Technical Due Diligence
When you buy a property, you want to be sure your investment is sound. When you sell, you want to know that nothing will adversely affect the sale. As buyers and sellers alike have discovered, it pays to know as much about a property as possible. And that’s where due diligence comes in…
What a due diligence survey can tell the buyer
A due diligence survey is a more in-depth inspection than a full building survey. The building is scrutinized to make sure that it’s fit for the use you want to put it to, and that it can accommodate your short and long term plans. It warns you of any future cost commitments, and of any operational issues. A due diligence survey puts you in a position to negotiate on price if it throws up something that materially affects the value of the property.
These are just a few things you can get checked out when you commission a surveyor to carry out a due diligence survey.
How energy efficient is your building? And what can you do to reduce energy costs? What about the carbon footprint? Are there actions you can take to improve its green credentials?
What statutory undertakings will the property involve you in? What are the implications of these?
Will you be able to adapt the property in a way that works for you? For example, will the number of load bearing walls make it unfeasible to turn the building into an open plan office? Will the positioning of a fire exit staircase prevent you from adapting it to suit your needs?
Is the building suitable for any extensions you are planning? Can the structure stand another floor? Are planning issues likely to arise?
What are the financial implications of any tenancy agreements or leases? Who is liable for any repairs and alterations?
How a due diligence report can help the seller
A due diligence report gives you an independent analysis of the property. That way you can be sure that the purchaser isn’t going to come across a problem that affects the sale, delays completion, reduces the selling cost or even means the deal falls through.
These are some of the questions a due diligence report can answer.
Are there any defects or potential defects that could reduce the value of your property? What action can you take?
Is all statutory certification in place?
Are all the planning conditions satisfied? Have any restrictions been contravened?
Have any breaches to legal conditions or covenants occurred?
Have any changes in legislation affected the property?
Is the building in order from a health and safety perspective?
The question for both buyer and seller is not whether you can afford have a due diligence survey, but whether you can afford not to have one.