It was a good idea at the time.
Home reports were devised during a boom period in the housing market, for reasons that made sense in the circumstances.
Before the introduction of the home report – a single survey giving detailed information about the condition and value of a property, an energy-efficiency report and property questionnaire – potential buyers were obliged to commission their own individual valuations on every house or flat they placed an offer on. As a consequence they could end up shelling out hundreds on valuations for multiple unsuccessful bids.
By putting the onus on sellers to commission home reports, the aim was to reduce the liability of potential purchasers, helping hard-pressed first-time buyers in particular; set a clear shared benchmark for the value of the property; and provide reliable information from the outset about its condition and energy efficiency. It was also hoped that including an energy-efficiency report would help increase awareness of a home's environmental impact.
That was then. Five years on, however, the state of the housing market has changed dramatically and now it appears that this innovation is having an adverse effect on an already-sluggish market. Estate agents advise that fewer properties are coming onto the market because, due to the £480 home report and additional fees, it can cost £750 just to a put a house up for sale. It is not hard to see why some may be put off by such costs when trying to sell their homes. What is more, in a significant number of cases more than one valuation is still required on the same property. Sellers who cannot make a swift sale – not unusual in the current climate – are often finding themselves in the position of being required to pay for a further mortgage valuation, three months after the first one.
The National Association of Estate Agents Scotland also observes that the home report valuation is increasingly being taken as a maximum and that solicitors and mortgage brokers frequently urge buyers to start their bids at 10% below it, with the result that most sales are under the valuation level.
Is that making the housing market "fairer, greener and much more informed", the stated aim of the home report as expressed by the former Communities Minister Stewart Maxwell in 2008?
There will be an opportunity for estate agents and others to air such concerns when the Scottish Government launches a review of the home reports system in December, five years after they were launched. The Scottish Government must listen to those concerns. Certainly there are good features of the home report system, for instance the energy-efficiency section which encourages both buyers and sellers to consider a home's running costs and environmental impact. However, in other respects the home report may no longer be serving such a useful purpose. It may have been suitable for the housing market of five years ago, but there are clear grounds for reviewing it in the light of today's changed conditions.
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