Home reports, introduced on 1 December 2008, are required for almost every property marketed in Scotland and feature a single survey (including a valuation), an energy report and a property questionnaire. The reports were designed partly to eradicate the need for multiple surveys, but market insiders say that hasn't happened.
At least one in three buyers has to pay for an extra survey, according to a Scottish government review which said it would look at measures to minimise the need for additional reports. Most lenders only accept reports from surveyors on their panels and buyers have to pay for a new one when the first is rejected. Edinburgh Solicitors Property Centre (ESPC) found earlier this year that lenders reject up to one in four surveys. Most lenders also ask for a new survey if one is three months old, which as the market slows is increasingly the case.
Andrew Smith, partner at Strutt & Parker in Edinburgh, said: "In about 75 per cent of cases, lenders demand a second survey and many offers are coming in with either a 'subject to survey' clause or 'subject to the lender accepting the home report survey'."
Robert Carroll, solicitor and managing director of MOV8 Real Estate in Edinburgh, said lenders should request fresh valuations only in exceptional circumstances. "Lenders need to continue accepting the home report for the purposes of the buyer's mortgage, which saves the buyer money and makes the purchase more affordable than if they had to instruct their own survey or valuation."
David Marshall, business analyst at ESPC, claimed lenders should accept reports from all surveyors. "Sellers obviously can't predict who a buyer's lender will be so often a second valuation is required which adds time and cost to the process," said Marshall. "The current approach may also deter sellers from using smaller surveyors who are on fewer panels which, over the longer term, could reduce competition amongst surveyors and naturally this would not be in the interests of consumers."
The need for fresh reports has exposed initial valuations that are too high. Second-opinion valuations frequently arrive at a lower figure, forcing the seller to reduce their asking price. And as house prices fall, many sellers are offering discounts off the home report to attract interest.
Smith said: "Too high a valuation figure can often create a false expectation on the part of the seller when ultimately any property is only worth what the buyer will pay."
But the reports have still been a boost for the market, he added. "They offer piece of mind for the prospective purchaser, providing information which allows them to make a reasonably informed decision about the property."