The CML's position on Home Buyers Surveys is sensible even if it does little to get consumers a fair deal
The CML is a trade association for mortgage lenders (Banks and Building Societies), the majority of whom are members. The collective lending of CML members account for over 90% of all residential mortgages in the UK.
Many confuse its raison d'etre with that of a regulator like the SRA or FSA. In fact, as a trade association, the CML acts primarily in the interests of its members rather than the general public.
Home Buyers Surveys and the Mortgage process
Home Buyers taking out a mortgage will normally be expected to cover the cost of a Mortgage Valuation 'Survey' conducted by a RICS Chartered Surveyor from the lender's approved panel.
The main purpose of this 'Survey' is to ensure that the property value is suitable security for the loan - in other words, to protect the lender's interests, not those of the buyer.
The Mortgage Valuation is instructed by the lender, the lender is the client of the surveyor but the Valuation is paid for by the borrower.
The cost of the Mortgage Valuation to the borrower can be as high as £600 yet the they is not even entitled to see the report. Clearly the cost of this so-called survey bears no relation to the cost of carrying out the valuation, and any consumer concerns about this tend to be managed by calling the valuation a 'Survey' as if to enhance its value.
Professional advice for the right Home Buyers Survey
Purchasing a home is an expensive and potentially risky business and it is for this reason that everyone from RICS, to Which?, from the CML to downright common sense, recommend purchasers take out a Home Buyers Survey on a property before exchanging contracts.
The CML state on their website that under 2% of buyers commission a full Building Survey and roughly 15% take out a HomeBuyer Report, both of which typically cost less than the lenders charge for Valuation Surveys - despite the fact that the HomeBuyer Report actually includes a valuation!
There are any number of reasons why few are wise enough to take out a Home Buyers Survey. Certainly agents would not wish to 'scupper their supper' by introducing doubt into buyers minds, or encouraging post-offer price negotiations resulting from defects highlighted in the survey.
Chartered Surveyors are more than ever dependent on lender Valuation business as their bread and butter, and there is no reason why they would inform the buyer that they are getting a poor deal on the valuation because, after all, that would be to bite the hand that feeds them.
The CML officially recommends that all buyers carry out a Home Buyers Survey, in addition to the valuation, which either means instructing it through the lender (rarely the most competitive route) or paying your own choice of surveyor directly to visit the property.
It would certainly be in the interest of borrowers if the CML were able to exert some degree of pressure in obtaining better and more transparent deal in relation to Home Buyers Surveys.