Search the site


Scottish Home Reports - background and effect

publication date: Oct 20, 2005
Download Print
scot flagConsumers making the "biggest financial decision of their lives" deserve the most reliable information before they make a bid for a house, said Communities Minister Stewart Maxwell. 

Mr Maxwell said that the Home Report, the new system for buying and selling houses due to be introduced from 1 December, will provide the best information for consumers. He underlined that nearly all sellers are also buyers so they will also benefit from the Home Report in the purchase of their next home. 

He welcomed signs of "positive action" by Scotland's property industry gearing up for the Home Report's introduction. 

At least seven specialist Home Report providers are competing in the market to provide a service to sellers and their agents, and dozens of training sessions have been delivered for property professionals. 

Meanwhile the RICS and the Council of Mortgage Lenders (CML) now intend to go beyond the specific requirements of the legislation by including mortgage valuation information. This could help a prospective buyer to obtain a decision in principle from a lender - a response to recent market changes that have made lenders more cautious than in the past. 

Mr Maxwell said: "Scotland is not immune from the effects of the global economic downturn. That's why it is essential that those buying a house, one of the most important decisions that they will ever take, receive the best advice possible. 

"To those who do not embrace the idea of a Home Report I would ask, how can more information be anything other than a good thing for consumers? There is a momentum building and I'm delighted at signs of positive action by the property industry preparing for the Home Report introduction on 1 December. 

"Our plans to introduce the Home Report have been backed by influential consumer groups such as the Scottish Consumer Council and Which?. They share our belief that serving the interests of consumers is paramount. 

Roger Wilson, Connells Group Conveyancing Service Director said: 

“Whether you are for or against them, there is no getting away from the fact that Home Reports are being introduced in Scotland on 1 December. 

The time for debate has passed and estate agents now need to concentrate on making sure they are fully prepared for their implementation. 

“Through our national network of Connells and Sequence offices throughout England and Wales we have been producing Home Information Packs for over a year and we also took part in each of the Government ’s HIPs trials prior to their introduction. 

We are drawing on all of this invaluable experience and knowledge to ensure that we have the right systems in place and all staff at our Allen & Harris branches in Scotland are fully trained to ensure a smooth implementation when Home Reports go live on 1 December.” 

DEALING WITH THE INTRODUCTION OF THE HOME REPORT 
The NAEA has partnered with the Scottish Government to provide courses for members on this new legislation. Home Reports will be required by law and this means there will be changes to the ways in which office staff and valuers work. Whether you are dealing with sellers or buyers, you will need to be aware of the changes to the house buying and selling process. The half day workshops are aimed at estate agency staff to supply the information you need on Home Reports in order to understand the processes involved and be able to deal with requests for information: 

Topics:
  • The Home Report Documents in use.
  • Questions that are likely to arise from Sellers and Buyers about the Home Report
  • Who provides what, to whom and when?
  • When can marketing start, and what does this mean?
  • Why it is important to follow procedures and guidelines
  • Dealing with client’s concerns
  • Avoiding pitfalls
  • The Home Report – a brief overview of the legislation as it relates to the above 

These courses are funded by the Scottish Government so there is no charge. Attendance also provides 3 hours CPD. 

Following the sellout programme of courses in October there is another course scheduled for Glasgow on 6 November. 

For more information contact the Courses Co-ordinator on 01926 417787 or email courses@nfopp.co.uk

  

THE FACTS – HOME REPORT SCOTLAND 
From the 1 December, anybody who markets their home to the public in Scotland will require to market it with a Home Report. 

Why has it been brought in? 
The primary driver for the introduction of the Home Report is to provide better information about the condition and value of a property earlier in the home buying and selling process, so that people can make better informed decisions. Ultimately, this should help to improve the quality of housing in Scotland. 

The new system will also help to reduce the commissioning of multiple surveys and artificially low asking prices for properties. 

The Home Report is supported by consumer groups, the Scottish Consumer Council and Which? 

What is it? 
The Home Report comprises three separate elements:
  • Survey report – which includes information on the condition of the property, a market valuation and basic accessibility information. Additionally, on request of the seller, the chartered surveyor can provide a generic ‘Mortgage Valuation Report’ (MVR) for inclusion in the Home Report, which the prospective purchaser can take to a lender to discuss a mortgage.
  • Energy Report – will also be carried out by the surveyor and it will include an indication of current carbon dioxide emissions resulting directly or indirectly from energy use within the home, any energy efficiency measures implemented in the home and recommendations to improve the energy efficiency of the home.
  • Property Questionnaire – which is completed by the seller and provides information on issues such as Council Tax banding, car parking, factoring arrangements, alterations and planning permissions. 

How was it brought in? 
The Housing Improvement Task Force made recommendations in 2003 from which the Home Report was established. After a poor response to a market-led pilot, Ministers decided that the Home Report should be compulsory. The Housing (Scotland) Act 2006 received Royal Assent in January 2006 in which Part 3 introduces a new requirement for specified information to be provided when a house is being marketed for sale in Scotland. 

The Scottish Parliament approved regulations to introduce the Home Report and a Home Report Implementation Group which includes representatives from professions including the Law Society of Scotland, the Council of Mortgage Lenders, the National Association of Estate Agents, the Royal Institution of Chartered Surveyors and the Scottish Consumer Council, refined the product. 

How will it work? 
Every home that is being marketed for sale to the public in Scotland must possess a Home Report at the point of marketing which should be made available to prospective buyers upon request. To prevent the use of an out-of-date Home Report, documents must be no more than 12 weeks old at the point of marketing. 

Once the documents are in their possession, the person marketing the property has nine days in which to provide the Home Report documents following the request from a potential purchaser. 

The penalty for noncompliance is set at £500. 
The survey element of the Home Report will also be used by the buyer to satisfy legal and mortgage lender requirements. The survey will be carried out by surveyors registered with or authorised by the Royal Chartered Institute of Surveyors in Scotland. The legislation gives buyers a right to rely on the report as if they have commissioned the report themselves. They will have the same rights of redress as the buyer who commissioned the survey report. 

RICS confirm that a mortgage valuation report will be covered by the fee for the Home Report, so lenders should receive the same information from the same people in the same format as they currently do. Lenders have reserved the right to require a separate valuation, if for any reason, the surveyor in question is not acceptable to them (which reflects current practice). 

How much will it cost? 
Fee scales for the Home Report will be set by individual surveying firms in the market according to the size of the home. RICS has advised that the cost of a Home Report for an average (three bedroom) home will be between £500 and £700 - similar to the fees scales for the existing ‘Scheme 2 Homebuyer Survey and Valuation’. It is expected that for the majority of smaller homes and flats, this will cost less. 

The Home Report includes the cost of the Energy Performance Certificate which, from January, house sellers will be required to provide due to new European law. The EPC will be provided as part of the Home Report for houses marketed from 1 December." 
First-time buyers will benefit particularly as the cost of the survey falls to the seller. 

Most sellers are also buyers so they will benefit too in the purchase of their next house. 

How long is a Home Report valid for? 
There is no set shelf life set by legislation. Initial market soundings suggest that the survey report can be refreshed at a reasonable cost if need be, by the surveyor. Guidance from the Law Society of Scotland suggests lawyers should advise clients to consider whether to refresh a survey that is more than 12 weeks old. 

Why do we need the energy report? 
The Energy Report contains an assessment by a surveyor of the energy efficiency of the home and its environmental impact. It also recommends ways to improve its energy efficiency. From 4 January 2008, Article 7 of the European Energy Performance of Building Directive requires that when any building is sold, an Energy Performance Certificate (EPC) must be made available by the owner to a prospective purchaser. 

The energy report will allow the seller of a property to comply with the Directive as it will be part of the Home Report from 1 December 2008. 

On completion, the energy report will be registered on the Energy Saving Trust’s Home Energy Efficiency Database. For those who have marketed their property for sale prior to 1 December 2008, they will need to purchase an Energy Performance Certificate from the 4 January 2009. It is expected these will cost between £80 and £100. 

What’s the purpose of the property questionnaire? 
The questionnaire was proposed by a representative of the Law Society at the Home Report Implementation Group and will be completed by the seller or someone nominated by the seller. It is there to provide better and helpful information for the buyer. It contains information such as factor fees, parking and planning permission details, as well as other useful information such as refuse collection. Early indications suggest that the Law Society of Scotland think that the property questionnaire will not be referred to in the missives. 

A seller who makes a negligent or fraudulent misrepresentation could be liable in damages to the purchaser. 

Who is exempt? 
New homes including those sold ‘off plan’, newly-converted homes, seasonal/holiday accommodation, unsafe properties, mixed sales and property to be demolished. A full list of the types of property that are exempt is available on the website. Where a tenant is exercising the right to buy, a Home Report is not needed because the house is not being marketed. 

How is the Home Report different from HIPs in England and Wales? 
Only the Energy Performance Certificate is common to both Home Reports and Home Information Packs. 

HIPs were introduced in England and Wales with the aim of reducing the instances of ‘gazumping’ in the property market. They do not include a valuation or surveyor’s report and the Energy Performance Certificate is carried out by a Domestic Energy Assessor. 

They include a range of legal documents, to make sure that the sale can be concluded as rapidly as possible after terms have been agreed under the English system. 

In Scotland, the aim is to provide more and better information to house buyers at the start of the process. The surveying profession will carry out both the valuation and survey report and the energy efficiency report. 

Additional information about the house will be provided by the seller or agent in a Property Questionnaire, but this will be followed up by formal checking of legal documents, as at present, after the bargain has been concluded under the Scottish system. 

For further information, visit www.homereportscotland.gov.uk