In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for surveyors.
Key developments in 2020
The judgment in Hart v Large provides important guidance on the scope of a surveyor's duty when advising prospective purchasers, as well as the way in which the Court may assess damages. The surveyor, Mr Large, advised that an RICS Homebuyer inspection and report would be sufficient. His report highlighted some drainage, pipe and guttering problems, but made no mention of the serious water ingress and damp issues that came to light following the Claimants' purchase of the property, which required extensive remedial works. The Claimants brought a claim in negligence against Mr Large for failure to: (1) recommend a full building survey; (2) identify the significant damp problems; and (3) recommend seeking an Architect's Certificate's.
The Court held that Mr Large should have recommended further investigation and found that, had he done so, the Claimants would not have proceeded to buy the property. Instead of limiting recoverable damages to the difference between the property’s value with and without defects, the Court ordered Mr Large to pay the costs of the remedial works required to remedy all defects that would have been identified if he had properly advised the Claimants. The Court also commented that surveyors should keep their advice under continuing review, including whether to recommend a full building survey. A key takeaway from the judgment is the importance of surveyors reporting not only on what they have inspected, but also on what they have not inspected, with an explanation as to why, in order to protect their position in the event that unexpected issues arise.
What to look out for in 2021
We previously reported on the EWS1 Form, launched in December 2019, which was originally intended only to be used for buildings over 18m in height. The proposed changes to the Regulatory Reform (Fire Safety) Order ("the FSO"), due to be introduced in 2021 will create an obligation for owners of all multi-storey, multi-occupancy residential buildings to carry out a fire risk assessment on any external wall system ("EWS") on the building, irrespective of its height.
Further, in January 2020 MHCLG released an advice note which combined all advice notes released to address fire safety issues identified since the Grenfell Fire. The Combined Advice Note makes it clear that owners of multi-floor, multi-occupancy residential buildings should not wait for the changes to the FSO before taking action; they should obtain a risk assessment of the EWS now. As a result, many mortgage lenders and valuers have been requesting an assessment by way of the EWS1 Form of buildings under 18m before they will make a loan or value a property for the purposes of secured lending. This has caused a severe logjam due to the lack of people with sufficient expertise to complete the form.
The RICS will be launching a training programme in 2021 to help address this lack of capacity and will also issue a Guidance Note about when a building is likely to fall within the scope of the EWS1 form, to avoid valuers requesting the form unnecessarily. It is to be hoped that both these measures should reduce the logjam in the UK property market.
Authored by Felicity Strong.
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