Home reports 'devalued' as lenders seek second opinion

Published on Friday 6 November 2009 19:19

THE home reports system is being undermined by the failure of lenders to adapt to the new regime, it has been claimed.

Almost a year after the reports were introduced in Scotland, buyers and sellers are uncertain whether lenders will accept the home reports they have arranged, defeating the purpose of a system designed to bring clarity to the buying and selling process, according to two leading surveyors.

Under the home reports regime, which came into force last December, almost everyone putting a property up for sale in Scotland must pay for a home report containing a single survey (including a valuation), an energy report and a property questionnaire.

Critics say the reports have hindered the housing market recovery, though many surveyors and estate agents now argue that they have improved the buying and selling process in Scotland.

But Ian Thomson, managing director of Allied Surveyors (Scotland), accused lenders of "demeaning" home reports. One recurring problem is that valuations accepted by one lender are rejected by others, he claimed. "The most common complaint is from people being told to get another survey from lenders at a cost of around 300. Lenders have not adapted to the system and there has been a general inconsistency."

Eric Curran, partner in the Glasgow North office of DM Hall Chartered Surveyors, said lenders unwilling to trust valuations had caused confusion among buyers and sellers.

"Not all lenders are taking the information from the valuation report and using it to facilitate mortgages."

Kennedy Foster, policy consultant for the Council of Mortgage Lenders in Scotland, said lenders generally accepted valuations provided the surveyor was on their panel.

"There may be exceptions if a property or borrower is perceived to be higher risk and lenders always reserve the right to commission an independent valuation," he said.

Most lenders want valuations to be updated once a report is three months old, though some accept older reports, and others are more flexible, depending on the date of the original valuation.

"These are decisions for individual lenders and depend upon the level of risk they are prepared to accept," Foster explained.

"For instance, it may be easier to accept a valuation which is just over three months old if you are lending on a low loan-to-value basis as opposed to a higher loan-to-value one."

However Curran said that while he sympathised with lenders, they were nullifying the benefits of home reports. "If lenders universally accepted the valuations in reports, which are done by qualified and regulated chartered surveyors, there is no doubt it would help the process," he said.

"They have not adapted, but time will solve that."