Barclays ready to snub Scottish Home Reports

Published on Friday 21 November 2008 18:07

BARCLAYS is to snub Scottish home buyers by refusing to accept Home Reports when they are introduced next month, The Scotsman can exclusively reveal.

As of 1 December, almost every property marketed for sale in Scotland will require a Home Report containing a single survey (including a valuation), an energy report and a property questionnaire (see box for more). But the Woolwich, the mortgage arm of Barclays, has angered brokers and surveyors by declaring that it will not accept valuations from the Home Reports for the time being, requiring buyers to pay for a valuation from its own range. This effectively means those selling one property and buying another will have to pay twice.

A spokesperson for Barclays told The Scotsman: "We will not accept the valuation from a Home Report at the time being. This is because it could be out-of-date which is more likely given how much and how quickly house prices are moving at the moment. However, this position is actively under review following feedback from customers and brokers in Scotland."

However, Woolwich valuations for properties up to 150,000 cost 295, compared with 175 typically charged by a Scottish surveyor. The figures for a property up to 250,000 are 355 and 265 respectively.

The stance demonstrates a lack of understanding of the way the housing market works in Scotland, said David Rolleston, of Mortgage Advice Brokerage in Glasgow. "In Scotland, a survey is usually carried out before an offer is made or at the very least as a condition of the offer and carried out within 24 hours of the offer being accepted. By having to get an assessment from a Woolwich surveyor that could realistically take anything from two to four weeks to organise, any prospective purchaser using Woolwich could miss out on a property."

This could be detrimental to the Woolwich business in Scotland, added Rolleston, particularly from the perspective of brokers as any costs need to be considered before a recommendation is made.

"Someone with Woolwich having to pay, say, 355 for a Woolwich survey, compared with no survey fee with another lender, could be a deal breaker for them."

Other big lenders, including Abbey, Alliance & Leicester, Cheltenham & Gloucester and Halifax, have confirmed they will accept Home Reports, provided the information in a pack meets their requirements.

"As long as the surveyor is on their panel, most major players will be happy to accept valuations from the single survey," said Kennedy Foster, policy consultant for the Council of Mortgage Lenders in Scotland. "Lenders have their own format for valuations and there may be circumstances where they require their own report. But if the bulk of lenders accept them the pressure will be on others to as well."

Most lenders stipulate that reports must be no more than three months old, which could prove a problem at a time when properties are taking more time to sell. Consequently, many sellers will have to pay again for a fresh report or risk their existing documents being rejected.

Controversy has dogged the concept, which follows last year's introduction of Home Information Packs south of the Border, from the outset.

The Scottish Law Agents Society claims they could aggravate the housing market slowdown and called for a delay to their introduction. Presciently, Janette Wilson of the Law Society of Scotland's conveyancing committee, said recently that buyers may have to commission and fund their own surveys to satisfy lenders.

So, how will the reports affect the market when they come into being? "If the marketplace had stayed busy, many commentators predicted a negative impact with home reports slowing sales," said Matthew Gray, property sales director at Pagan Osborne. "However, against the current market, with more properties up for sale than many have seen for a long time, there is a feeling that the home reports could be a valuable tool to help boost sales."

Leslie Deans, senior partner of Leslie Deans & Co, said the reports will offer value for buyers and most sellers. "For sellers, it is an expense they incur before they put their property on the market, but they should bear in mind that they will get the benefit of the reports for the house they are buying."

The reports will remove some of the pressure from what is a stressful buying and selling process, added Richard Sexton, director of business development at Home Report Scotland. "Buyers will be reassured that they have been given all of the facts to make an informed decision and as a result sellers can feel more confident that the buyer is less likely to pull out."

While prices have fallen in recent months, many sellers remain reluctant to amend their expectations accordingly, but Home Reports could change that, Gray suggested. "The guide price will be a reflection of the market value and for many people selling their homes, this could be a wake-up call."

It's not only those putting their property on the market after December who may need to fork out for Home Reports. "Come December, homes which are new on to the market and have a Home Report, may appear more attractive than those that have been on the market for some time and are, therefore, exempt from having one," said Gray. "We would advise sellers whose properties are still on the market in the New Year to pay for a Home Report so that they don't lose out against newer competition."

What exactly are Home Reports?

The pack, which buyers should receive within nine days of asking for one, comprises three documents:

Single survey – an assessment by a chartered surveyor or another approved provider of the valuation and condition of the property.

Energy report – gives the property an energy efficiency rating and provides advice on improving energy efficiency. Also provided by a chartered surveyor or another provider approved by Scottish ministers.

Property questionnaire – completed by the seller and containing information on the house such as alterations, factoring costs and council tax banding.

There are no concrete prices, but, as a guide, reports for properties of around 170,000 are likely to cost between 500 and 700, paid for by sellers. Some properties are exempt, including new homes, properties waiting for demolition and seasonal accommodation.

Eric Curran's top tips for new system

1 SHOP AROUND

Property sellers should shop around to make sure they are getting a good deal on their Home Report.

However, it is important not to make the decision just on price alone as the look, feel and quality of the reports will differ depending on who compiles them.

2 DEADLINES

As ever, time is of the essence. Sellers should be sure that whoever is supplying the Home Report can get it done quickly and that it will not delay the house being put on the market.

3 PROPERTY VALUATION

Sellers should use this to make sure they market their property at the right price. Traditionally properties have often been slow to sell because they have been overpriced. Using the report to market the property effectively should help it sell quickly.

4 HOME IMPROVEMENTS

Sellers can use this information to make changes or to put themselves in a position to better explain the current status of a property to prospective buyers. The key is to use the information to your advantage, rather than being caught out by these issues only when they are highlighted in a buyer's survey and once negotiations have already started.

5 INDEPENDENCE

If the report is not independent buyers will have to get a survey of their own carried out at extra expense and this may put them off the property. If there is any doubt over the independence of the work, the money spent on the Home Report will be utterly wasted.

• Eric Curran is a partner in DM Hall chartered surveyors and a specialist in residential valuation