Surveyor Eric Curran says that misinformation about Home Reports is adversely affecting a development which he says could act as a stimulant to the property market.

As a residential property surveyor it is of some concern to me that a great deal of misinformation is circulating in the market about the newly-introduced Home Reports which have had to be produced by all sellers of residential properties in Scotland since December last year.

Firstly, for clarification, the Home Report consists of a Single Survey, provided by a Chartered Surveyor, and a property Questionnaire. The biggest myth is that the fees for Home Reports are exorbitant. In reality, Home Report fees start not, as claimed by its opponents, at £700 plus VAT but at £300 plus VAT.

Given that the average house in Scotland is currently £152,256, according to the Communities and Local Government (CLG) department house index, the price of the Home Report is comparable to the older Scheme 2 survey but with much more information provided. The Single Survey is a Scheme 2 equivalent report and includes an accessibility audit covering areas such as the width of door openings, stair arrangements to property, and layout issues amongst other things.

Also incorporated in the Single Survey is an Energy Report, which details the property’s energy efficiency rating, its environmental impact and the ways in which these elements can be improved as well as details on the likely cost of making energy efficiency improvements. There is a Property Questionnaire to be completed by the person selling the property which, provides useful information and, completes the Home Report. A generic mortgage valuation report can be included, at no additional charge, with the seller’s consent.

For the most part, only a very small portion of the market comprises people who cannot afford the amount of money required, and there, in any case, a number of credit and deferred payment schemes available to meet that cost.

Contrary to the popular view I believe that Home Reports can stimulate the market, not kill it, and a number of estate agents to whom I have been speaking lately seem to share this view. In addition, since every seller is also a buyer, the overall financial position more or less evens itself out.

One of the benefits to the economic environment resulting from the introduction of the Home Report is the virtual disappearance from the market, one hopes permanently, of the speculative seller who really only wanted to get a handle on the possible price they would get if they were actually to sell.

Many people who have been disappointed when their ‘dream’ home was withdrawn from the market by a speculative seller, who really only wanted to dip their foot in the valuation water, will be pleased that the phenomenon is unlikely to re-emerge as a result of the requirement for every to prospective seller to produce a Home Report.

Another point of criticism is the cost of refreshing a report three months after it has been prepared. The old system of ‘offers over’ will I believe, go, in the main, and the Home Report valuation will become, in effect, a guide price and it may not be necessary, therefore, to refresh the valuation until the end of the sale process. After three months prospective lenders may say the valuation is too old but estate agents should be capable of managing the position so that it is refreshed at the time a serious buyer emerges. The refresh price is likely to be between £100 and £200 plus vat but is bound to be dictated by market forces.

For the future I believe estate agents will begin to use the Home Report as a useful marketing tool, though both they and solicitors need to assist their clients more to understand that the process has changed quite markedly.

The timescale too is undoubtedly slower than in the past because of the protocols which have to be observed. Vendors need to agree the terms and conditions of the Home Report before it can take place, they must contribute to the Property Questionnaire and must finally, sign-off the Report as acceptable and not all professional advisers actively advise of these requirements. In addition, but no less importantly, the new system is designed for sellers who are on the internet; those who are not tend to undergo a more drawn-out and perhaps onerous process.

Current market conditions mean that the volume of transactions is much lower than would normally be the case, but it is interesting to consider that properties for sale before 1 December without a Home Report are now at a significant marketing disadvantage while they remain unsold when all other houses which went onto the market after that date have a Home Report available to potential buyers.

Similarly the Energy Performance Certificate, included in the Home Report, became a mandatory requirement for all residential property sales from 4 January 2009 and the cost of obtaining an EPC could be absorbed by obtaining the Home Report and at the same time gaining the marketing advantage.

Overall, and this may be the cause of the misinformation over Home Reports, I regret to say, there is widespread ignorance about them even amongst solicitors who really should be more up to speed. Though this is steadily improving there remain big gaps in understanding. Many were in denial that the Home Report would ever be introduced but it is now a reality and every one in the sector owes it to themselves, and more so their clients, to get to grips with the process and its implications.

Eric Curran is a Partner in DM Hall LLP, Chartered Surveyors and a specialist in residential valuation.