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Scottish Home Reports - background and effect
publication date: Oct 20, 2005
 Consumers 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:
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:
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
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