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SPECIAL FEATURE: Scotland’s Home Reports five years on

Sarah Davidson

January 13, 2015

After long deliberation, the Scottish government has delivered its verdict on five years of operation of Home Reports, one of the most controversial tranches of legislation to affect the property market in decades.

It will hardly surprise market watchers that the views of vested interests about their introduction have not undergone a seismic shift. Those who were for it five years ago are still for it. The majority of those who were against it have not been swayed.

What does come out of the impartial investigation, however, is that after submissions from interested parties, the general consensus is that Home Reports have by and large achieved the effect on the market that was intended.

The legislation hoped to achieve three things: an end to multiple surveys; an end to the market-distorting practice of low asking prices; and a general improvement in the housing stock.

Factors one and two have been accomplished beyond doubt – there is not a buyer in the country who would wish to return to having to commission survey after survey only to fail in subsequent bids; and Home Reports have introduced a new realism, compared to the old days in which agents priced properties ludicrously low to encourage competition.

Curiously, however, the improvement in the housing stock has not necessarily been driven by sellers sprucing up their properties before sale. Rather, repairs, modernisation and improvements are being carried out by buyers – who have been guided on what needs to be done by the chartered surveyor’s informed opinion in the report.

The information in the government’s review, far from being “mixed and contradictory”, clearly illustrates that the housing stock is being improved by purchasers who have better information on condition than was delivered under the old system which relied too heavily on a mortgage valuation.

The review points out that market changes have been pushed by economic conditions, rather than legislative effect. That is only to be expected.

But it would be disingenuous to underestimate the stabilising effect of the information that a well-constructed Home Report delivers. It provides transparency on condition and benchmarks market value for both sellers and buyers.

The statistics in the review rightly are drawn from a broad spectrum – the experience of all Home Reports in the marketplace. It follows that this will mean a wide range of standards, and less well-constructed reports – of which, let’s face it, there were a few in the early stages – may be driving some of the more adverse comments.

The fact is that quality will out, and some market participants who have in the past been known to produce lower quality reports are no longer in operation. They have been winnowed out by diligent professional service.

A stand-out element of the review is the change in the factors which make people move house – such as location and changes in personal or family circumstances. The cost of buying and reliable information on a property has moved significantly up this list of priorities – thanks to the Home Report.

Another lesson of the review for the Chartered Surveying profession is that we have more work to do on consolidating trust, and getting people to understand that surveyors are independent of the other potentially vested interests in the house transaction process.

Surveyors, it has to be stressed, are independent because they carry the liability in the Home Report product – not solicitors, not sellers, not buyers and not estate agents. It all falls on the shoulders of the surveyor.

They have to make sure that they have produced the Home Report exactly right in an impartial way and that they are comfortable with the reported market value. If they don’t, they will be found wanting and their standing in the market will be reduced with consequent reputational damage.

Surveyors also need professional indemnity insurance, which is a large business cost, to operate. If they can’t demonstrate to a PI insurer that they are reliable and independent and are managing risk properly, they will not be insured and will not be able to trade.

The report highlights that surveyors have perhaps failed in getting the message across about the added value of a well- constructed Home Report within the sale process, as well about its limitations and reasonable client expectations.

But there is a message in the review for the house-buying public as well. It remains quite incredible that, for the biggest financial decision most people are ever likely to make, they are still reluctant pay as much as they would pay for a television or a mid -range Tablet.

Surveyors have been continually pressed on price, which may explain in part the review’s comments on qualitative differences. But buying a home is a big decision. Paying market rate for a well constructed package of professionally-prepared information is simply a smart decision.


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