A pre-purchase survey is not a legal requirement to buy a home in Ireland, but it may be mandated as a condition of applying for a mortgage with your bank or financial lender. Many Irish homebuyers incorrectly assume that their bank will tell them specifically which survey they need, so it’s important to understand the bank’s requirements and to commission the correct type of survey for your desired home.
Although around 60% of Irish homebuyers do commission a pre-purchase survey of their own volition, many banks are now increasingly asking buyers to get one done in order to qualify for a mortgage and to lessen their own risk.
In Ireland, there is a principle of caveat emptor, “buyer beware,” which means that the buyer is responsible for any issues detected after closing the transaction and becoming the legal owner of the property. If there are no issues, then it’s no worry. In many cases, however, there are several issues which can cost thousands of euros to remediate and as the buyer, you’ll have to foot the bill for it all.
What Banks Check vs What Engineers Check
What do banks check during a valuation when you apply for a mortgage for a home, and what do engineers check during a pre-purchase survey? In short, they tend to check for two very different things. Here is a detailed breakdown of what banks check during a property valuation, compared to what an engineer looks for during a pre-purchase survey:
Bank Valuation
- The market value of the home, in relation to surrounding properties, market trends, and the visible condition of the home.
- A quick visit (perhaps 15-30 minutes, sometimes even remotely) to inspect the condition
- The survey asses the bank’s risk for the collateral (the home) to approve/deny a mortgage loan
- Does not entail any structural inspection beyond surface-level
- Does not identify defects with the property which could detract from its value
Pre-Purchase Survey
- A full structural inspection, including all relevant elements, e.g. structural integrity, plumbing, electrical, HVAC, etc.
- Mainly done to protect the buyer against making a poor purchase or paying too much for a property full of defects
- Identifies all necessary and remedial works to be done, including any defects, dampness, structural problems
- Identifies compliance issues which could be problematic with local planning authorities, e.g. unauthorised sheds, attic conversions, etc.
- Can be used to renegotiate an offer from a seller or simply to walk away from the transaction
In brief, a bank valuation estimates the market value of a property for the purpose of lending, whereas a pre-purchase survey assesses the actual condition of a property, primarily for the purpose of informing the buyer of any defects.
Do Banks Require a Pre-Purchase Survey?
Banks and financial lenders in Ireland do not legally require a structural survey, but it is common for them to encourage buyers to get one for their own benefit. Furthermore, some lenders are now asking mortgage applicants to retain a pre-purchase survey, especially for older homes. Homes built before 1963 or that are 80-100 years old (or even older), or that have visibly deteriorated, often require a pre-purchase survey as a condition of being approved for a mortgage loan.
Generally, the idea is that banks cannot and will not force you to pay for a pre-purchase survey, but in the likely event that one or more defects are found after the purchase, it is the buyer’s full responsibility.
Several of the biggest banks in Ireland have the following recommendations with regards to pre-purchase surveys:
- AIB: pre-purchase survey is recommended, but not mandatory
- Bank of Ireland: only a property valuation is required
- PTSB: only a property valuation is required
- Credit Unions: most recommend a pre-purchase survey, all require a property valuation
Why Solicitors May Require One
A solicitor is needed when purchasing a property in Ireland as they provide essential services such as conveyancing, legally transferring the title, and ensuring that the transaction and the property itself is compliant. Compliance is important and it’s fair to have doubts, so a solicitor may require you to retain a pre-purchase survey before proceeding with the conveyancing.
Reasons why a solicitor may need one include:
- It protects you, the buyer, from inheriting issues which can be potentially very costly
- It ensures that any existing extensions or alterations to the property are compliant
- It avoids any implications that may arise with your title or home insurance
- It identifies any boundary problems such as encroachments
- It is part of their own due diligence and for yours, especially as a first-time homebuyer
- It gives you peace of mind and clarity about the actual, not stated, condition of the home
Risks of Skipping a Pre-Purchase Survey
If around 3/5ths of Irish homebuyers get a pre-purchase survey, even when it isn’t a legal requirement, then what does that say about the other 2/5ths? For some, it’s a little bit of money saved, assuming there is nothing out of the ordinary with the home. For many, it’s a costly affair to have to repair and maintain all sorts of unanticipated problems, all of which wouldn’t be your responsibility if you had gotten a pre-purchase survey!
Some of the hidden issues that can be identified by an engineer or surveyor during a pre-purchase survey include:
- Presence of dampness and mould
- Structural damage and cracks, e.g. foundation walls
- Rot or deterioration of the roof
- Non-compliant extensions and other works
- Fire safety issues
- Boundary encroachments
Some problems, like a faulty bathroom fixture, might only cost you a couple hundred euro. A rotten roof with rafters precipitously in need of replacement could easily run you tens of thousands. Skipping a pre-purchase survey could leave you paying far more than anticipated later on, so don’t skip the survey and save yourself the headaches.
How a Survey Helps with Mortgage Approval
Banks and other mortgage lenders in Ireland want to be sure that the collateral asset, your desired property, is worth approximately what they determine in their valuation report. A home with several major issues could drastically reduce the value of the property and make it far riskier for the bank to approve a mortgage.
Some of the indirect benefits of a pre-purchase survey for mortgage approval include:
- It identifies issues sooner rather than later, allowing for remedial works to take place if necessary
- It allows the buyer to renegotiate the offer with the seller, either reducing the cost by the estimated amount or having the seller perform these repairs at their own expense as a condition of the sale
- It prevents mortgages from being denied due to structural problems, since all issues are laid out before the contract is signed
- It shows mortgage lenders that the property is a sound long-term security
- It makes the mortgage drawdown process simpler and clearer
When You Need a Snag List Instead
While pre-purchase surveys are common for second-hand homes in Ireland, don’t mistakenly think that new build homes are safe from issues. Naturally, second-hand homes have wear and tear and accumulated damage which a pre-purchase survey can identify, but a new build can have several issues such as non-compliance with building standards and regulations. Structural problems are not as likely (but still possible) on a new build, but things like finishes or poor quality of workmanship can still become inherited by you, the buyer, after the purchase is concluded.
For new builds, a snag list is a similar type of survey that consists of periodic inspections to a building site of either a new build home or a renovated home. It identifies:
- Poor quality workmanship
- Missing or incomplete fittings
- Cosmetic flaws and issues
- Ventilation or compliance problems
As with pre-purchase surveys, a snag list does not replace a bank’s valuation report. Instead, it gives homebuyers clarity and allows them to renegotiate the sale of the property, request that the seller’s contractors remediate any issues detected, or to step away from the transaction altogether.
Retain a Pre-Purchase Survey or Snag List in Cork from BCE Consulting
Whether you’re planning on buying a new or second-hand home, any number of issues could be hidden away from the seller (intentionally or not). In Ireland, any such problems become your responsibility once you legally own the property, so the best way to avoid headaches and having to fork over potentially tens of thousands of euros on remedial work is to retain a pre-purchase survey (for second-hand homes) or a snag list (for new builds) from a qualified engineer or surveyor in Cork such as BCE Consulting.
Banks don’t require you to get one, but many recommend it, strongly even, and it is one of the smartest decisions an Irish homebuyer can make. Protect your investment, make fairer negotiations, and avoid costly surprises by getting a pre-purchase survey or snag list from BCE Consulting today.
Recent Comments