Quantity Surveyor Costs: When Lenders Require Independent QS Reports

A quantity surveyor is a construction cost specialist who provides independent assessment and verification of build costs. In the context of development finance, lenders frequently require an independent QS report to confirm that the build costs in the developer's appraisal are realistic and that the project can be completed within the proposed budget. The QS provides the lender with assurance that they are not advancing funds against an unrealistic cost plan, which would put their security at risk if the project runs out of money before completion.

The requirement for a QS report depends on the lender, the size of the project, and the experience of the borrower. Some lenders require a QS report on every facility regardless of size, while others only require one above a certain threshold, typically £1,000,000 in build costs. Experienced developers with a track record of delivering projects on budget may be able to avoid the QS requirement if their cost plans are supported by competitive contractor tenders. However, for first-time developers, a QS report is almost always mandatory.

The QS report typically includes a detailed review of the proposed build costs, a comparison against industry benchmarks and similar projects, identification of any cost items that appear unrealistic or missing, an assessment of the contingency provision, and a recommendation on whether the proposed build budget is adequate. The report gives the lender confidence in the cost plan and also serves as a useful sanity check for the developer, who may discover cost items they had overlooked.

Quantity surveyor fees for a lender-required cost review typically range from £2,500 to £8,000 depending on the size and complexity of the scheme. For a straightforward residential development of three to six units with build costs below £1,000,000, expect to pay £2,500 to £4,000 for an independent QS report. For medium-sized schemes with build costs of £1,000,000 to £3,000,000, fees typically range from £4,000 to £6,000. Larger or more complex developments with build costs above £3,000,000 can attract QS fees of £6,000 to £10,000 or more.

These fees cover the initial cost review report. If the lender also requires the QS to provide ongoing cost monitoring during the construction phase, the fees will be higher. Ongoing cost monitoring involves the QS visiting the site periodically to verify that actual costs are in line with the budget, similar to the role of the monitoring surveyor but focused specifically on costs rather than physical progress. The fee for ongoing QS monitoring is typically £500 to £1,200 per visit, with visits on a monthly or quarterly basis.

Some lenders combine the monitoring surveyor and QS roles, appointing a single firm to perform both functions. This can reduce the overall cost because there is less duplication of effort. Where the roles are combined, the per-visit fee is typically £1,000 to £1,800, which is more than a standalone monitoring surveyor visit but less than the cost of two separate professionals. Check with your lender whether combined appointments are available, as this can save £3,000 to £6,000 over the life of a typical project.

A comprehensive QS cost review for development finance purposes will cover every element of the build cost plan. This includes preliminaries (site setup, security, welfare facilities, site management), substructure (foundations, groundworks, drainage), superstructure (frame, floors, roof, external walls), internal finishes (plastering, tiling, decoration), mechanical and electrical installations (plumbing, heating, electrics, ventilation), external works (landscaping, driveways, boundary treatments, drainage connections), and professional fees (architect, structural engineer, building control).

The QS will compare each cost element against their database of actual costs from similar projects, industry benchmarks such as the BCIS (Building Cost Information Service), and their professional judgement. If any element appears unrealistically low, the QS will flag it in their report and recommend an adjusted figure. Conversely, if any element appears high, they may recommend a reduction. The overall aim is to produce a verified cost plan that the lender can rely upon when setting the facility amount and the drawdown schedule.

The contingency provision receives particular attention. Most lenders require a contingency of 5% to 10% of the build cost, and the QS will assess whether the proposed contingency is appropriate given the nature of the project. A straightforward new-build on a greenfield site might justify a 5% contingency, while a complex conversion of a listed building might require 10% or more. The QS recommendation on contingency directly affects the total facility size, which in turn affects the borrower's equity requirement and the arrangement fee payable on the facility.

While a QS report is a cost imposed by the lender, it can also work in your favour if used strategically. A positive QS report that confirms your cost plan is realistic and well-prepared sends a strong signal to the lender that you are a competent developer who understands construction costs. This can improve the terms offered, including a lower interest rate, higher leverage, or more favourable drawdown conditions.

If you are a first-time developer, commissioning your own QS report before approaching lenders can be a powerful strategy. Rather than waiting for the lender to instruct a QS, proactively include an independent cost review in your application pack. This demonstrates professionalism and gives the lender immediate confidence in your cost plan. The cost of a pre-application QS report is typically £2,000 to £4,000, and it may reduce the need for the lender to commission their own report, saving you a duplicate charge.

The QS report can also help you identify genuine cost savings before you commit to a contractor. If the QS highlights that certain elements of your cost plan are above market rates, you can use this information to negotiate with your contractor or seek alternative quotes. We have seen developers achieve savings of £20,000 to £50,000 by using the QS report as a benchmark for contractor negotiations. These savings go directly to your profit margin and can transform a marginal scheme into a comfortable one. Submit your project through our deal room and we can advise whether a pre-application QS report would strengthen your specific application.

The cost and scope of QS involvement varies significantly across different types of development project. New-build residential developments are the most straightforward to assess because the construction methods are well-understood and there is extensive benchmark data available. QS fees for new-build residential schemes tend to be at the lower end of the range. Conversion and refurbishment projects are more complex because the existing building fabric introduces uncertainty about the actual condition of the structure, the extent of remedial works required, and the feasibility of the proposed design. QS fees for conversion projects are typically 20% to 40% higher than for comparable new-build schemes.

Commercial developments, including offices, retail units, and industrial buildings, require specialist QS expertise because the construction specifications and cost profiles differ significantly from residential. Not all quantity surveyors have experience with commercial construction, so it is important to ensure that the QS appointed by the lender has relevant expertise. QS fees for commercial developments can be higher, reflecting the specialist knowledge required and the generally larger scale of the works.

Mixed-use developments that combine residential and commercial elements are the most complex to assess and attract the highest QS fees. The QS must evaluate multiple building types within a single scheme, each with different cost profiles, specifications, and risk characteristics. A mixed-use development in Greater Manchester or Bristol with residential, office, and retail components might incur QS fees of £8,000 to £15,000 for the initial cost review alone. If ongoing cost monitoring is also required, the total QS cost over the project life could reach £25,000 to £35,000.

QS fees should be included as a separate line item in your development appraisal, alongside other professional fees such as architect, structural engineer, and monitoring surveyor costs. A reasonable budget for QS involvement on a standard residential development is £3,000 to £5,000 for the initial cost review, plus £5,000 to £10,000 if ongoing monitoring is required. These figures should be adjusted upward for larger, more complex, or non-standard projects.

Some lenders will include QS fees within the construction facility, allowing them to be funded from the loan. Others treat them as a borrower cost to be funded from equity. The treatment varies between lenders and should be clarified at the term sheet stage. If QS fees are included in the facility, remember that you will pay interest on them for the duration of the loan, adding to the total finance cost.

For developers building a pipeline of projects, establishing a relationship with a QS firm can deliver efficiencies and cost savings. A QS who is familiar with your typical construction approach, preferred contractors, and target markets can prepare cost reviews more quickly and at lower cost. Some QS firms offer retainer arrangements for repeat clients, providing a fixed annual fee for a specified number of cost reviews. This is particularly valuable for developers active in regions such as West Yorkshire, South Yorkshire, and the East Midlands where development activity is growing and there is strong demand for QS services. For more on managing the complete cost of your finance package, see our guide on the true cost of development finance.