A Register of Home Reports

The Home Report came about as a result of the findings of the Housing Improvement Task Force which was charged with investigating various matters with a view to seeking to identify ways in which Scotland’s housing stock could be improved. It was formed in 2001 and its report can be found at www.scotland.gov.uk/Resource/Doc/158826/0043128.pdf 

It is fair to say that the Home Report has not been without its critics since being introduced on 1 December 2008 with some criticisms being focused on cost, shelf-life and its alleged negative effect on the house buying/selling process. The timing of the introduction of the Home Report was very unfortunate in terms of coinciding with impact of the economic recession.  This coloured many people’s minds as to the fact that they were not a good idea. The Government has recently undertaken a review of the Home Report with a view to assessing its efficacy. Although the findings of the review are not yet public, it is suggested that it is unlikely that the Home Report will be abolished. Although there have been issues surrounding its effectiveness generally, it has had a positive  effect on the house buying/selling process in that prospective purchasers now have much better information about a property which they are interested in buying. That has to be a good thing. A fact that is often overlooked is that prior to the introduction of the Home Report over 90% of prospective purchasers relied on a Mortgage Valuation – the cheapest of the three survey options available in the market. The Home Report has also had an effect on the fixing of more realistic asking prices given the inclusion of a valuation in the Report. Only after a further review in say 10 years time will it be possible to carry out  a full objective assessment as to whether the Home Report has had a positive effect on improving the quality of Scotland’s housing stock. At present, it is questionable if there has been any material effect and, even if there has been, there is no effective means of measuring that.

One of the reasons for this is that Home Reports are not collated and held anywhere. Unfortunately, the then Government did not make it a requirement that Home Reports be held in a central database or register – unlike the position in England and Wales at the time. Property prices are in the public domain once titles have been registered and there is no reason why the information contained in Home Reports should also not be publicly available.

The Home Report has three constituent parts: the survey; the Property Questionnaire; and the Energy Property Certificate. There is a register of EPCs. This is held by the Energy Savings Trust – https://www.epcregister.com 

Given the absence of a Register of Home Reports, it is unfortunately the case that the system can be abused. A hypothetical example of how this could happen is as follows:

Seller A wishes to sell his flat and a Home Report is instructed. This produced a valuation of £165K but approximately £15K of essential repairs are identified. Seller A pays for the Report and decides to commission a second Report. This Report values the property at £175K with £5K of essential repairs being identified. Still not satisfied, Seller A pays for that Report and instructs a third surveyor. The third surveyor values the flat at £185K with no essential repairs being identified. Seller A pays for the survey and instructs the flat to be marketed at Offers over £180K. As an aside, this potential problem is exaggerated when one bears in mind that the RICS Red Book provides that a difference of up to 10% between surveyors' valuations is acceptable.

Such circumstances may never occur but the fact is that the system can be abused in this way and the loser is the prospective purchaser. In such circumstances, prospective purchasers have no way of knowing about the previous Home Reports and will generally proceed on the basis of Home Report 3 without instructing their own private survey over the property. So, for an outlay of less than £2K, it is possible that Seller A may secure a higher price than might otherwise be the case and the property will not have had essential repairs undertaken to it. That would be the case even if the purchaser’s solicitor followed the growing practice of inserting a clause in the Missives that the seller confirms that they have only instructed one Home Report over the property. This is all well and good, but without a Register of Home Reports how would a purchaser find out the true position without calling round every surveyor in the area? This potentially makes the clause in the missives of little value.  In what way is that fair? What contribution has been made to the goal of improving the quality of Scotland’s housing stock in such circumstances? The system was arguably fairer when lenders retained a proportion of mortgage funds until repairs identified in their mortgage valuation report had been undertaken to the satisfaction of the surveyor who undertook the survey. At least that way, the repair work was done. Such retentions still occur but are not so common as they once were.

Such unfortunate outcomes could be avoided if there was a Register of Home Reports. This would require it to be compulsory to register Home Reports at the same time as the Report is made available to the instructing party. It would then be registered and the Register would be open to public scrutiny. That way, prospective purchasers and their advisers could quickly ascertain how many Home Reports of the property there had been and when the most recent one was undertaken. This would, by necessity, lead to greater transparency in the housing market.

It is suggested that the creation of a Register would not be a difficult task. Such a Register could be held by the Energy Savings Trust along with EPCs or, indeed, by RICS or some other body. The Home Reports could be linked to properties via their Unique Property Reference Numbers and ultimately linked into the cadastral map maintained by Registers of Scotland. Such a  Register would then be searchable by way of address; name;  UPRN; Address Database; and/or  Title Number. Ideally, the Register of Home Reports would be map-based.

Now this may all seem far-fetched but is it really?

There is a flaw in the present system which it is in the public interest to rectify. It is possible to go further however. This would involve the Home Report Register being part of a National Land and Property Information Database. Such Land Information systems exist in other jurisdictions eg New Zealand and Norway. In Norway, the national land information company, Ambita AS (www.ambita.no) maintain a national database called Infoland (www.infoland.no). Infoland is a searchable database of all relevant information on land and property and over 80% of Norway’s Municipalities subscribe to it with net profits being returned to the Municipalities for them to spend on further improvements in local service provision. Put simply, it works and it works well.

The introduction of a Register of Home Reports gives us an ideal opportunity to establish a Scottish Land Information Service and create a timetable for full integration of all data on Scotland’s land and property. This will deliver benefits for citizens and for the economy as a whole. It will also provide a searchable database to interrogate in order to ascertain movements in valuation and the history of the state of repair of the fabric of the property. This would also allow an assessment of  whether or not the Home Report has delivered on one of its key objectives – that of improving the quality of Scotland’s housing stock.

(c) Stewart Brymer 2014