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Lawyers call for home reports to be scrapped, claiming they push sellers into bankruptcy

THE cost of having to fork out for a home report to sell a property has contributed to a rise in bankruptcies and repossessions, lawyers have claimed.

Home reports are mandatory on almost all properties for salePhotograph: Mark Hilfrey
Home reports are mandatory on almost all properties for salePhotograph: Mark Hilfrey

The Law Society of Scotland's property law committee raised the concern in a submission to the Scottish Government's first major review of the "single survey" packs, which were introduced five years ago.

The organisation says the extra costs imposed on would-be sellers - with a home report typically costing upwards of £500 - has prevented many from being able to place their property on the market. And it claimed finding these initial funds has been "simply impossible" for some homeowners in financial difficulty who want to sell up because they cannot meet their mortgage payments.

The submission to a Scottish Government consultation on home reports stated this had led to a rise in companies specialising in purchasing properties from "distressed sellers" - who offer to buy at a price substantially below the value of the property.

It added: "The upfront costs of obtaining a home report undoubtedly prevented many home owners from putting their property on the market, and almost certainly resulted in the rise in repossessions/bankruptcies which occurred over that period [since home reports were introduced]."

Paul Carnan, a Glasgow-based property lawyer and member of the Law Society of Scotland's property law committee, said: "If you go to an estate agent, they might say it will cost £600-£700 [for a home report] to put your property on the market. If you are a distressed seller, you might not have £600 or £700 to pay."

He added: "The home report idea was conceived in a buoyant market in around 2003-04. By the time they actually introduced it, it was December 1, 2008 and we had fallen off the cliff by then in terms of the property market.

"So it introduced a scheme that was perhaps designed for a buoyant market into a market that was very, very poor indeed."

The home reports - which consist of a survey report including valuation, an energy report and a property questionnaire - have to be in place for the majority of properties going up for sale, with some exceptions such as new build properties and holiday accommodation.

Last week a survey by the Royal Institution of Chartered Surveyors found that house-buying activity is now picking up in most areas of Scotland, but there is still gap between demand and the number of homes being put up for sale.

Carnan added: "We would say there might be some cases where home reports would be a good idea, we do not deny that.

"But perhaps the best measure would be if you removed the mandatory requirement to have a home report and see just how many people would take them up."

Scottish Conservative housing spokesman Alex Johnstone said: "Home reports are clearly unfit for purpose, and it's time for them to be dropped.

"They create an entirely unnecessary barrier to people trying to sell their homes, and that is damaging for both individuals trying to move forward in life, and the wider economy."

A Scottish Government spokeswoman said an analysis of the responses submitted to the consultation, which will feed into the research phase of the review, will be published early next month.

She said: "After five years of providing valuable support to home owners we understand that there could be ways to improve or adapt the home report, that's why we launched our consultation.

"We note the Law Society's concerns and they will be considered as part of the review."

She added: "With home reports, buyers and sellers now have information on the condition, energy efficiency and valuation of a home right at the start of the house buying process.

"The Scottish Government believes everyone in Scotland should live in high quality, sustainable homes that they can afford and that meet their needs, which is why people should have confidence in the property's condition before making an offer."

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