When carrying out a survey on a property that is on the market, a surveyor can have a tricky job in determining the value and condition of the property, especially when many parts can only be visually inspected, often from a distance. Surveyors are trained and regulated, and are of course insured should any errors arise resulting in a negligence claim.
Generally, when valuing a property, a surveyor has a duty of care to both the house buyer, and also if the buyer is borrowing money from the bank, a duty of care to the lender too (typically, a bank or building society). When the house-buying process is already so stressful, prospective homeowners want to feel all the professional services that are involved in that process are giving them accurate information. However, in a recent case, this duty of care was shown not to extend to a buyer where a property is purchased as a buy to let investment.
In the case of Scullion v Bank of Scotland, the bank had engaged the services of a surveyor to place a valuation on a property. The surveyor did so, putting a valuation on the property and giving a potential rental value that could be achieved if the property were to be let. Mr Scullion relied on this amount, expecting to achieve £2000 per calendar month for it; he had decided to invest in the property specifically for the buy-to-let market. Mr Scullion took the action against the surveyors on the basis that he had relied on these valuations, the valuations were negligently high, and that the surveyor owed him a duty of care when preparing the report. In the initial action, the judge found in Mr Scullion’s favour, except for the issue of the negligently high capital valuation. The surveyors then appealed this decision. The court allowed the appeal in favour of the surveyors, albeit reluctantly given the losses incurred by Mr Scullion. Ultimately, if Mr Scullion had been buying the property as a home to live in, the outcome could have been very different, but as he was buying this as a business proposition, through a business partnership, he would be deemed to have a higher knowledge of the market and should not rely on a third party for judging the potential returns on his investment.
The decision will be of some relief to surveyors undertaking work for those who are buying and selling properties as part of a business as opposed to those buying for residential use. It will be interesting to see at what point an enterprise is classed as a business – perhaps any purchase solely for buy to let will count as business use.
Inksters handle all aspects of property sale and purchasing, whether it be the purchase of a home or the acquisition of a buy-to-let property. We can assist by making contact with a suitable surveyor on your behalf. Please contact us if you require further advice.