Home reports are 'like a new poll tax'

HOME Reports, which are being introduced for every house sale in Scotland from today, will become as hated as the poll tax, lawyers warned last night.

Anyone putting their house on the market north of the Border must now have a home report, including a survey, costing between £350 and £820.

Critics have warned that the change will depress the already fragile Scottish housing market still further and could bring it to a virtual standstill.

Ian Ferguson, of the Scottish Law Agents Society, said: "I predict that home report costs will become as despised as the poll tax.

"Today is Black Monday. It's the birth of Home Reports but, quite possibly, the death of the Scottish property market."

Ian Smart, vice-president of the Law Society of Scotland, said the real problem was the seller's survey.

He said: "To introduce the seller's survey in the current climate is a policy initiative that makes the poll tax sound like a great idea. It cannot make things better, and I suspect it will make things significantly worse."

The Scottish Government has argued the new reports – which include a survey, an energy report and a property questionnaire – will ensure those buying a house have the best possible information. A spokeswoman said claims they would damage the property market were "scaremongering and irresponsible".

Ministers have the support of consumer organisations, which have argued for more choice and information for buyers. But there are increasing fears among estate agents, solicitors and surveyors that such a major change – which could have been accommodated in more prosperous times – will cause the Scottish housing market to collapse.

They fear it will erode confidence still further and burden sellers with extra costs they will be reluctant to take on.

There are still major questions over the report's acceptance by lenders. The Woolwich, which is Barclays' mortgage arm, has said Home Reports are not a reliable indicator of value in a fluctuating market. Other lenders are waiting to see how the new system works in practice before taking a definite decision on the reports.

Mr Ferguson said the Scottish Government had dismissed its calls for the scheme to be postponed for two years and rejected a plea for the scheme to be voluntary rather than compulsory.

He said: "We learned only last week that the Scottish Government does not even have all the major lenders on board to back the scheme. That should have been secured from the outset. To have gone ahead without this was breathtakingly irresponsible.

"What is despicable is the government has broken promises to the public on its website that purchasers could rely on the Home Reports and would not need their own report. Sellers were also told they would pay once only for the sale and not for their new purchase.

"They also now accept that the reports will become dated and will need refreshed, but it is not reflected on their website.

"Those promises are now worthless. By any standard, this is a failure of government."

The Conservatives also called for the introduction of the reports to be postponed.

David McLetchie, the Scots Tories' chief whip and a qualified solicitor, said: "It is all too evident that Home Reports are a disaster waiting to hit the Scottish housing market.

"We have continually warned that our already fragile property market would be further damaged by their introduction."

But the Scottish Government spokeswoman said: "It is essential that those buying a house – one of the most important decisions that people will ever make – receive the best information possible. The home report will provide buyers and sellers with this information.

"The Scottish Government has considered carefully the representations for delay from the legal profession, against the strong representations from other professions and consumer interests to implement Home Reports on 1 December."

She went on: "The view of the Council of Mortgage Lenders, representatives of the Law Society, the National Association of Estate Agents and the Royal Institution of Chartered Surveyors – which we share – is that the home report will have a neutral effect on the housing market, and claims to the contrary are both scaremongering and irresponsible.

"A significant problem in the housing market at the moment is the relative lack of first-time buyers, and this measure will help hard-pressed first-time buyers by cutting the costs of bidding for a house. As nine out of ten sellers are also buyers, they will benefit too."

Martyn Evans, of the Scottish Consumer Council, said there was a strong case for the introduction of Home Reports.

He said: "Home Reports is not a legal question – it is about buyers and sellers. The question is whether the reports are there to improve that process, and of course they will. It will give more information, and benefit buyers, sellers and the market.

"The connection to the recession would be much more plausible if Home Reports were not opposed during the boom years, yet they were.

"Home Reports are an unremarkable, consumer-focused introduction into the housing market."

Will the new Home Reports make Scottish property deals fairer or deepen the slump?

SCOTLAND has grabbed a once-in-a-generation opportunity to put consumers, rather than the house buying and selling industry, at the centre of the process in Scotland.

At present, nine in ten buyers obtain only the cheapest basic valuation survey – so most Scots make their biggest purchase with very little information. Sadly, it is not uncommon for people to spend thousands in their first few months in a new home putting right problems a valuation survey didn't uncover.

Home Reports offer a more detailed survey giving information on a property's condition, accessibility and value. There will also be a report with recommendations on how to improve the building's energy efficiency and cut bills. A property questionnaire will give practical information such as parking arrangements, factoring and alterations. As the Home Report is commissioned by the seller, first-time buyers will pay nothing. As most sellers also buy, they pay only once.

We are convinced buyers will quickly understand their value, and not having one may place sellers at a disadvantage. They mean people who put a home on the market have something to prove it is worth buying.

• Sarah O'Neill is Principal Policy Advocate, Consumer Focus Scotland


Information packs may cost sellers a packet

THE Home Report pack, which buyers should receive within nine days of asking for one, will need to include three documents:

• Single survey – this is an assessment by a chartered surveyor or another approved provider of the valuation and condition of the property.

• Energy report – this gives the property an energy efficiency rating and provides advice on improving energy efficiency. This should also be provided by a chartered surveyor or another provider approved by Scottish ministers. The energy reports will be a requirement from 4 January for all property sales across the European Union, although ministers have admitted there are still questions over the enforcement of this new regulation.

• Property questionnaire – this is to be completed by the seller and will contain information on the house such as alterations, factoring costs and council tax banding.

There are no concrete prices, but, as a guide, reports for properties of around £170,000 are likely to cost between £500 and £700, paid for by the sellers, with reports for properties from £500,000 upwards costing up to £820.

Some properties are exempt, including new homes, properties awaiting demolition and seasonal accommodation.

Your questions answered on the new packs that will change the way we buy and sell our homes

What are home reports?

They are information packs that will have to be provided by the seller of any house in Scotland that goes on the market for the first time from today. The pack will have to include a single survey, an energy report and a property questionnaire giving information on the property. They will cost anything from £350 to £820 depending on the size of the house.

Do they have a shelf life?

Ministers are working on the forecast that home reports will have to be renewed, in part, every three months. But they have insisted this will only involve a revised valuation and an update of any changes, not a new full report.

Why are they being brought in now?

Home reports were first suggested by the former Labour/Lib Dem Scottish Executive and carried forward by the current SNP administration. The European Commission has set a deadline of 4 January for all countries to introduce energy reports for all property sales. As this was coming in, Scottish ministers felt this was the best time to bring in the full home report, including the energy reports.

What are the home reports designed to achieve?

The initial aim was to save house buyers from having to invest in commissioning multiple surveys on properties that they lost through the bidding process.

Their backers also claim the reports will give buyers much more information on properties and so help the market become more transparent and workable.

The inclusion of the energy report is also intended to help improve energy efficiency, with buyers able to see easily which properties are more environmentally friendly and which will cost less to heat.

Will they have any effect on the way we buy and sell houses?

Yes, experts have forecast that the Scottish "offers over" system will now fade away, to be replaced with something closer to the English 'offers around' system.

This will be because the home reports will include a valuation submitted by the seller's surveyor.

It is more likely that potential buyers will offer less than this valuation, rather than more.

The practice of sellers putting their houses on the market with an unrealistically low upset price, in the hope of starting a bidding war, will probably disappear.

Who is in favour of the home report system?

Consumer groups such as Which? and Consumer Focus Scotland have backed the move. Labour and the Liberal Democrats were the first to adopt the new system when in government, and the SNP has taken it forward as well.

Who is against the home report system?

A large number of solicitors and estate agents and surveyors outside the Scottish Parliament, as well as the Scottish Conservatives inside the Scottish Parliament.

What are their concerns?

They believe that the home reports are unnecessary and expensive. They have warned that the reports will not do away with multiple surveys, because buyers are likely to commission their own surveys rather than take one for granted that is provided by a seller.

Also, they warn that the new system will place an added financial burden on the housing market, just when it is going through its worst period for decades.

The fear is that this new change could bring the market to a standstill.

Is there any chance of the Scottish Government changing its mind?

No, by the time you read this, home reports will be part of the home buying system in Scotland.