In recent days, new research has revealed that nearly a third of people selling a home in Scotland are worried that the Home Report process will undervalue their home and, as a result, some are concerned that they will be unable to sell.
The findings, from Home Report Scotland, showed that the value of the home is the biggest worry for those looking to sell – with younger sellers more concerned than those aged 55 and above.
Overall, 19% said they feared the Home Report would cause them to lose a sale, with this number increasing to 38% among sellers aged between 16 and 24. Meanwhile, 12% were worried about getting a category three rating on their Home Report, which means that urgent repairs are required.
By contrast, 16% said they had total confidence in the reporting and had no problems whatsoever with the Home Report process. This rose to 27% for those aged 55 and above.
What is a Home Report?
If you live in England and Wales, where a Home Report is not mandatory, you might be asking yourself what all the fuss is about. While a Home Report
is compulsory north of the border, this is not the case in the rest of the UK. For some in the property industry, there is scepticism when it comes to Home Reports, believing they are not thorough enough and not worth the hassle required to get one done.
For others, the advantages are obvious and there is a belief that there is a misunderstanding of the value of Home Reports
to buyers and sellers.
In essence, a Home Report is a pack of documents which helps to give would-be buyers more information about a property that is up for sale. For anyone selling a home in Scotland, it’s a necessity to provide a Home Report to potential buyers. The report includes three elements: a single survey, a property questionnaire and an energy report. It costs between £500 and £700 plus VAT, depending on how much the home in question is worth and the size of the property.
When a property is placed on the market, the documents contained within the Home Report must be no more than 12 weeks old. Once a home is on the market, no official expiry date for the Home Report exists, although buyers may request a ‘refresh survey’ if a home has been on the market for a long time.
Certain properties are exempt in Scotland from requiring a Home Report, including new builds being
sold by the developer for the first time, properties that also have a commercial use (a flat above a shop, for instance) and newly converted homes that haven’t been used before they were converted.
What are the pros?
If you’re a buyer, a Home Report allows you to see the condition of the property – clearly written down in front of you – before you take any further steps. If you’re selling a home, it’s a good chance to showcase the main selling points of your property, as well as making sure that buyers won’t be turned off by any unforeseen issues that crop up later in the sales process. You can nip potential problems in the bud early on, thereby preventing complications further down the line.
If, as a seller, you’ve maintained the condition of your property and kept it in tip top shape, this will be reflected in the Home Report and will act as an assurance to buyers weighing up whether or not to place an offer. What’s more, it can highlight things that, with a little work, improvement or renovation, could add value to your property over time.
Why isn’t everyone convinced?
Those who are against Home Reports say they don’t go far enough and aren’t suitably thorough. Instead, it’s argued that a private survey should be taken out by buyers before they purchase a property as this offers a far more thorough and comprehensive analysis. Another argument against Home Reports is that the valuation is far more accurate with a private survey than a typical valuation report
conducted by a lender.
Mortgage advisers are in agreement, according to a recent survey by the TMA Mortgage Club. The findings showed that the majority of advisers recommend that borrowers take out a private survey before buying, which in many cases leads to lenders and borrowers valuing properties differently. The advisers also suggested that a private survey offers more protection than a Home Report – and saves people money in the long run – as they are the only reliable way to identify any defects in the property.
While defenders of the Home Report would point to the condition of the property being thoroughly checked in the single survey – which gives an assessment of the condition of a house, including the roof, internal and external walls, plumbing and kitchen fittings – those who point to a private survey as a better option suggest the single survey doesn’t look deep enough to spot any defects or faults, instead giving only a superficial analysis of the property in question.
Such thinking is backed up by ongoing research carried out by the Royal Institution of Chartered Surveyors (RICS), which found that, on average, homeowners spend £5,570 on repairs and maintenance once they’ve moved into their new home – largely due these homeowners not investing in a full private survey.
Nonetheless, 43% of the brokers polled by the TMA don’t believe a Home Report – of the like seen in Scotland – should be mandatory in the valuation process in the UK. This could again come down to the fact that the Home Report in Scotland isn’t seen as the equivalent of a private survey in the rest of the UK, which critics argue is much more detailed and thorough.
Although many brokers already advise their clients to take out a survey, this isn’t something that is routine across the board. David Copland, director of TMA Mortgage Club, says more should be done to aid buyers. “A home is one of the most expensive purchases a person makes and whilst our advisers are on hand to make sure that their clients get the best deal, we should be ensuring that they are not about to commit to a home that could cost them thousands of pounds
He added: “Going forward, we will ensure that TMA members are aware of all the surveys available and will help them to develop a strong relationship with a firm that they can refer their clients to, so they don’t have to solely rely on the lender’s provider.
Will the Home Report be introduced in England and Wales?
As things stand, there seems little appetite for mandatory Home Reports to be introduced outside of Scotland. Even though buyers are encouraged to take out private surveys in England and Wales, there are question marks when it comes to the effectiveness and meticulousness of Home Reports.
Some believe it could work south of the border, though. Jim Gibson, managing director at chartered surveyors Harvey Donaldson & Gibson, one of Countrywide’s Scottish surveyor brands, reckons English-style “Home Reports” would be feasible and believes Countrywide are well-placed to trial it. He has suggested to Britain’s largest estate agent group and surveyors’ body RICS that trials should be set up in England to see how they fare.
“The beauty of the Home Report is that everyone goes in with the same information,
” he said. “Whether they do it in isolation or not is another question. It is probably better to be industry-wide through a body such as RICS.
” He added: “I have suggested this but at the moment there is a reluctance to make that change. I would love to come down to England to help introduce this.
Houses for sale in Scotland have been marketed with a Home Report since 2008, and there are murmurs at Westminster that a paper is being worked on to improve the home-buying process in England and Wales, with some sort of Home Report being mooted as a possible option.
For the foreseeable future, though, any change in England and Wales seems unlikely. In Scotland, meanwhile, there will be concerns that a significant minority are having such worries over Home Reports, in particular younger sellers. Whether this causes the Scottish government to review their current processes is much less clear, but it will be something that sellers in Scotland will be keeping a close eye on.