Ten years of Home Reports
On 1st December 2018, the Home Report system in Scotland became 10 years old. I thought it would be interesting to look at the effect of the system over that period.
Home Report Principles
First and foremost the main principle of the home report, to provide relevant information relating to the property including condition and energy efficiency has of course been welcomed by proposed buyers. It would be unthinkable now for a buyer in Scotland not to have the level of information they have been used to prior to submitting an offer.
Another principle of the home report was to improve the standard of the housing stock in Scotland. To my mind, this has been less than successful. The rationale was that a seller would commission a Home Report and on sight of their draft survey would complete any remedial works prior to going to market. From my experience, this rarely happens unless significant work is required.
A third principle of the system was to eliminate multiple surveys. Ironically this problem had resolved itself prior to Home Reports being introduced. A further irony is that from my experience the majority of buyers will request the seller provides an updated version of the survey incurring a further cost for the seller and meaning a second inspection by the surveyor.
A downside of the home report system is that it significantly increases the initial costs of putting a property on the market in Scotland. This has had an interesting effect. Gone are the days of would-be sellers testing the market on a whim. The vast majority of property coming to the market is done so by serious sellers. This has, in my view, been part of the reason for low stock levels across the country.
The valuation in the survey element of the home report can also be a bone of contention. This is one of the more controversial areas of the home report. Indeed, the question could be asked ‘Does the valuation in the home report restrict the eventual sale price?’. The answer has to be yes. Why? The valuation in the home report restricts the initial marketing price, in many cases sets a ceiling level in the buyers’ mind and restricts the level of mortgage lending the proposed buyer can obtain. For me, this is an area that could be improved or indeed eliminated. Given that the surveyor is required to revisit the property in the majority of cases I would pose the question, would this not be the most appropriate time to provide the valuation? The surveyor at that point of the second visit would now know how long the property has been on the market, the level of interest it had gained and what the agreed selling price is i.e. much better equipped to provide a true market value.
In summary, whilst many in the industry ten years ago had their doubts about the Home Report system it has proven extremely helpful to buyers and generally helped the process of buying and selling. The valuation element of the home report is something that could be included as part of an updated survey and eliminated from the initial report to allow for a truly unrestricted market.
If you require any advice relating to home reports or buying and selling generally don’t hesitate to contact Blackadders as we can provide expert advice in these areas.
Brian Main, Associate Director