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Consultation on the Home Report

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SECTION 2

This section seeks views on:

  • How the Home Report is working by looking at the different stages of the process including costs, commissioning, production, marketing, timescales, access, enforcement, access to mortgage finance, redress and exceptions.

Overview of the Home Report process

2.1. Before a house is marketed for sale a seller needs to obtain a Home Report. This can be done through the selling agent or by going direct to a surveying company. The cost of the Home Report is usually paid up front, although, some selling agents and surveying firms offer deferred payment options to spread the cost.

2.2. Once the Home Report is completed the property can be placed on the market, provided the Home Report is less than 12 weeks old. While the property is on the market there is no requirement for the seller to update the Home Report at any time.

2.3. When a buyer is interested in a property they can request a copy of the Home Report from the selling agent or the seller. A seller or selling agent must usually supply a copy to a potential buyer within 9 days.

2.4. Once a buyer has an offer accepted on a property and they require mortgage finance the Home Report can provide the buyer's lender with information on the condition and valuation of the property.

2.5. The lender will usually accept the valuation within the Home Report provided it meets their criteria around timescales and if the surveyor is on their approved panel of surveyors. If it does not meet the lender's criteria they can ask for it to be updated or ask the buyer to obtain a mortgage valuation report.

2.6. Both the buyer and the seller can use the information in the Home Report to identify any repairs/ improvements that need to be done to the property. The surveyor is liable, if negligent or biased, to both the buyer and the seller under law. The surveyor is bound by complaint and redress systems including the independent Ombudsman Services: Property[7].

How the Home Report is working

Costs and commissioning

2.7. As was the case prior to the introduction of the Home Report, the costs for surveys are set by the market. The cost of a Home Report usually increases as the value of the property increases. For example, a property worth £100,000 would have a cheaper Home Report than a property worth £200,000.

2.8. A Home Report can be commissioned directly from a surveying company or through the selling agent. In practice the majority of sellers usually commission their Home Report through a selling agent.

2.9. The Home Report is usually paid for before the property goes on the market, along with other costs such as marketing costs if using a selling agent. We have heard anecdotally that a small number of sellers have been unable or unwilling to put their property on the market due to the upfront costs of obtaining a Home Report. Some selling agents and surveying firms may offer a deferred payment scheme to help with upfront costs.

Q5) Do you think the upfront cost of Home Reports is preventing potential sellers from putting their property onto the market? Yes/no
Q5a) If yes, please provide details

Q6) Are you aware of any schemes available (e.g. deferred payment) to help potential sellers to pay for Home Reports? Yes/no
Q6a) If yes, please provide details

Q7) Are there any issues with the majority of Home Reports being commissioned through selling agents? Yes/No
Q7a) If yes, please explain why
Q7b) If no, please explain why

Production of a Home Report and marketing a property

2.10. The Single Survey (including valuation) and Energy Report elements of the Home Report must be completed by a surveyor registered with or authorised to practice by the Royal Institution of Chartered Surveyors (RICS).

Q8) Should other organisations be allowed to carry out the Single Survey (including valuation) and/or the Energy Report? Yes/No
Q8a) If yes, what other organisations and why
Q8b) If no, please explain why

2.11. A Home Report is required before a property is put on the market. This may mean that it takes slightly longer to get the property on the market than before the Home Report was introduced.

2.12. The Home Report legislation sets out what "on the market" means:

  • In Part 3 of the Housing (Scotland) Act 2006 references to "the market" are to the market for houses in Scotland.
  • A house is on the market when the fact that it is or may become available for sale is, with a view to marketing the house, made public in Scotland by or on behalf of the seller.
  • A house is to be regarded as remaining on the market until it is sold or taken off the market.
  • A fact is made public when it is advertised or otherwise communicated (in whatever form and by whatever means) to the public or a section of the public.

2.13. This means that, for example, if a seller decides to sell their house privately (not using a selling agent) and puts a sign in their window their house would still be "on the market" and would require a Home Report.

2.14. When the Home Report was introduced it was thought that sellers would use the Home Report as a marketing tool. For example, sellers may be using the valuation in the Home Report to decide how to market the property and some sellers may be making repairs to their property before it is put on the market.

Q9) In your experience is the requirement for a Home Report before marketing a property leading to delays in properties coming onto the market? Yes/No
Q9a) If yes, please outline the implications of this

Q10) Are Home Reports a useful marketing tool for sellers? Yes/no
Q10a) If yes, please explain why
Q10b) If no, please explain why

Timescales

2.15. A Home Report must be no more than 12 weeks old when the property is put on the market. Once a property is on the market there is no time limit for a Home Report, provided it remains on the market, and there is no requirement in the legislation for the seller to update the Home Report at any time.

2.16. A seller can take their property off the market for no more than 28 days on any number of occasions and put it back on the market without requiring a new Home Report. This could be, for example, when a seller wants to go on holiday and wishes to take their property off the market for a short period while they are away or they want to take it off the market during the Christmas period.

Q11) Is the 12 week deadline for marketing a property after completion of a Home Report appropriate and reasonable? Yes/no
Q11a) If yes, please explain why
Q11b) If no, please explain why

Q12) Is the 28 day provision for removing a property from the market without requiring a new Home Report appropriate and reasonable? Yes/No
Q12a) If yes, please explain why
Q12b) If no, please explain why

Access to the Home Report

2.17. A Home Report must be given to a potential buyer within 9 days of them asking for it. But a seller or selling agent can refuse a request if they think that the person making the request:

  • is unlikely to have enough money to buy the house;
  • is not genuinely interested in buying the house; or
  • is not someone the seller wants to sell the house to.

2.18. A seller or selling agent can charge a potential buyer for a paper copy of the Home Report. However, in practice most Home Reports are being provided online and for free.

2.19. Selling agents can ask for contact details from a potential buyer when they ask for a copy of a Home Report. This is to ensure that the surveyor knows who is viewing the report as they are liable, if negligent or biased, to both the buyer and seller under law.

Q13) Are there any issues with potential buyers accessing Home Reports? Yes/No
Q13a) If yes, please provide an overview and outline the implications of this

Enforcement of the Home Report

2.20. Local Authority Trading Standards officers are responsible for enforcing the Home Report legislation. They can issue a penalty of £500 if the property is on the market without a Home Report and if a Home Report is not supplied to a potential buyer within the 9 day timescale.

2.21. Trading Standards officers can also require the person responsible for marketing the property to produce the Home Report for inspection.

Q14) Is this the most appropriate way to enforce Home Report legislation? Yes/No
Q14a) If no, please explain why and how this could be improved

Access to mortgage finance

2.22. The inclusion of the valuation in the Home Report was to help stop the practice of sellers setting unrealistic asking prices. It was never intended for the Home Report to guarantee mortgage finance, although all major lenders in Scotland took the position that the valuation within a Home Report was acceptable provided it met their criteria around timescales (usually less than 3 months old) and the surveyor being on the lender's panel of approved surveyors.

Q15) What are your views on mortgage lenders' acceptance of Home Report valuations?

Redress

2.23. The content of the Single Survey and Energy Report are covered by a surveyor's professional standards. If a buyer has concerns with the content of the documents then these should first be raised with the surveying company and then, if necessary, the Ombudsman Services: Property[8].

2.24. The Property Questionnaire is completed by the seller or the selling agent acting on their behalf. Sellers should complete the information to the best of their knowledge. If the buyer finds that some of the information in a Property Questionnaire is incorrect they can raise these issues through their solicitor.

Q16) Are the redress options available to buyers reasonable and appropriate? Yes/no
Q16a) If no, please explain why and how these could be improved

Exceptions

2.25. There are a number of exceptions to the requirement to have a Home Report. These exceptions are:

  • Portfolio of properties
  • Seasonal and holiday accommodation
  • Mixed sales
  • Dual use
  • Unsafe properties
  • New housing
  • Properties to be demolished
  • Newly converted properties

Q17) Do these exceptions need to be amended? Yes/no
Q17a) If yes, please explain what amendments are required and why