SAVA Technical Bulletin Feb 2017 Issue 25 by Sava

TECHNICAL BULLETIN For Residential Surveyors

OLDER PVCU REPLACEMENT WINDOWS Keeping the client happy Page

F & G PROPERTIES AND THE PRIVATE RENTAL SECTOR Are the storm clouds gathering? Page 13

ISSUE 25 FEBRUARY 2017

AN ANALYSIS OF COMPLAINTS AND CLAIMS

Keeping everyone happy Page 19

WHAT MAKES GOOD RATIONALE FOR UNDERTAKING A RESIDENTIAL VALUATION?

Why it pays to be prudent Page 23

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TECHNICAL BULLETIN

CONTENTS 03

THE TECHNICAL BULLETIN

WELCOME TO THE TECHNICAL BULLETIN

FOR RESIDENTIAL SURVEYORS

A message from the editors

Welcome to the Technical Bulletin for Residential Surveyors. This Bulletin is designed for residential practitioners who are members of RICS and/or the SAVA Scheme.

OLDER PVCU REPLACEMENT WINDOWS

Produced jointly by BlueBox partners and SAVA, here you will find technical articles, updates on convention changes and best practice etc. We hope you will find this useful in your day to day work and we welcome any feedback you may have and suggestions for future publications.

Keeping the client happy 13

F & G PROPERTIES AND THE PRIVATE RENTAL SECTOR

CONTACT SAVA

Are the storm clouds gathering?

Head office: SAVA, National Energy Centre, Davy Avenue, Milton Keynes MK5 8NA Telephone number: 01908 672787 Email: bulletins@nesltd.co.uk Web: www.sava.org.uk

AN ANALYSIS OF COMPLAINTS & CLAIMS

Keeping everyone happy

CONTACT BLUEBOX Office hours 09.00-13.00 please contact on mobile outside these hours

Head office: SAVA, National Energy Centre, Davy Avenue, Milton Keynes MK5 8NA Telephone number: 01908 442105 | 07989 406168 Email: chris.rispin@blueboxpartners.com Web: www.blueboxpartners.com

WHAT MAKES GOOD RATIONALE FOR UNDERTAKING A RESIDENTIAL VALUATION?

Why it pays to be prudent

CPD CPD is a commitment by members to continually update their skills and knowledge in order to remain professionally competent. The Technical Bulletin is worth 30 minutes of CPD and can be recorded as such. More CPD can be found on the SAVA website.

SAVA is wholly owned by National Energy Services Ltd. (NES) While every effort has been taken to ensure the accuracy of all content in this publication, NES and BlueBox partners take no responsibility for any errors or omissions in the content and the views expressed in this publication are not necessarily those of NES or BlueBox partners. Neither NES nor BlueBox partners can accept any liability for any loss or damage suffered as a result of the content or opinions expressed. All rights in this publication, including full copyright or publishing right, content and design are jointly owned by NES and BlueBox partners, except where otherwise described.

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WELCOME TO THE TECHNICAL BULLETIN Welcome to the Technical Bulletin for Residential Surveyors. This is the third issue jointly produced by Bluebox Partners and SAVA. While this Bulletin is designed for residential practitioners who are members of RICS and/or the SAVA Scheme, we also think it will be of interest to a wider range of housing professionals. You will find technical articles, updates on convention changes and best practice etc. We had great feedback regarding our first two jointly produced bulletins â&#x20AC;&#x201C; it seems we are providing the sort of technical content needed, but we really welcome suggestions for articles and items for future issues. Tell us what you want covered and we will do our very best to commission content from an appropriate technical expert. Meanwhile, we hope you enjoy this bulletin.

HILARY GRAYSON

CHRIS RISPIN

DIRECTOR OF SURVEYING SERVICES SAVA

MANAGING DIRECTOR BLUEBOX PARTNERS

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OLDER PVCU REPLACEMENT WINDOWS Keeping the client happy PHIL PARNHAM DIRECTOR, BLUEBOX PARTNERS

Remember when PVC replacement windows became all the rage? Along with stick-on stone cladding, doubleglazed replacement windows quickly became the ‘must have’ feature for home owners in the late 1970s and the early 1980s. As ‘right to buy’ policies flourished, one of the best ways to show the world “we no longer lived in a council house” was to install double glazing – it became a status symbol.

• Survey level one (for example, a condition report) –

you should attempt to open only a limited sample of the windows and this might typically include one on each elevation and especially on the most weatherexposed side.

• Survey level two (for example, RICS HomeBuyer

and SAVA HCS) – you should attempt to open a representative sample of the windows. For example, this might include one on each elevation (as above) and one of each different type of window where there is a variety.

However, a quarter of a century before replacement windows were first controlled by the building regulation, early standards were variable. Gaskets failed, double glazed units misted over and insecure beads and other PVC components became brittle and, in many cases, were unrepairable.

• Survey level three (for example, RICS building survey)

– you should attempt to open the majority of windows where possible.

This may help set the standard approach but the reality is never straight-forward. For example:

Following a number of complaints against surveyors about their assessment of older PVC windows, this article will establish a number of ‘benchmarks’ against which these windows can be assessed no matter what their age.

• In all cases, you should only open windows where the

occupier has given their permission; and

• Where keys are available and the locks are easy to

For reasons of brevity, this paper concentrates on assessing the condition of replacement PVCu windows only. PVCu doors will be considered in a future bulletin.

operate without force or damage.

Often window sills cluttered with possessions and heavy curtains will make it difficult to inspect the windows. In these cases, you will have to make your own decisions but I would suggest on level one and two inspections you should not move anything. For level three, I think a small amount of possessions/curtains should be repositioned. Another way of tackling this is to ask the occupant to clear the sills from the windows you want to inspect.

Inspecting windows

The first step is to make sure you are carrying out the right level of inspection and collecting the appropriate information. This will depend on the specific terms and conditions you have agreed with the client. Rather than going through each variation, I think RICS’s Guidance Note ‘Surveys of Residential Property’ (SORP) sets out a practical approach. It identifies three different levels of inspection: 04

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TECHNICAL BULLETIN From the outside, you should carry out a visual inspection of all window frames using your binoculars where appropriate. Where your inspection is restricted, you MUST clearly tell your client in the report and outline the implications of the restrictions.

Assessment ‘benchmarks’

Although replacement windows were not covered by the building regulations until April 2002, the current regulations provide a very useful framework against which all installations can be assessed. Clearly pre-2002 windows will not match the more exacting 2017 standards so you will need to use your professional judgement.

On a more serious note, this is one of the more important factors because many original window frames had an informal load bearing function. If this wasn’t properly recognised and accommodated in the design and the replacement process, localised damage could occur. The responsibilities for this are clear. For example, the Glass and Glazing Federation (GGF) state that if no lintel is fitted above the existing opening, the installation company is responsible for assessing if one is required. The installer cannot avoid the issue on the grounds that because the original window did not have a lintel, then the replacement does not need one either. In such a case, there are two options: • The installer should recommend a new lintel is

The Building Regulations

required (usually fitted by others); or

In April 2002, replacement windows and doors came under the control of the Building Regulations. You should ask the vendors for evidence that any replacements installed after that date comply with the appropriate standards. There are two ways of showing this: • Certification showing that the work has been done by

an installer who is registered under an appropriate competent person scheme. The Fenestration SelfAssessment Scheme (FENSA) is probably the most common (with over 7 million registrations) but other suitable schemes now include BM Trada Certification, the British Standards Institution, CERTASS or Network VEKA.

• Certification (usually a final completion certificate) from

the local authority confirming that the installation has approval under the Building Regulations.

In light of the growing number of competent persons schemes, rather than simply using ‘FENSA’ in your reports, consider using a phrase like:

• The new window frame is designed to be load

bearing. For example, most PVC windows incorporate a reinforcing steel frame and these can be very strong.

It is not only the nature of the opening and the strength of the window that is important but also the level of temporary support provided during the replacement works. If these are insufficient (or non-existent) then structural damage could occur. Bay windows are particularly vulnerable as the lower windows will often support loads from above including the bay walls, part of the first floor and sometimes the flat roof over the bay itself. In all of these cases, it is vital you look for signs of movement including: • external and internal cracking; • sloping floors within the bay at first floor; and

‘The windows should have been installed by an organisation who is a member of a government approved competent person scheme. Follow this link for more information:

• distorted openings where the opening casements

stick or do not open at all.

(https://www.gov.uk/building-regulations-competentperson-schemes) However, your job doesn’t finish there.

Checking the key indicators

Even if the vendor thrusts a certificate in your face, you should still check the installation for any obvious signs of non-compliance. The main ones are described below and are loosely grouped under different parts of the Building Regulations: Structural support (Approved document A) In my experience, many window installers have worked on the assumption that gravity is slow. As long as they got the old windows out and the new ones installed quickly enough then they didn’t have to worry about temporary structural support. The amount of cracking and structural movement above and around replaced windows suggests to me that gravity may be quicker than first thought!

Figure 1: Carefully inspect the lintels above the replaced windows. In this case, the first brick in this soldier course is at a different level to the rest suggesting the brickwork dropped during installation.

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TECHNICAL BULLETIN Means of escape (Part B): Most building control departments will strongly advise that all first floor windows in dwellings should have opening lights/casements large enough to allow occupants to escape if trapped in the room by a fire. Usually the opening part of the window should have an unobstructed open area of at least 0.33m2, be no less than 450mm high and 450mm wide and no more than 1100mm off the floor level. However, the route through the window may be at an angle rather than straight through. This also applies to ground floor rooms that do not open directly into a hall leading to an external door. An ‘inner room’ is a typical example.

Figures 2a and 2b: The same window inside and out. How easily could a six year old or an 86 year old be rescued from this bedroom? Although the window may be in satisfactory condition it can pose a risk to safety. You need to tell your client.

Sadly, all of this is not a strict requirement of the Building Regulations. As long as the installer did not make matters worse (for example, make the opening windows smaller than the originals) then the installation could still get its competent person’s certificate but have windows through which the occupants could not escape. In these cases, you need to clearly warn the client of the potential risks.

This lack of trickle ventilators can result in increased levels of condensation after the new windows have been fitted. This is because informal ‘adventitious’ ventilation provided by the old draughty windows is dramatically reduced. Where trickle ventilators have not been fitted these can often be fitted retrospectively by either:

Upper floors more than 4.5m above ground level (say second floor and above) should be accessed by a “protected stairway” or an alternative escape route and so fire escape windows are not required at this level.

• cutting/drilling through the frame and fitting

appropriate ventilators either side; or

• By replacing a glazed panel so a slot ventilator can be

Other indicators you may want to look out for:

fitted across the top of the new glazed unit.

• Windows (particularly top opening casements and roof

Other points to watch out for:

windows) should be designed to remain open without needing to be held by a person making their escape.

• Particular care should be taken when the room is

fitted with a gas cooker or other flueless appliances (for example, a water or space heater). The window installer should have referred the matter to a “Gas Safe” registered gas engineer for advice but if you are worried the room may now be too tightly sealed, check to see if the gas appliance has been checked/ serviced since the replacement window was fitted. If not, then an urgent further investigation may be required for safety reasons. If the windows have been replaced as part of a material change of use (for example, conversion of a house into flats) then the window must comply with the full Building Regulations requirement for windows in new buildings.

• Many pivot type windows do not have an

unobstructed open area suitable for escape purposes.

• Locks (with or without removable keys) and stays

may be fitted to egress windows, subject to the stay being fitted with a release catch, which may be child resistant.

If you are carrying out an HCS, the SAVA protocol is clear when means of escape do not meet current standards. The surveyor applies their judgement according to the scale of the remedy.

The hazard must be flagged up in Section C of the report. Ventilation (Approved document F – Means of Ventilation) As with other provisions, the replacement windows should not make matters worse. So if the original windows did not have fixed ventilation (for example, trickle vents) the new ones don’t have to have them either. Building control authorities will encourage the use of trickle vents but cannot force the matter. Consequently, to keep costs down many installers will not offer trickle vents as standard but as an additional feature for which there is often a cost. Some installers will argue that windows can be locked in a ‘crack ventilation’ position but my experience suggests most occupiers are reluctant to leave their windows open especially when they are out.

Note, for the HCS even if a Gas Safe Certificate is available for you to check and is current, if the windows have been installed since it was issued you should still issue a CR3 if you believe lack of ventilation could impact on health and safety of the occupants. You should explain this in your justification for a CR3.

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prevent a 75mm sphere from coming into contact with the glass (note: smaller size than for balustrades). In bathroom areas where the window is situated adjacent to the bath/shower, the finished floor level is taken from the bottom of the bath or shower cubicle and not the floor level where the bath or shower has been installed. Most building control authorities recommend that window restrictors are always fitted to opening lights/casements less than 800mm above floor level. Figure 3a and 3b: The window on the left serves a bathroom and does not have a trickle vent while the bedroom window on the right does. You should follow a clear ‘trail of suspicion’ and carefully inspect the bathroom for signs of dampness and mould.

Glass safety & critical locations (Approved document K) During your inspection, you should look out for glazing in ‘critical locations’ (see figure 4). In these positions, the glass should either: • Break safely. When broken, the glass should not

be capable of causing injury. The Glass and Glazing Federation give advice on the different markings manufacturers use to show compliance. In my view, we should not bother trying to decipher any symbols we see. Simply look for some sort of permanent marking on the glass (these will usually be in one of the bottom corners of the panes). If there is no mark then the client needs to be warned (see figure 5).

Figure 5: this window sill is below 800mm from the internal floor level and each glazed panel has this mark in the bottom left hand corner. Is it sufficient? Probably.

• Be robust. Some types of glass increase in strength

with thickness (for example, annealed glass) but this is difficult to assess on normal surveys both in terms of the type of glass and its thickness (see the discussion on the use of laser measuring gauges).

Conservation of fuel and power (Part L) In my opinion, you should not be asking for separate evidence that shows the window complies with Part L but familiarity with the relatively new Window Energy Rating system (WER) will be useful.

• Be in small panes. Glass in small panes will be less

likely to cause injury. The panes should be a maximum of 250mm wide and not exceed 0.5m2 in size.

The British Fenestration Rating Council (BFRC) Scheme is the UK’s national system for rating the energy efficiency of windows and is recognised within the Building Regulations and competent person schemes as a method to show compliance.

• Be permanently protected. If the glazing in the critical

location is protected by a permanent screen then the type of glass is not an issue. The screen should be robust, not easily climbed (no horizontal rails) and

The WER is an objective method used to assess the total energy performance of a window and it takes into account: • the materials used (glass, framing materials and so

on);

• the air leakage (through gaskets and joints but not the

junction between the frame and the wall); and

• the solar gain (energy from the sun).

The scheme puts the window type into a rated band (A to G). It uses standard size windows and so provides a simple method of comparing different products from either the same or different suppliers. A typical WER certificate (see figure 6) includes the following information:

Figure 4: Diagram from Approved Document K of the Building Regulations: protection from falling, collision and impact.

• The band rating of the window. Band C is the minimum

for Building Regulations compliance.

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TECHNICAL BULLETIN • The energy efficiency rating - a negative value

Approved Document Q refers to ‘easily accessible’ doors and windows that give access:

represents an overall heat loss. A zero or positive value indicates an overall contribution to the heat levels in the home. In other words, a window with a positive value gains more heat from the sun than it loses from the room.

• to a dwelling from the outside • into parts of a building containing flats from the

outside

• Into the common parts of a building

• Details on the factors that affect the rating such as

the U value (thermal transmittance), how ‘leaky’ the window (air leakage) is and an allowance for solar gain (solar factor).

To meet the requirements of Part Q, the windows have to resist physical attack by a casual or opportunistic burglar by being robust and fitted with appropriate hardware. One way of showing this is by ensuring the windows have been made to the security requirements of British Standards publication PAS 24:2012. What are the security requirements of PAS 24? To be honest, I haven’t the faintest idea as this goes beyond the level of knowledge required for most condition surveys. In my view, it is reasonable to assume replacement windows covered by a competent person scheme or a Building Regulation approval should meet with these new requirements. External beads – a security risk? Older installations often have the glazing beads positioned on the outside of the glass. Although this allowed the glazing to be replaced with little or no disturbance internally, it also proved very popular with burglars who could take the beads and panels out within seconds! Therefore, although external beading by itself does not automatically condemn the installation, it certainly is a major consideration.

Figure 6: a typical Window Energy Rating certificate.

Other factors that may influence the assessment

Although there are a number of different ways of achieving this standard, you should be looking for double glazed units that are wider (say 16mm and more). Personally, I don’t think you should be looking for reference numbers printed onto the silver spacers between the panes, just take a broad view. The older the windows, the lower the thermal efficiency it is likely to be.

Although not part of the formal regulatory framework, there are other features of window replacements that are becoming important. Air-tight perimeter seals The original purpose of perimeter sealants between the frame and wall was to repel water, but as energy efficiency requirements have tightened, preventing heat loss through air leakage between the frame and the structural opening has become more important. This is more than a bit of expanding foam squirted in the gaps or a poorly applied mastic seal on the outside face. It should involve the use of appropriate gap filling materials, air tight tapes and other techniques. As you might imagine, not all installers follow rigorous quality assurance processes so the following pointers may be useful:

Laser glass measuring gauges – should I use them on an inspection? Laser glass measuring gauges are available and many of these are able to measure the thickness of the glass, the width of the air gap and even whether the glass panes are laminated. Although relatively inexpensive and easy to use, I would advise against using them on Level one and two products. This is because this level of analysis goes well beyond the terms and conditions of most survey products. Additionally, these gauges will only give a partial assessment of the window. It can’t detect whether the panels are argon filled or have low emissivity coatings and so on. Like all of our tools, they must be used wisely.

• This becomes more important for dwellings at the

higher end of thermal performance (Passivhaus for example);

• Look for obvious signs of poor workmanship. A typical

example would be poorly applied mastic on the outside; and

Security (Approved Document Q: Security – Dwellings) This is the new kid on the block and only applies to new dwellings since 2015. Like most modern approved documents it is very brief and, apart from stating some broad performance standards, it refers to other documents that describe the requirements in more detail.

• Check carefully around the inside junction of the

frame and the reveals for signs of air leakage. In the worst cases, this can show up as ‘dust streaking’ to the decorative surface.

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doors. Ranging from hinge and lock repairs, replacement of defective gaskets to the repair of cracked and scratched PVC components, contractors will rightly claim to be able to extend the economic life of older PVC windows. However, the older the installation the more difficult it will be to get replacement parts. Like all maintenance activities, there will be a point where the level of performance and the cost of repair may justify the window’s replacement especially when considered over the medium term.

The problems with spacer bars Spacer bars are the continuous hollow frames which separate the two glass panes in the double glazed panels. The bar is bonded to the glass panes by a primary and secondary seal, creating an airtight cavity which is filled with air or gas. The spacer bar itself is filled with a desiccant to absorb any residual moisture within the cavity and thus prevent condensation within the double glazing window. Spacer bars are an important contributor to a window’s energy ratings. They are typically made of aluminium, or a low heat-conductive material (known as a warm-edge spacer). There are a number of problems associated with spacer bars:

Accurately identifying this point goes beyond the scope of most survey products. Despite this, it may be possible to put the client into the right ‘Ball Park’. Assuming you have carried an appropriate inspection, the overall condition of the installation will be a function of the following factors. For example:

• If the primary and secondary seals between the glass

• Are all the gaskets and seals in place? Are there any

and the spacer breakdown, the sealed unit will be vulnerable to misting between the glazing panels. Once this has occurred, the sealed unit will have to be replaced; there are no repair options. In terms of longevity, most commentators suggest that spacers that sit within windows rebates that are drained and ventilating (for example, most PVC frames) will last longer than those that are in undrained rebates (for example, many timber windows).

missing? Have some shrunk back from the corners? (see figure 8).

• Are the seals brittle/inflexible? This will result in

draughts.

• Are the mitred junctions between the different parts

of the casements/frame members properly sealed or have gaps appeared (see figure 9)?

• Are the windows easy to open? Do the casements

catch against their frames? Are the hinges and stays rusty/distorted?

• Spacers act as ‘cold bridges’ and allow heat to

conduct from the inside to the outside at a greater rate than the adjacent frame and glass (although modern spacers use ‘warm edge technology’ to reduce this effect). Where there is a cold bridging problem, older replacement windows can show a thin line of condensation just above the internal beading (see figure 7).

• Do the handles operate smoothly? Are they robust?

Are they loose?

• Is it easy to lock/unlock the casements? • Are the PVC surfaces of the frame and casements

scratched, fractured or broken? If yes, can they be easily repaired?

Figure 8: Check for gaskets Figure 9: Check the junctions that have worked loose. between the different components for signs of problems.

Assuming you may have only opened and closed 25 – 30% of the windows in the dwelling, it is not possible to be prescriptive as to what level of defects and/or deficiencies equate to the ‘end of the installation’s economic life’. I try and imagine how the three condition ratings relate to the magnitude of the defects I see during the inspection:

Figure 7: These are relatively modern PVC replacement windows but the condensation on the inside face of the glass suggests cold bridging spacer problems and/or an excess of moisture in the dwelling.

General condition

An internet search for any town or city will identify a number of organisations specialising in repairs to PVC windows and

Condition rating 1 – no observed defects

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TECHNICAL BULLETIN Condition rating 2 – although there are a number of problems that need repairing, none of these are urgent or prevent the windows from fulfilling their function.

help you answer the questions raised in the ‘Boxes’ if you are completing an HCS). Once you have collected the data on site, respond to this series of questions. The answers may help you reflect on the outcomes of your inspection and arrive at a confident decision.

Condition rating 3 – there are a number of problems and some of these are urgent (for instance, the window is insecure, it is allowing water to get in or parts are likely to fall out) or serious (there are so many smaller repairs that the window now needs replacing).

How to use the protocol The questions are designed to illicit ‘yes’ or ‘no’ answers. Simply pose the questions, tick the appropriate box and when complete, stand back and look at the mix of the answers. If there are more ‘yes’ responses then it could suggest a condition rating one or two. More ‘no’ answers could indicate a condition rating two or three. However, watch out for the exceptions. For example:

As with the general assessment protocol described below, it is difficult to give accurate outcomes. All we can do is review the information we have collected during the inspection and come to a suitable condition rating decision. If you are doing a HCS remember - the use of the SAVA Protocol in the Product Rules is mandatory when assessing a condition rating. You still apply your professional judgement – but in a structured way and in fact, would coincide with the thought process of the author.

• Although the process may produce a clear majority

of ‘yes’ responses, some of the safety issues (for example, a low sill with unprotected glass) may be so dangerous you may want to allocate a CR3 (for an HCS you probably will!) ;

The BlueBox/SAVA assessment protocol for replacement PVCu windows

• The rule governing ‘further investigations’ will always

apply. If you recommend an aspect of the installation needs to be examined further then a CR3 will be appropriate whatever the mix of responses.

Not another one we hear you say! Stick with me. Like many of the protocols created before, this is not intended to replace your own decision making but to support it (and

YES

ASSESSMENT FACTOR Were the windows installed after 2002? If you answered yes to the question above, have you seen evidence of a competent person’s scheme or Building Regulation approval that covers the whole installation? Are the structural openings of the replaced windows free from signs of building movement? If a fire was to trap you within any of the habitable rooms, would you be able to get out through an opening casement? Are all parts of the windows higher than 800mm above floor level? If you answered ‘no’ to the question above, are the lowest parts of the glass properly protected against breaking? Are the insides of the window (especially below the window sill) free from water penetration? Is the gap between the glass panes closer to 16mm than 6mm? Are the glazing beads on the inside? Are the windows in a generally satisfactory condition (seals, splits, hinges, locks and so on)?

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Sample phrases

No safety glazing For a HomeBuyer Report

I thought I would include some sample phrases I’ve been using in my reports. These would be suitable for level 2 products.

The glazing to the low level window (describe location) is unlikely to be safety glass and will be a safety hazard for anyone who falls against it. This is a safety hazard (see section J3 Risks).

These are in no particular order and please make sure they are adapted to suit your own particular situations.

Condition rating 1. No repair is currently needed. The property must be maintained in the normal way.

Replacement windows The windows are a mixture of (describe the original and new window types).

To reduce this hazard, you should ask an appropriately qualified person for advice.

Condition rating 1. No repair is currently needed.

The opening windows are not fitted with restrictors and so do not have protection from the danger of falling (see J3).

The property must be maintained in the normal way. You should ask your legal adviser to check whether the replacement windows have either Building Regulation approval or have been installed by a contractor registered with the Government’s Competent Person Scheme (see section I2 [HBR] / see section C [HCS]).

[ For an HCS refer to box B and C on the SAVA Protocol. You will attribute a condition rating depending on ‘the scale of the remedy’ and the Risk. This is likely to depend on the location of the offending window/glazing and you would attribute a CR 1, 2 or 3 depending on the level of risk]

If there is no evidence, you should ask an appropriately qualified person to inspect the windows and check their suitability.

Misted units

No fire escape window For a HomeBuyer Report

Condition rating 2.

The double glazing units (describe location) have failed and the space between the glass panes has ‘misted’ over.

This is not a serious defect but is unsightly and can reduce the thermal efficiency of the double glazing. You should replace this/these soon.

The design of the original/replacement windows does not allow people to escape from a fire (describe location and nature of problem). This is a safety hazard (see section J3 Risks).

Where some double glazed panels have failed, the remainder could suffer similar problems and you should plan to replace more in the near future. It can be difficult to replace just the double glazed units on some older windows. In these cases, you may have to plan to replace the whole window.

Condition rating 1. No repair is currently needed. The property must be maintained in the normal way. To reduce this hazard, you should ask an appropriately qualified person for advice.

Older PVC windows For an HCS

The windows are doubled glazed with PVC frames and are likely to be original to the property.

The design of the original/replacement windows does not allow people to escape from a fire (describe location and nature of problem). This is a safety hazard (see section C Risks to People).

Condition rating 1. No repair is currently needed. The property must be maintained in the normal way. Although I did not see any problems in the sample I opened, these windows were installed before 2002 when the tighter regulations were introduced and are unlikely to be covered by a guarantee/warranty. The cost of maintaining older PVC windows can increase with age.

Condition rating 3. No repair is currently needed but I have allocated a CR3 because, although compliant with regulations at the time that they were installed, in the event of a fire, they would seriously impede escape from the property.

The windows are doubled glazed with PVC frames and are likely to be original to the property. A number of double glazed units have misted over and several seals/gaskets are defective/poorly fixed.

[Note: if some windows were compliant and some were not, in an HCS it would be acceptable to apply different Condition Ratings to different groups of windows or even to a single, non compliant window. ]

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These windows were installed before 2002 when the tighter regulations were introduced and are unlikely to be covered by a guarantee/warranty.

I saw a number of problems in the sample of windows I opened. You should ask an appropriately qualified person to inspect all the windows and provide you with a report together with quotations for repair. Although the extent of these repairs will not be known until this report has been received, you should plan for a major overhaul of the windows.

The cost of maintaining older PVC windows can increase with age. If you are suggesting further investigation you would always allocate a CR3.

Extract from SAVA Product Rules (V10) Page 20 (vi) Windows a. Include shutters and shutter furniture and security fixtures and locks if they exist b. Inspection: • upper windows will normally be viewed from ground level using binoculars, though if an opportunity exists to view higher levels from other vantage points this should be taken • wherever possible, the inspection should be from all sides, noting that the inspection should only be from the property itself and any adjoining land to which the public has access • access limitations which could add to repair costs should be noted and should be considered when determining if a Condition Rating 3 is appropriate • inspect external surrounds, i.e. lintels, sills, jambs as well as frames and glazing • inside, open and close a sample of windows to test that they work properly • test for damp around window openings

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TECHNICAL BULLETIN

F & G PROPERTIES & THE PRIVATE RENTAL SECTOR Are the storm clouds gathering? DR LISA BLAKE TECHNICAL MANAGER, SAVA

In March 2015 the ‘2015 Energy Efficiency Regulations’ were passed, which make it unlawful for private landlords to grant a new lease on a property after 1st April 2018 if that property has an Energy Performance Certification (EPC) asset rating below E. More commonly known as MEES (Minimum Energy Efficiency Standards), these regulations cover both residential and commercial properties in England and Wales with leases longer than 6 months and shorter than 99 years. Properties in Scotland do not fall under the jurisdiction of MEES.

This article will: • look at exceptions to the legislation • provide analysis on the likely size of the stock affected • discuss the characteristics of an F or G rated property • explore cost-effective measures to bring a property

into the E band

Energy Performance Certificates – a quick reminder

An EPC asset rating of E is a SAP of 39 or above, so this legislation relates to the really poor performing sections of the UK housing stock with a SAP rating of 38 or below.

An Energy Performance Certificate (EPC) indicates how energy efficient a building is by collecting data that affects the energy performance of the property such as the wall type, the heating system present, any retrofitted insulation etc. The certificate provides an asset energy rating of the building (it reflects the potential energy efficiency of a building), where A is the most efficient and G the least efficient. The higher the rating, the more energy efficient the building is and the lower the fuel bills are likely to be. An EPC is required whenever a building is newly constructed, sold or let to a new tenant. The purpose of an EPC is to show prospective tenants or buyers the energy efficiency of the building.

How big is the F and G problem?

The Department for Communities and Local Government (DCLG) is the government department responsible for EPCs. In October 2016 they published a Statistics Release covering the period Q1 2008 to Q3 2016.

Figure 1: EPC with rating F

The legislation also has a sting in the tail. From April 2020 private landlords will not be permitted to continue to let a property with an EPC asset rating below E.

A total of 355,977 domestic EPCs were lodged on the

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TECHNICAL BULLETIN Domestic Register during the 3rd quarter of 2016 (ending 30th September). 13 per cent of domestic properties for which EPCs were lodged on the Domestic Register during this quarter were awarded an Energy Efficiency Rating of either A (the highest) or B. A further 62 per cent were awarded a Rating of either C or D, while the remaining 25 per cent were awarded a Rating of E, F or G (the lowest). Unfortunately, DCLG does not break that 25% E, F and G down into F and G.

There are exceptions to the legislation: Devaluation The required ECMs will either cause damage or reduce the value of the property by 5% or more. What energy efficiency measures could devalue a property? The only measure than might have an impact on the value of a property would be internal solid wall insulation as this would reduce the floor area of the property.

A total of 1,640,812 EPCs were lodged on the Domestic Register during the 12-month period ending 30th September 2016 and 25% were E, F or G. And a total of 15,626,016 domestic EPCs have been lodged between 2008 and 30th September 2016. 9 per cent of domestic properties were awarded an Energy Efficiency Rating of either A (the highest) or B. A further 66 per cent were awarded a Rating of either C or D while the remaining 25 per cent were awarded a Rating of E, F or G (the lowest).

For example an 84m2 semi detached house could reduce to 80m2 with 100mm of internal wall insulation applied. If we estimate around £1300/m2, this could be a difference of £5200. However, another thing to consider carrying out a valuation on a property is the EPC or energy performance. Clearly, installing internal insulation will increase the energy performance of the property and thus could negate any reduction in the value from the decreased floor area. However, solid wall insulation is not likely to have a payback period of 7 years or less, or meet the Green Deal Golden Rule, so may fall under the cost exemption reason anyway.

How many F and G rated private rented

Cost The identified improvement measures are not costeffective, either within a 7 year payback, or under the Green Deal’s Golden Rule. The average cost of solid wall insulation is £90 - £100 per m2. On a 3 bed end terrace house this would equate to around £9,000 - £10,000. If we assume the annual savings of £400, the payback period would be over 20 years.

Figure 2: Energy efficiency rating based on fuel costs

domestic properties are there?

If ECO2 funding was available, the carbon score would be around 40 tonnes which could raise £800 at £20 per tonne, which is not enough to take the payback down to 7 years. So it would appear that without additional funding from other grants, solid wall insulation would not be installed under MEES. As most F and G properties are likely to be solid wall, this seems like a missed opportunity.

Despite DCLG recording that 25% of EPCS are E, F or G, when you look closer the number is not quite so large. There are around 5 million rented homes in the UK and, because the purpose for the EPC is recorded, we can estimate that actually only around 8% are in the F and G band. However, this is still equivalent to approximately 400,000 properties.

Measures already installed The landlord has already installed cost-effective measures and the property is still below an E band.

This compares to 7% of all tenure EPCs being F and G. The chart below shows that Social Rental EPCs have the lowest proportion of F and G, with Owner Occupied EPCs actually being the highest at 9%.

If the property is an F or G, but the landlord has already installed all cost-effective measures, then the property is exempt.

Exemptions

In what situations might this apply? An example could be a solid walled property with an old oil boiler, no loft insulation and single glazing. Of the recommendations on the EPC, only loft insulation and draughtproofing would be costeffective and these only raise the SAP rating to 37, which is still an F. Thus, in this scenario, unless other funding was available, the property would be exempt from the legislation to reach an E. Consent What happens if it is not possible to be gain the consent for the works to be completed required from the tenant, lender or superior landlord?

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TECHNICAL BULLETIN

and use a fuel other than mains gas for the heating.

If the tenant refuses to have the energy efficient measures installed, then the Landlord would have a valid exemption.

Getting to an E band

Some of the F and G properties will be close to the boundary of an E; SAP 39. For those properties, simply adding in low energy lights or draughtproofing could be enough to raise the SAP band. We identified 5 properties with EPCs that were private rented, each in the F or G band and looked at whether there were cost-effective measures to bring the dwelling up to an E (SAP rating 39).

What does an F or G rated property look like?

Most F & G rated properties have solid walls, either solid brick or stone (68%). Around 27% of F & G have cavity walls. Cavity walls would be a cost effective measure to fill, so are there other characteristics of those cavity walled F & G

NOTE: All examples are from real EPCs produced for the private rented sector. Hence some photographs are not of good quality. They are included here to help illustrate the types of property affected.

Example 1: Current SAP rating 20 (band G) Cost of measures £40 - £240 SAP rating after measure 45 (band E) This is a semi detached ground floor flat, 1900’s with solid brick walls and electric room heaters in the one habitable room. There is an uninsulated hot water cylinder providing hot water from an immersion.

Figure 4: Wall constructions of F & G properties

properties we can identify? The majority (83%) of cavity walled F & G properties are heated by fuels other than mains gas. Those heated by main gas tend to be heated by room heaters or have no loft insulation (none would be assumed for properties older than 1966 if the EPC has recorded no access or unknown). For solid walled properties in F or G bands the majority (73%) are heated by fuels other than mains gas, with electricity being the main fuel for 43%. Loft and roof insulation play a big part in keeping ratings low and can be a cost effective measure. We found that over half of all F & G properties had no loft insulation either recorded or inferred from the age of the property if there was no access. Therefore, most F and G rated properties will have solid brick or stone walls, have little or no loft insulation

Figure 6: Semi detached ground floor flat

Cost effective measures to raise the rating to an E would simply be to insulate the cylinder (£40) and change the meter to a dual meter. Changing to a dual meter can be free, depending on the supplier, or around £200. Changing the meter/tariff is not an EPC or Green Deal recommendation. Changing meter and adding a 160mm cylinder jacket would raise the SAP to 45.

Figure 5: Loft and roof insulation in F & G properties

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TECHNICAL BULLETIN Example 2: Current SAP rating 25 (band F) Cost of measure~ £300 SAP rating after measure 45 (band E) SAP rating 25 (band F) This is a mid terrace top floor flat, 1900’s, with cavity walls and no heating system present (electric heaters assumed in RdSAP). There is 12mm of loft insulation present.

Figure 8: A top floor maisonette

Example 4: Current SAP rating 32 (band F) Cost of measures ~£700 SAP rating after measure 41 (band E) This property is a 1900’s end terrace with solid brick walls and an old roof room. It has 20% double glazing and an inefficient gas boiler. The heating controls are a programmer only. Figure 7: A mid terrace top floor flat

For this property just insulating the loft to 270mm would raise the SAP rating to 45 at a DIY cost of around £300. Example 3: Current SAP rating 36 (band F) Cost of measure free - £200 SAP rating after measure 46 (band E) This is a top floor maisonette, 1960’s with cavity walls and electric room heaters. There is a flat roof with unknown insulation. Filling the cavity walls of this dwelling would bring the SAP up to a 46; however, as this is a maisonette the whole property would need to be insulated. This would need permission from the freeholder. As with the first example, as this property has electric heating, changing the meter to dual to get some of the heating and hot water at reduced rate will increase the SAP rating to 46 (band E).

Figure 9: A 1900’s end terrace

As there is no access to the loft space and insulating a roof room would not be cost-effective (under the guidelines), we 16

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TECHNICAL BULLETIN looked at draughtproofing, low energy lights and upgrading the heating controls. With draughtproofing on all windows and doors, low energy lights in each fitting and installing a room thermostat and TRVs, the SAP rating would rise to 41. The cost of these measures would be around £100 for the draughtproofing and low energy lights, and £600 for the controls upgrade.

This one is a mid terrace house, built in 1920’s with cavity walls, no access to the loft and a roof room. The heating is from an old gas boiler, with only a programmer for the controls. There are no low energy lights. There are a few options for this house; see table 1 below.

Example 5: Current SAP rating 37 (band F) Cost of measures~ £650 SAP rating after measure 45 (band E)

Measure

Cost

Resulting SAP

Cavity wall insulation

£500

Party wall + LEL

£0 + £50

Room thermostat and TRVs

£600

Notes

If the party wall construction can be identified as solid (as would be likely in a property like this), then the cost would be £0

Table 1: Analysis for F&G properties

The analysis shows that for many F & G properties there are cost-effective ways to bring the rating up into the E band.

Figure 10: A mid terrace house

Conclusion BY CHRIS RISPIN MANAGING DIRECTOR, BLUEBOX PARTNERS The article puts into context the size of the issues that will be created by raising the energy ratings for residential property. This doesn’t mean the situation can be ignored but it is manageable. The biggest challenge is likely to be that most of the properties affected are at the lower end of the price range and therefore the proposed measures affect those with the least amount of surplus cash to undertake the required improvements. Though be aware that there will be some larger, more valuable properties that do fall into these energy efficiency bands. As regards the consequences for surveyors and valuers, they must report the facts and although these are relayed in the article they do lead to a significant amount of interpretation for individual cases, so we are left with a high degree of opinion. The following is a summary of the key points from the article that need to be considered when producing reports: • The 5% rule proves to be a bit of a red herring as there are few energy saving measures that could, if correctly

installed, impair the value of the property, and measures that change the appearance of a dwelling (such as external solid wall insulation) probably won’t achieve the payback requirements specified by the legislation.

• Many measures to raise the ratings are at minimal cost and given the levels of property value in most parts of the

country this won’t impact in any way whatsoever.

• The payback provisions limit the type of measures that can be undertaken and if they cannot be installed then the

property continues to have a poor energy performance, which should be reflected in the value, but see the next point.

• Older property at the lower end of the price range will usually be discounted to reflect current condition and

increased maintenance costs. There is a risk that this type of property may become a candidate for redevelopment as it is uneconomic to restore. They are unlikely to be available as a “Buy to Let” proposition, so consideration needs to be given as to their sustainability in mortgageability and value terms.

• Flats will continue to pose a problem as the article explains, there is a need to involve all the occupants in the

building, even for sound economic works, and this may be a logistical issue. It takes time to organise management meetings and raise funds to do the work.

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TECHNICAL BULLETIN

AN ANALYSIS OF COMPLAINTS & CLAIMS Keeping everyone happy

MARIA JACOBS CUSTOMER AND TECHNICAL SUPPORT CONSULTANT, SAVA

How and why people complain and why is it important

As we all know, the most important aspect of any business is the customer – without customers, a business cannot succeed. It is happy, satisfied customers who carry the business to great success. However, even the best businesses will sometimes have unhappy customers. As poet and priest John Lydgate once observed:

There are multiple ways in which a complaint can be instigated - via post, email, telephone or (very rarely) in person. So why does a person complain?

“You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.”

• They may be unhappy about something out of the

surveyor’s control

• They may be unclear about the level of service they

Obviously, in business what we really and practically want is to please as many people for as much of the time as possible, so to understand why customers become unhappy helps to manage future customer expectations and achieve that ambition.

have commissioned, the role and responsibilities of the surveyor and about the restrictions on the surveyor when carrying out the inspection

• They may simply just be unreasonable – casting round

for someone to blame when things might not have gone quite to plan

This article considers some complaints and claims, looks at the reasons why people complain and explores how complaints can lead to a claim.

• They may regret the purchase for any number of

The difference between a complaint and a claim

• Something has genuinely gone wrong and the surveyor

reasons that may not include any shortcomings on the part of the surveyor is the ‘low hanging fruit’

Before we look at the issues in detail we should initially remind ourselves what a complaint is and how it becomes a claim against an insurance policy:

• A tradesperson has gone round to quote for something

and suggested ‘the surveyor should not have missed that’

• There may be a genuine shortcoming on the part of the

A complaint is ‘a statement that something is wrong or

surveyor

not satisfactory’ and a claim is ‘a successful application for compensation under the terms of an insurance policy’.

And why does this matter – even if the complaints never lead to a claim?

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TECHNICAL BULLETIN • Because receiving a complaint can be very stressful for

• Damp issues

the surveyor

• Structural movement

• Because a complaint can be very time-consuming to

• Issues with services

manage

• Because, even if the surveyor is completely exonerated,

Each of these are analysed separately further down.

a complaint can leave a mark on the reputation of the business

The complaints picture

Looking at a sample of Home Condition Surveys carried out over the last 6 years the first thing to note is that from 2014 untill today there has been an increased number of complaints and an increased number of claims. 2016 shows the highest number of complaints received to date.

Figure 2: Subjects of HCS complaints

The next significant reasons for a complaint we have grouped under the heading “Code of Conduct”. These make up 9% of all complaints. Some examples of “Code of Conduct” complaints are:

Figure 1: Timeline of complaints vs. claims

Now, this could mean that surveyors who form this sample group are getting worse at their jobs, but this is most unlikely. Instead, what it demonstrates to us, borne out by conversations with brokers and insurers, is that we seem to be living in more litigious times.

• Security of the property - surveyor left the property rear

door and/or windows open

• Issues with quality of the survey report - inadequate

descriptions, photos, or using professional jargon which clients struggle to understand

We are also not wholly confident that the above graph is a complete and true reflection of the complaints picture. We suspect many more surveyors will have received a complaint and that many are dealt with successfully in the first instance and not then formally recorded as a complaint.

• Damage caused to the property at the time of the

inspection - cracked ceilings, overflowing sinks, etc.

• Data protection issues - sharing details of the property

with an unrelated party

Advice from SAVA

Woodworm (which of course could also be classed under Damp) is another defined reason for a customer complaint, triggered by limited or no comment made in the report on the presence or absence of woodworm.

If a situation arises resulting in the return of the survey fee this is classed as a complaint and, tempting though this is, returning the client’s fee is not something we recommend. Talking with our insurers this does not guarantee the problem will go away but can be taken as an admission of liability on behalf of the surveyor which can go against the surveyor if the complainant decides to take the matter further.

Invasive plants at or adjacent to the subject property is another quite significant trigger for client’s dissatisfaction. Under the heading “Health and Safety Issues” we have included complaints regarding the lack of identification of asbestos containing materials, lead paint and lead pipework within the surveyed property. We have also received a complaint regarding the lack of clear advice about such health and safety matters.

So what are the issues which lead a client to raise a complaint?

Figure 2 shows that the 3 major reasons for submitting a complaint are:

Complaints usually come from clients for whom the 19

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TECHNICAL BULLETIN survey report is prepared. However, in a few instances, and in particular where there has been damage to the property during the inspection process, the complaint has been generated by the seller of the property. Also, 3% of complaints have been generated by disgruntled sellers, reasoning that the survey report has revealed issues which made the potential buyers pull out of the property transaction. Analysis of DAMP ISSUES: People get very worked up about damp, and damp issues are the most common reason for a complaint to be generated. Analysing those complaints further, we can see that half of the issues are directly related to penetrating damp (moisture penetrating from outside through a building element) and the majority relate to roofs.

Figure 4: Movement and structural complaints

Analysis of SERVICES ISSUES: When looking at complaints regarding the services the majority relate to the water installations. We have seen complaints relating to the location and operation of stop cocks, leaks to showers and various plumbing issues. Under the Electrical Installations complaints arise where surveyors have assigned the wrong condition rating; for example for an electrical installation Condition Rating 1, but there was no evidence of a recent certificate being available and a Condition Rating 3 should have been applied by default.

Interestingly, and despite all of our concerns relating to flat roofs, actually 80% of the complaints specifically relating to roofs have been regarding pitched roofs, and only 20% of roof complaints have been about flat roofs. This could be testament to the quality of surveyor training over recent years from BlueBox Partners and similar warning surveyors of the risks associated with flat roofs so they take more care on the inspection and report.

The Heating Fuels section relate to complaints about the location and condition of oil tanks and gas meters.

Figure 3: Damp related complaints

Analysis of MOVEMENT AND STRUCTURAL ISSUES: In the vast majority of homes, walls have the largest area, so it is no surprise to see that for structural movement complaints, problems with walls make up the majority of the complaints.

Figure 6: Services related complaints

Examples of such complaints relate to structural stability of gable end walls, bowing and distortion of external walls, applying render to timber frame walls and its implications, structural movement of the subsoil, etc. Often if there is structural movement to walls this also affects floors and openings, and within some complaints multiple issues are linked together.

Complaints â&#x20AC;&#x201C; best practice

If you ever receive a complaint you should follow a protocol to ensure that complaints are all handled in the same way. Also, you should check the terms of your insurance policy. There are many policies that require the insured to notify the insurer of â&#x20AC;&#x153;any complaint that might become a claim under the policyâ&#x20AC;?. Failure to do so can lead to the insurer actually refusing to accept the claim due to a breach of a condition of the policy. It is extremely important that you check the 20

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TECHNICAL BULLETIN wording of your insurance policy. When considering a complaint you should first of all look at the ‘root cause’ of the issue. If the root cause of the complaint proves to be uncontentious and straight forward the complaint turns into a claim - these situations include Public Liability issues (damages to property by surveyors).

Of course, not all complaints end up as a claim. The following graph shows for which categories a complaint turned into a claim.

However, our research indicates that in majority cases complaints relate to Professional Indemnity where the professionalism of the surveyor is being challenged, and here the investigation should focus on the inspection methodology and whether the issue was reported on, and can be evidenced satisfactorily to substantiate the matter. SAVA handles claims and complaints on behalf of our members and when we do we work very closely with our insurers on this, and if we take the view that a complaint could not be defended were it to go to court, perhaps due to lack of clear photographs, inadequate site notes etc. then we will take a pragmatic and commercial approach, negotiating with the claimant to reach a mutually acceptable settlement.

Figure 7: Subjects of HCS claims

It is very important to note that the following applies: 1. Our starting position is always to defend a claim and to

‘bat it away’

2. We take the same approach to a claim irrespective of

the size

3. By the time a complaint becomes a claim we will

have already entered into a significant volume of correspondence with the claimant

4. When a complainant does take legal advice this will

almost always result in the insurers instructing specialist solicitors. When they do we work closely with them as well as the claims handlers

5. We always review the evidence (site notes, photographs,

Figure 8: Probability of complaints turning into claims

report etc.) and write an initial report for the insurance claims handlers. If we feel that the surveyor’s site notes and photographs are poor, we will report this and this will affect the approach the insurers take. If we think the site notes and other evidence is very strong the insurers will be much more robust in their approach to the defence. This is a commercial reality

Despite the fact that complaints predominantly relate to damp issues, less than 20% of these complaints turn into a successful claim. However, complaints related to invasive plants (Japanese knotweed in particular) have nearly 70% chance to be justified as claims and Insurance will pay out. Similarly, with limited identification and/or reporting on Health and Safety issues, complaints related to unidentified or unnoticed asbestos or lead pipes are likely to turn into claims. This is logical, if you think about it. The issue is not that the Japanese knotweed is present, but rather if the surveyor should have seen or reported on it.

6. We, that is SAVA, the insurers and any solicitors

if appointed, want to avoid going to court. Some surveyors have challenged our approach if we start to negotiate, but the reality, particularly in light of point 2 above, is that the courts do not look favourably on a party where they think an out of court settlement could be reached

In terms of amounts paid to settle claims from the sample reports, the largest average payout related to asbestos, followed by services, invasive plants and damp related issues.

7. When we do reach a settlement we do so without

admitting any liability on the part of the surveyor (whether or not any liability existed). The claims handlers at the insurance company have a legal background and their experience in the workings of the courts is invaluable

When do people complain?

Looking at all the information, we have observed that there are certain times during the year when higher levels of complaints are registered. The busiest months are September, October, November and December, which 21

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Conclusion

From the sample reviewed it is difficult to draw any definitive conclusion, particularly in relation to the size of claims. However, there are some very important points to note. • The percentage of complaints is increasing over time • More complainants are going straight to law without

trying to resolve the issue first (still admittedly tiny numbers, but nevertheless significant and will affect the way insurers approach the complaint)

• Claims and complaints take a lot of time to manage and

they can be very stressful for the surveyor

• The quality of the site notes, photographs and other

evidence collected on site is crucial to the success of the complaint and, if a settlement is reached, to the size of the payout.

Figure 9: Average amount paid per claim

suggests that the property is likely to manifest its weak points during the winter season, prompting clients to raise complaints.

CAPTION CORNER No need for a ladder! Please send us your caption suggestions to bulletins@nesltd.co.uk by Sunday 30th April 2017 for a chance to win a prize. The winner will be published in the next bulletin! Do you have a picture for the next edition? Send any photos for consideration to the email address above.

CAPTION CORNER RESULTS Really! The winning submission this month is Jeffrey Scott with: “Well I’m sure there use to be a garage door here” Congratulations to Jeffrey, your prize is in the post!

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TECHNICAL BULLETIN

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TECHNICAL BULLETIN

WHAT MAKES GOOD RATIONALE FOR UNDERTAKING A RESIDENTIAL VALUATION? Why it pays to be prudent

CHRIS RISPIN MANAGING DIRECTOR, BLUEBOX PARTNERS

Companies spend thousands of pounds auditing work undertaken by valuation surveyors to ensure that surveys are carried out in a professional and accurate manner. These companies are both property related clients and surveying practices. I am sure a number of readers will question the validity of auditing in the first place. What value or benefit does it actually bring and is it a wasted expense that could be avoided? However, read on because for valuers it could be a form of protection. This is an introductory article leading to a number of others that will go into more detail on the methodology used in some practices to produce the methodology that will provide a robust valuation.

for easy fishing. As with any potential for fraud it pays to be prudent and take some precautions; many practices have already introduced new systems that provide comprehensive valuation rationales, with numerous checks and balances in place. Of course, technology can provide many of the answers, rather like “big brother” watching over the activities going on in the property market place. There is much more information available now to the valuer to help identify the transactions that have taken place, when and at how much. Consequently, a failure to engage with those web based systems or to do the equivalent manually would be regarded as a serious shortcoming.

The high level of cases that were directed against valuers during the ‘90s and indeed in more recent years, together with a number of quite high profile cases stretching back to Yianni v Edwin Evans and Smith v Bush in the ‘80s, would suggest that the methods adopted by valuers are not always right.

I have seen systems that superimpose recorded sales of property onto a map and track those sales over a period of time. This can then very easily highlight sales that fall out of line. Similarly, this is being achieved by using the ‘black box’ of the automated valuation model to monitor sales and predict values. However, such systems do have limitations – not all property has sales evidence, the black box doesn’t have “eyes and ears” and cannot accommodate issues with condition or alterations and it struggles when the subject property is unusual and has few direct comparables.

Add to this the problem of high levels of fraud within the property industry over the last couple of decades, where in many cases valuers have been “tricked” into falling for the fraudsters’ gambits. Vast sums of money can be made from valuation fraud and those involved are capable of quite sophisticated methods to achieve their aims. So in a very important way auditing is a form of protection, an assurance to all involved that the valuation process adopted is robust and not tainted by the unscrupulous, who have significant funds and rewards if they get their way and who see the minnow, in the form of a small independent surveying practice, as a prime target

DAC Beachcroft recently commented upon the case of Barclays Bank Plc v Christie Owen & Davies Ltd (trading as Christie & Co) [2016] EWHC 2351 (Ch) where Christie & Co denied it was negligent. The parties and their experts (both valuation and lending) were unable to agree on 24

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TECHNICAL BULLETIN many issues in advance of trial meaning the court had many things to consider and the judgment was lengthy. As appears increasingly to be the fashion, the court did not prefer one valuation expert over the other, but instead considered “the weight to be placed on different aspects of [the experts’] evidence…and then [reached] its own conclusion”. Respective experts were, therefore, preferred on some points whilst the Judge went with his own views on others, an outcome likely to give a few sleepless nights to anyone trying to advise a client as to the merits of a valuation case.

rigorously determine the attributes of the comparables and determine the value that can be ascribed to each attribute so as to produce the positives and negatives of each comparable. They then adjust the values of the comparables to produce a true reflection of supporting evidence that proves the value of the subject. So a valuer finds three similar styled comparables all within the same neighbourhood, one has a double garage and the subject property has a single one. Another comparable has a conservatory and the subject property does not, and the final comparable is similar to the subject but is not in as good a condition.

There are a few concerns here. The wording - “increasingly the fashion” for the Court to pick and choose from the evidence presented is particularly of note. On what basis do the Courts believe that they are in a better position to make a decision on value than all the professionals who have been involved in the case? We as surveyors and valuers should not allow the Court to be in such a position. At the outset we need to ensure that we have provided a robust validation of the valuation that we have produced.

So the double garage is a positive and to make the comparison the value of the additional garage has to be deducted. Similarly, on the second comparable the value of the conservatory has to be deducted as it is a positive attribute. However, for the third comparable it has the negative attribute of being in a worse condition, so a figure has to be added to the comparable to bring it up to the same standard as the subject. This is shown in a simple matrix below. It should be noted that this matrix does not

Address

Type

Beds

Date of sale

Price £

Size sq mts GEA

Gar

Condition

Age

Distance from subject

£/sq mt

Variables £

Variable attribute

Adjusted value

Subject

SDH

Jan-17

210,000

AVG

1955

2360

0.00

33 Acacia Ave

SDH

20/10/2016

220,000

AVG

1953

200

2418

-10000

Garage

210,000.00

21 Oak Road

SDH

01/09/2016

215,000

100

AVG

1955

150

2150

-7500

Conservatory

207,500.00

10 Willow Cres

SDH

23/09/2016

185,000

Poor

1954

250

2079

25000

Condition

210,000.00

So where can the valuation surveyor add value and reduce vulnerability?

show all the attributes that may be considered, however as a summary to establish ranking and demonstrate key variables, it helps to “see the wood for the trees”.

Here, views vary on which method should be adopted and how far is it necessary to go to produce that validation. There is one view that the supporting notes should transparently set down - how the valuation has been produced so it is clear for all to see. An alternate view, in particular held by some, but not all, in the legal profession (and the writer has personal experience of this), is that a degree of ambiguity is helpful and a lack of transparency is to be recommended otherwise it can clearly be seen when the valuation surveyor has got it wrong.

Simple matrix Using a spreadsheet for the matrix this can then be shown

I think the argument here is that no-one intends to get it wrong and the intention is to ‘set it all down clearly’ so that the component parts of an accurate valuation can be supported by evidence. It makes for a better night’s sleep and a feeling of self-esteem that a good job has been undertaken to support what the customer needs. On a continuation of this theme, there are those who

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TECHNICAL BULLETIN on a chart like the one above to see how the adjustments prove the valuation of the subject property. Valuation rarely has so few variables and the complexity is knowing how much to adjust the figures. The critics ask how are the attributes valued as precisely because this is not a true reflection of what buyers do in the market place. On this latter point the RICS definition of Market Value requires the valuer to consider that both buyer and seller are, among other things, “knowledgeable and prudent”. This is usually hypothetical as the buyers are lay people and not trained in valuation or building pathology. Their knowledge comes when it is pointed out by the expert valuer. Their prudence comes from the deposit they can raise together with the mortgage funding they are allowed based on their salary. They have an overwhelming desire to buy a property that appears to suit their needs. So if the expert says to the buyer that one property is more expensive because it has a double garage as opposed to a single one, then it is fairly logical to explain that this difference in value is a real figure, and not an intangible comment that it is “better”. If subsequently disputed it will be left to experts to thrash it out and they will produce their own figure, which is not an ideal plan. How much the figure is comes with the experience of working in the area and knowing the variances for certain

attributes. That is not an easy exercise and only comes with hard work in observing the market place over the years and building a database that demonstrates such variables. If it was easy then the technologists would produce a computer model to do it. The real reason they have not is that there are no databases in this country that collect sufficient data to make the granular analysis that differentiates the valuer from the machine. Some valuers maintain this sort of information in their heads and some struggle to put the rationale down on their site notes, but that is what is now required. See the RICS Information Paper 1st edition “Comparable evidence in property valuation” for more guidance. The more unique the property with fewer comparables, then the harder it becomes to provide a purely scientific approach. There are an increased number of variables i.e. some properties at a higher value will have more features, such as increased number of ensuite bathrooms, a study, larger garden or possibly a gym to reflect an increased level of buyer preferences and affordability. However, the science provides the benchmark upon which the “dark art” of residential valuation can be applied. Future articles will explore other methodology and provide more detailed examples. We will also look at the techniques for undertaking the more complex valuations in a robust way. The next article in this series will be from Giles Smith Chief Surveyor and Technical Director at SDL Surveying.

SURVEYORS COMPARABLE TOOL FROM ‘RIGHTMOVE’ FOR SMALL AND MEDIUM SIZED FIRMS BlueBox partners has obtained an agreement with the country’s leading property portal, ‘Rightmove’. ‘Rightmove Plus’ has now been improved through the development of the Surveyors Comparable Tool (SCT) so that finding comparable information is much easier for both sales and rentals. The SCT combines access to the Land Registry data with ‘Birds eye’ and ‘Street view’ all in the same place and much more efficiently. In line with RICS requirements, the reports now provide an audit trail for complete transparency, together with Rightcheck which checks the Rightmove database for things like hidden incentives, over or under valuation and much more. For more info, please email info@blueboxpartners.com We are now able to offer a subscription service combined with ‘pay-as-you-click’ access to archived property sales data. We can offer Rightmove Plus (which includes the Surveyors Comparable Tool, Rightcheck, access to the Rightmove AVM, and Rental comparables) at £120 plus VAT per month, which includes 20 free clicks (£6/case once the 20 cases are exhausted) for the Surveyors Comparable Tool. This offer is only available through BlueBox partners to small/medium sized firms and sole practitioners, and we think this is a “must have” for any valuer undertaking residential valuations. Please contact Chris Rispin on 01908 442112 for more information.