What factors should an adjoining owner’s surveyor consider when calculating their fee?

Insights - 09/07/2013

Guest post by Justin Burns BSc (Hons) MRICS FFPWS of Peter Barry Party Wall Surveyors

In many ways it’s the perfect job; freedom to set you own hourly rate and keep a record of your own time. It’s no wonder that the fees charged by adjoining owners’ surveyors are such a contentious topic.

To provide a flavour of the type of dilemma faced by party wall surveyors on a daily basis let’s start with a classic example of where commercial pressures can act against the interests of the owners.

A surveyor who has already been appointed by an adjoining owner is approached by the building owner to act as agreed surveyor (assuming that the adjoining owner has no objections the Act allows for such a dual appointment).

Knowing that there will be no ‘tribunal’ to scrutinise the agreed surveyor’s fee the building owner will generally request a fee proposal in advance but how can a surveyor be motivated to put forward a ‘reasonable’ fee when he is the only one quoting. It’s always an interesting conversation when the building owner clearly thinks the quote is too high but realises that they would have to pay at least as much if the surveyor acts only for the adjoining owner as well as their own appointed surveyor’s fee.

This is just one of the failings of the current system that struggles to accommodate the necessary principle that an adjoining owner must be free to choose their own surveyor but responsibility for that surveyor’s reasonable fee rests with the building owner.

Section 10(13) of the Act covers the costs of making an award:

The reasonable costs incurred in

  • making or obtaining an award under this section;
  • reasonable inspections of work to which the award relates; and
  • any other matter arising out of the dispute,

shall be paid by such of the parties as the surveyor or surveyors making the award determine.

Although the section states that the surveyor(s) should determine responsibility for the costs (i.e. fees) it is an unwritten rule that it rests with the owner benefitting from the works and that will generally be the building owner.

The question of what constitutes a ‘reasonable’ fee for an appointed surveyor is the more challenging one. There are two primary factors for the surveyors to consider when calculating fees; has the time spent been reasonably incurred and are the charges for that time reasonable?The second question relates to hourly rates.

 Has the time spent been reasonably incurred?

I should first point out that there is a clear distinction between how the surveyor acting for the building owner and the surveyor acting for the adjoining owner charge. Building owners generally agree a fee with their surveyor at the outset; often before notice has been served. We can therefore assume that fees charged by building owners’ surveyors are determined by the market. That is an important point and one that I will return to later in this post.

Conversely, the adjoining owner’s surveyor’s fee is generally the last point to be agreed before an award is signed and served on the owners. Some allowance will be made for checking and signing the fair copies and for whatever further inspections have been agreed but the majority of the adjoining owner’s surveyor’s work will have been completed before their fee is known.

So that the building owner’s surveyor can satisfy himself that the time has been reasonably incurred the adjoining owner’s surveyor keeps a detailed time sheet while the award is being agreed.

Surveyors are appointed under the Act to settle disputes although that principle is complicated by the fact that the dispute rarely defined. Where there is a ‘deemed dispute’ the surveyors must agree how and when all of the notified works are executed but should not involve themselves in other works that may be going on at the same time but that are not covered by the Act. The adjoining owner’s surveyor must keep that in mind when compiling his time sheet.

Travelling time can be a contentious issue between surveyors. Adjoining owners with a large portfolio of properties will often prefer to appoint the same surveyor on all of their properties. However, if it takes that surveyor 2 hours to get to site to attend a 1 hour appointment it would not be reasonable to expect the building owner to pay for that time. Before accepting such an appointment the surveyor should confirm that his appointing owner is willing to pay part of the travelling time.

Where possible, fees should be kept in proportion to the cost and scale of the works. Imagine a scenario where an owner wishing to create a through lounge has to insert a single beam in to the party wall. The adjoining owner’s surveyor could ask for a method statement, request engineering advice, details of insurance cover and to make an interim visit; throw in a request for security and it would not be long before the fees were greater than the cost of the works. Where the works are straightforward this should be reflected in the surveyors’ actions.

To assist the surveyors in agreeing matters as quicklyas possible the RICS (as have the FPWS and the Pyramus&Thisbe Club) has produced a template award. It is therefore unreasonable to expect a building owner pay for the surveyors to spend hours arguing over their preferred wording. A flexible approach is required.

Hourly rates

Once it has been established how much of the adjoining owner’s surveyor time has been reasonably incurred his costs in relation to the time must be determined.

A surveyor, or surveying practice, will take many factors in to consideration when setting hourly rates but when a surveyor is acting for an adjoining owner it may be necessary to revise a standard hourly rate to ensure that it is proportionate i.e. how does it compare to the average fee that a competent surveyor would charge to agree a similar award? There are a couple of common situations that can give rise to disagreements.

As a surveyor moves through his career, using his knowledge and experience to undertake more complex jobs, his time becomes more valuable and that is reflected in his hourly rate. That higher than average hourly rate becomes an issue when he then takes on the role of the adjoining owner’s surveyor on a relatively simple award. To ensure that the overall fee is reasonable he must either delegate day to day matters to a more junior colleague or discount his standard hourly rate.

A similar scenario arises when a surveyor working for Central London firm accepts an appointment in the suburbs where the hourly rates are lower. Again, it will be necessary for that surveyor to adjust his hourly rate to the local level.

Fortunately, any surveyor that regularly undertakes party wall work has a simple method of checking whether their hourly rate is reasonable; they just need to review their building owner appointments. If they are not winning a fair proportion of the building owner appointments for which they submit a competitive quote, using the same hourly rate that they adopt for adjoining owner appointments, then it is too high and should be revised downwards.

If a surveyor finds himself working almost exclusively for adjoining owners it is a clear sign that his fees are too high. All surveyors should be aiming for an even split.

Surveyors acting for adjoining owners need to respect the fact that they are in the privileged position of not having to provide a competitive quote in advance and regulate themselves accordingly.

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.