Buying and selling properties in Scotland has traditionally been even more cloak and dagger than in England and Wales, but this all changed last December with the introduction of mandatory Home Reports north of the border. The aim was to clarify the process and replace the mysterious ‘offers over’ system, involving a series of blind bids from would-be buyers running up to a closing date.
This approach allowed prices to inflate artificially and proved a costly and lengthy battle for all involved. As it turns out, for the most part, the new reports seem to have been a sensible move, and, despite the fact they’ve only been tested in a falling market, they’ve already been much better received than the much-maligned Home Information Packs (HIPs) introduced to England and Wales in 2007.
One of the reasons for this is the content. The Home Report (which has no official shelf life, although vendors might wish to have their property revalued as and when they feel they require it) contains three documents: a property questionnaire that contains information on Council Tax, parking, services, and planning notices; a single independent survey, including a current market valuation; and a report on the property’s energy efficiency. In contrast, the HIP has no survey and no valuation. Home Reports are required for all properties apart from property portfolios (for example, estates), new-build properties and mixed sales.
Initially met with cynicism, most industry figures at least admit the Scottish reports provide more transparency: ‘Scotland was already going towards fixed guide prices, but the valuation in the report has set them more firmly,’ says Matthew Sinclair from Scottish property-search agents Saint Property (0131-478 4533). ‘In general terms, buyers take comfort in the fact you can have a survey and a valuation to look at before you see a property and the assumption is that that is the proper market value.’
Jamie Macnab from Savills’ office in Edinburgh (0131-247 3800) shares experience from the seller’s side: ‘When we commission Home Reports, we realise that the information they provide is very significant to any purchaser. Sometimes, they may need to be supplemented, particularly when you’re dealing with the top of the market, where properties can require high levels of specialist knowledge, but we bring experts in to make sure as much inform-ation as possible is included.’
Naturally, the downside for the seller is the expense, and costs vary depending on the size and nature of the property, but they hover at about £1,000 for a £1 million property, and can be considerably more depending on the detail the report is required to go into. However, agents do point out that, taken in context with other necessary tools such as marketing, this isn’t the largest expense a vendor incurs.
Assessing Home Reports and their success so far also means factoring in the state of the Scottish market, which has been receding since 2008. The majority of purchasers have been cash-only buyers, which means banks haven’t yet been properly tested on mortgage lending, points out Mr Sinclair. ‘We have, by and large, only been dealing with cash buyers, who’ve achieved extremely good deals while the market is quiet, but next year, there could be trouble as buyers look for larger mortgages.’
There have been complaints that some lenders are unhappy about agreeing a mortgage on the back of a survey commissioned by the vendor and demanding the buyer commissions his own, although this only affects those who have made a successful bid, and who don’t have a substantial deposit. ‘If you come to the bank with a 50% deposit or more, you should be fairly safe,’ Mr Sinclair adds.
Scepticism does remain, however. ‘At the top end, people are coming around to Home Reports, but they’re not anticipating that they’ll speed up the process,’ says John Coleman of Knight Frank (0131 222 9601). He thinks prices are being kept lower than they would otherwise be. ‘It’s difficult in a falling market to advise a buyer to bid more than the valuation, and this inevitably keeps prices down.
Without the Home Reports, the market would probably be reviving faster transactions would remain at the same level, but prices would be picking up.’ In general, the majority of people seem hopeful that, as the market slowly recovers, there’ll be few lamenting the passing of the old buying process in Scotland.
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