Top claims risks facing surveyors in 2025

The Building Safety Act

Although the Act is not new and there have been extensive publications on the topic, the legislation to improve building safety regulation is still being implemented, with the effects of the remediation of buildings with flammable cladding continuing to impact the market and remains an ongoing concern for the industry. 

Although the regulations directly affect developers, freeholders and head landlords of leasehold properties, property managers who provide residential management services in an occupied higher risk building may also have agreed to take on additional duties under the Accountable Person role.  Under the Act an Accountable Person is a ‘duty holder’ and is responsible for assessing and managing risk to people in and around the building from structural failure or the spread of fire.  Therefore, property managers acting as the Accountable Person need to ensure that that they are proactively reporting potential risks, have a robust system in place to log incidents and problems and be available to respond to residents’ problems.         

In addition, as extensive costs to remediate properties are being incurred to ensure compliance with the latest safety standards, our concern is that those parties who have been left writing the cheque might now seek to explore potential recovery opportunities against any professionals who may have been previously involved in the property.  This could include valuers who advised on the acquisition of the buildings, sometimes whole portfolios, for investment purposes.  Additionally, if claims against the original contractor and/or design team are time-barred (despite the Building Safety Act limitation period extensions) there is a risk that this may result in spurious claims against building surveyors, property managers or even valuers who advised pre-purchase in relation to allegations of failure to warn and flag valuation uncertainty. 

From a risk mitigation perspective, documents are king (historic and current) so retain them, amend terms of business to adequately protect the firm in relation to the role agreed and ensure that as a firm the services you are agreeing to provide are within the scope of expertise disclosed to insurers.

Economic Instability 

Whilst the rate of inflation in the UK has decreased, inflation and interest rates remain high and continued geopolitical developments continue to unfold.  This could then disrupt supply chains and energy markets, potentially leading to a resurgence in inflationary pressure which could impact on the cost of living. 

When consumers are under pressure with the cost of living and budgets are tightened, consumers look for other avenues to recover money.  Therefore, with any economic instability we see an increased risk in claims whether they have merit or are simply spurious.  For example, we are seeing a high number of complaints from buyers in relation to issues once they have moved into the property.  These are often a result of buyers not paying for the additional services recommended and/or simply wanting a refund of the fees paid.  We have also seen an increase in claims against property managers in relation to maintenance of the building and personal injuries.

From a risk mitigation perspective make sure that all documents are retained, all file notes are well written, photographs of surveys are taken, and a robust claims handling procedure is provided to the client at an early stage.   

Retention and Lack of Skilled Professionals

Many surveying firms report difficulties in retaining and attracting new talent within the property sector and this looks to remain as the skills shortage is set to continue in 2025. 

RICS recognises this issue and have advised that it is committed to attracting diverse applicants to the profession and working with firms to ensure an inclusive environment.  This included early engagement with schools and colleges to raise awareness about the profession.  Firms now need to be proactive in terms of recruitment and seek alternatives to the normal recruitment process for example alternative gateways like apprenticeships.  Firms need to consider what sets them apart from competitors and diversify their recruitment process to minimise the impact of labour shortage.  

In addition, Gen Y and Gen Z now occupy a large part of the workforce, and firms failing to adapt to their needs and alternative ways of working could lead to missing out on future talent and losing talent already in the profession. 

A lack of skilled professionals and/or a high staff turnover can result in mistakes and issues being missed due to a lack of continuity.  Firms should therefore seek to put in place a diverse recruitment process to take advantage of alternative routes into the profession and ensure that engagement with the younger generation is prioritised to improve perception of the industry.  

Increased use of AI

Since the release of ChatGPT in November 2022, the subject of Artificial intelligence (AI) has been the hot topic for most professions and how it can be used innovatively to increase productivity.  The surveying industry is not immune to this and RICS supports continued investment in upskilling funds to subsidise Artificial intelligence and digital training in the Professional and Business Services sector^[1].  

Automated valuation models have been in use for a number of years but true AI-computer-based systems that have the ability to ‘learn’ are still in the early stages when it comes to the surveying industry.  We understand that RICS are now actively recommending the introduction of AI into daily tasks and considering how the industry can innovate to introduce this into valuation work for example the use of VALOS. 

This commitment to increasing use in AI can also be seen in RICS release of a new edition of its Global Red Book which makes several updates on the use of AI in valuations, along with mandatory implementation of ESG principles as they are integral to the valuation process.  The reform to AI regulation includes a commitment to transparency in its use and data rights protections to ensure the profession has clear guidance in an area that is rapidly developing. 

Although this type of AI innovation could free up surveyors’ time and make the firm more efficient, AI use in the industry is still in its infancy stage and the industry is not quite there yet with adopting new technology.  While AI is currently very good at using existing data and forming fast conclusions from that data, the output is only as good as the data it uses i.e. if the data is bad then the outcome can be incorrect.  Furthermore, AI is unable to predict the future for example the state of the property market and how market shifts, economic fluctuations and incoming legislation which are all major considerations when advising clients on value. 

In summary, although advancements are being made and the industry is championing innovation in this area, while the technology is still being developed caution needs to be used and surveyors need to view AI as a tool to assist them rather than replacing them.  Otherwise, overreliance could lead to incorrect valuations, mistakes and an increase in claims.