Consultation on the Home Report - Analysis of Responses

Executive Summary

The consultation

1. The Home Report was introduced into Scotland in December 2008. The Scottish Government is currently undertaking a two-stage review of the Home Report with a public consultation exercise forming the first part of that review.

2. The consultation sought the views and experiences of people who have used the Home Report and of those that are involved in the house buying and selling system including buyers, sellers and industry professionals. A total of 23 questions were divided between three sections: Section 1 considered whether the Home Report is meeting its objectives; Section 2 looked at how the Home Report operates in the current market; and Section 3 covered the content, layout and usefulness of the Home Report documents.

3. A total of 144 responses were available to the analysis team, with 97 individual members of the public submitting a response along with 47 groups or organisations. The group respondents included Chartered Surveyors, Legal Profession and Estate Agent Respondents, Local Authorities, Construction Industry Respondents, Consumer, Advice & Campaign Groups and Property Management, Maintenance and Conservation Respondents.

The Home Report's objectives & potential

4. The original objectives for the Home Report focused on: improving information about property condition and providing an incentive for repair or maintenance works to be carried out; addressing the problem of buyers paying for multiple valuations and surveys; and addressing the practice of setting artificially low asking prices. A clear majority of respondents thought the Home Report is meeting its original objectives and that those objectives are still appropriate.

5. For example, it was suggested that the incidence of multiple valuations and surveys on the same property has been reduced. It was also suggested that properties are generally being marketed at or close to their Home Report valuation. Respondents sometimes pointed to the continuing importance of meeting the original objectives, including through the provision of robust and comprehensive information, and the use of a standardised approach with which both buyers and sellers will become increasing familiar.

6. In contrast, some respondents did not consider the original objectives to still be appropriate, with this group including some who stated that they had never considered them to be so.

7. The majority of respondents did not support the establishment of a national register of Home Reports. Concerns included that the benefits to be derived from such a register are not clear or are insufficient and that implementing and maintaining a register would inevitably come with resource implications.

How the Home Report is working

8. The second section of the consultation sought views on how the Home Report is working, looking at different stages of the process including costs, commissioning, production, marketing, timescales, access, enforcement, access to mortgage finance, redress and exceptions.

9. A clear majority of respondents did not think that upfront costs are preventing potential sellers from putting their property on the market. However, most did think there are issues with the majority of Home Reports being commissioned through selling agents. The principal concerns of many respondents were lack of transparency and actual or perceived conflict of interest, particularly with regard to the relationship between selling agents and chartered surveyors.

10. At present, the Single Survey 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. A substantial majority considered this requirement should continue.

11. Most did not think the requirement for a Home Report before marketing a property is leading to delays in properties coming on to the market and did think Home Reports are a useful marketing tool for sellers. In terms of how the Home Report proves useful, respondents tended to point to homeowners having the opportunity to rectify any urgent repairs issues before marketing their property. The benefits of including a realistic valuation were also highlighted.

12. A Home Report must be no more than 12 weeks old when the property is put on the market. 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. A clear majority of respondents considered the 12 week deadline to be appropriate and reasonable. Most of those who had concerns about the 12 week deadline considered the period to be too short.

13. As with the 12 week rule, a clear majority of respondents supported the 28 day rule. Further comments highlighted the range of valid reasons why a seller might need or want to temporarily remove their property from the market. However, some respondents considered the 28 day rule to be a meaningless provision or suggested that it should not matter to buyers if sellers have taken a longer break.

14. A Home Report must be given to a potential buyer within 9 days of them asking for it. However, there are circumstances under which a seller or selling agent can refuse a request. A clear majority of respondents did not think there were any issues with potential buyers accessing Home Reports.

15. A valuation was included in the Home Report to stop the practice of sellers setting unrealistic asking prices. It was never intended for the Home Report to guarantee mortgage finance. A number of group respondents outlined their understanding of current practice amongst lenders. At one end of the spectrum, respondents suggested that the majority of lenders accept the Single Survey valuation, some suggested lenders accept a generic Mortgage Valuation Report (MVR), whilst at the other end of the spectrum, it was suggested that many lenders are not prepared to accept these valuations at all. A number of respondents noted that lenders will only accept valuations carried out by a firm on their approved panel list.

16. The majority thought the current enforcement arrangements for the Home Report legislation are appropriate. In terms of the redress options available to buyers who have concerns about their Home Report, the majority of respondents thought the current options are reasonable and appropriate.

17. The majority also thought the current arrangements for excepting some properties from needing a Home Report to be appropriate. Those who favoured change tended to suggest they should be required for new build homes.

The content and usefulness of the Home Report documents

18. There are three documents within the Home Report - the Single Survey, the Energy Report and the Property Questionnaire. Section 3 of the consultation sought views on the appropriateness and usefulness of each of these.

19. The majority of respondents thought the Single Survey provides a useful and appropriate level of information and did not think that the repairs categories should be amended to make them consistent with those used in the Scottish House Condition Survey. Many of the further comments focused on the frequent use of caveats and the need for more detailed information on property condition.

20. A very clear majority of respondents thought the Single Survey valuation is useful. Further comments often suggested the valuation is not just useful but is potentially the most important element of a Home Report. However, a small number of respondents had a very different perspective - for example, it was also suggested that many buyers do not trust Home Report valuations.

21. Most respondents thought the information provided in the Energy Report to be appropriate and useful. Further comments made by those that supported the current content sometimes focused on the importance of buyers being provided with energy efficiency-related information. However, even amongst those who thought the Energy Report to be useful, some questioned the extent to which buyers actually consider the information contained within it or use it to inform their buying decisions. Nevertheless, a number of respondents suggested the Energy Report could and should go further.

22. A majority of respondents also thought the information provided in the Property Questionnaire is appropriate and useful. Further comments sometimes set out the strengths of the Property Questionnaire, including that it provides a range of relevant information, particularly in terms of what a potential buyer can expect in terms of financial outgoings. Other comments focused on the completeness and veracity of the information provided.

23. The final question asked respondents if an additional question on land maintenance fees should be added to the Property Questionnaire. Compared to other issues covered by the consultation views on this issue were relatively evenly balanced, although a small majority did favour its inclusion.