Surveyors

Published on 21 January 2019

In this chapter of our Annual Insurance Review 2019, we look at the main developments in 2018 and expected issues in 2019 for surveyors.

Key developments in 2018

2018 was a quiet year for surveyors in the courts. Of most interest to insurers, the case of Moore and another v National Westminster Bank considered the correct measure by which to assess damages in cases involving negligent (or, here, non-existent) surveys.

The case, an appeal from the county court, involved the claimants’ purchase of a flat assisted by a mortgage from the defendant bank. The claimants asked the bank to produce a home buyer’s report. Despite not doing so, the mortgage was approved and the claimants assumed, incorrectly, that they had received a favourable survey. The flat was in a poor condition and the claimants successfully brought a claim for breach of contract. At first instance, the cost of repair was held to be £115,000 and the court awarded damages to the claimants in that sum.

 

The bank appealed, arguing that the correct measure of damages was the diminution in value of the property, on the bank’s case £15,000. It relied on the line of authorities involving claims against negligent surveyors but the claimants argued, successfully, that those cases did not create an inflexible rule and that it was open to the judge to award the cost of repair. The court upheld the damages award, almost eight times the flat’s alleged diminution in value.

 

It was clear the judge did not consider £15,000 to be a fair assessment of the claimants’ loss, but the only other sum available to him was £115,000. Offering a cautionary reminder to all involved in litigation, the court commented that had a more intermediate figure been advanced in the alternative by the bank, the outcome may have been different.

What to look out for in 2019

New mandatory requirements relating to commercial service charges will come into effect from 1 April 2019.

Launched by the Royal Institute of Chartered Surveyors (RICS) and endorsed by the Law Society, the new professional statement, Service Charges in Commercial Property, will regulate the activities of landlords and their agents and will aim to improve standards and promote best practice, fairness and transparency in the management and administration of service charges.

 

Among other matters, the new requirements will provide that changes to service costs are made clear to tenants from the outset, with any costs not specifically provided for in a lease not being recoverable. The requirements also incorporate technical advice to ensure the timely issue of budgets and offer guidance on dispute resolution, contract drafting and negotiation.

 

RICS professionals will only be able to depart from the guidance for a justifiable good reason and any RICS member that fails to comply may face disciplinary or legal action.

 

While the effect of these requirements remains to be seen, insurers operating in the surveyors’ market will welcome the new professional statement. By providing this robust mandatory guidance, RICS will hopefully remove non-compliant landlords and managing agents from the market, offer protection to tenants for the payment of certain repair or maintenance costs and thereby reduce the number of costly disputes between landlords, agents and their tenants.

Authored by Felicity Johnson.

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