As the housing industry pushes for a rethink of Home Reports, Caroline Lindsay discovers it’s time for some home truths.
Introduced in December 2008 by the Scottish Government, the Home Report provides buyers with all the information they need before making an offer on a property.
Everyone selling a property in Scotland must pay for a Home Report to be produced for their property before they market it to prospective buyers. It consists of three documents: the Single Survey, Energy Report and Property Questionnaire.
In theory buyers won’t have to pay for a survey on a property before they make an offer as the Home Report will include the necessary information including a market valuation. However, some solicitors will advise buyers to pay for their own independent survey and valuation.
It costs the seller between £400 and £1,000 for a Home Report, a sizeable amount on top of all the other expense of moving home. Although the number of homes being sold is up 5%, it is still well below the peak before the credit crunch.
David Mackie, head of the National Association of Estate Agents in Scotland, isn’t a fan. “Home Reports were brought in to improve housing stock across Scotland and they have done that. But my problem is that it’s slowing everything up and stopping the market breathing. When the market is sluggish and you don’t know what house prices are going to do from one month to the next, it doesn’t work. It reduces the number of properties coming on to the market. Also, sellers are not prepared to pay hundreds of pounds to put their house up for sale.”
Solicitor Stewart Brymer, the Law Society’s representative on the committee that came up with Home Reports, has had recent first-hand experience of them, when his daughter was looking for a property to buy in Glasgow. “From a prospective buyer’s point of view I have seen it working in practice. It meant my daughter had all the information she needed at her fingertips and that was invaluable,” he said.
“In the past the main criticism was that purchasers often had inadequate information on which to buy a property and had to organise multiple surveys and valuations. Now potential buyers have more information available to them at the click of a button.
“However, I have had a few criticisms of them from the outset.
“Firstly, I feel the shelf-life of Home Reports needs to be looked at as a priority at the moment, if a property has not been sold, the Home Report needs to be refreshed after just three months and that’s far too tight. Secondly, it is far too long and has far too many disclaimers and, thirdly, there should be a register of Home Reports so the public can access it at any time, to better protect buyers.
“It has delivered what it set out to do but could be better presented. However, there is always a tendency to criticise something just because it’s different and that is not conducive to success.
“The Home Report has changed the way property is bought and sold in Scotland but it’s important to point out that changes in conveyancing go way beyond the Home Report. The Law Society is looking at ways of taking conveyancing into the 21st century and Home Reports are just a small part of that. For example, as from 2013, it will be possible for contracts to be concluded electronically with digital signatures.”
Faisal Choudhry of estate agent Savills feels that the Home Report has a lot of advantages, offering vital information for both buyers and sellers that might not have been available before 2008. “Before the Home Report most agents wouldn’t know the square footage of a house, which is something any potential buyer needs to know. The Report helps the buyer to put in a reasonable offer and provides information on the condition of the property which he might not have been aware of. This works to the seller’s advantage, too, as it means they have the chance to improve their homes once flaws have been highlighted.”
The main feature of the Home Report is the value of the property. “It is often difficult to find comparables for certain properties, including prime properties, both in town and country areas. So it is vital that Home Report surveyors continue to liaise with agents and experts in order to arrive at sensible values,” said Faisal.
Jim Gibson, managing director of chartered surveyor company Harvey, Donaldson and Gibson feels that, by and large, Home Reports have worked out well. “People who have bought houses under both the old and new system would say that it works much better, providing so much more information on the condition and value of the property. Everthying is more upfront and transparent now.
“Some sellers may baulk at the cost of a Home Report but it will assist with their sale, and they will benefit themselves when they buy a property.
“However, it’s not perfect personally, I’d like the Property Questionnaire to be more robust with less ‘don’t knows’ in the answers and a more detailed summary of faults and repairs accompanied by photographs.”
Someone who is not in favour is solicitor Ross Mackay, partner with HBJ Gateley, one of the UK’s leading law firms. “Home Reports haven’t changed since they were introduced, so a review is welcome. They offer huge benefits but also huge defects and our view is that they are a waste of time, effort and money on the part of our clients. They are of benefit to first-time buyers but for the vast majority they add nothing to the process and we remain concerned at the lack of information they contain.”
The final word goes to Sarah Speirs, director of the Royal Institution of Chartered Surveyors: “We are supportive of the principle of Home Reports because previously around 95% of purchasers were reliant on mortgage evaluations and there was no report of the condition of the property, so often they were purchasing without realising what they were buying. The Scottish Government introduced Home Reports to improve Scotland’s housing stock many owners weren’t maintaining their properties properly and the report now encourages them to protect their greatest investment and make it safe and secure.
“We support the Home Reports because we believe it’s in the public’s interest to give the consumer the most information and the best experience possible when making the biggest purchase of their life. However, nothing sits in aspic so a review is always a good idea.”