate office and if they type in Charters Reed Surveyors into Google we shall pop up on the screen. You can also contact us on our Harrogate number which is 01423 259601.
Alex: Jon, thank you so much, a fascinating insight as always, really appreciate you coming on the show.
Jon: Thanks very much indeed, take care.