Why does everyone hate home reports?

Since the home report system was introduced in Scotland in 2008, it’s gotten a pretty bad rap. For those who don’t know, a home report is compulsory north of the border, but not in the rest of the U.K. It consists of three documents: a Single Survey, an Energy Report and a Property Questionnaire. The Single Survey contains a surveyor’s assessment of the condition of the house, plus a valuation and an accessibility audit for people with particular needs. The Energy Report contains a surveyor’s assessment of the energy efficiency of a house and its environmental impact, with recommendations for ways to improve its energy efficiency. The Property Questionnaire has to be completed by the seller of the house and provides additional information, such as Council Tax banding. Any prospective buyer of a house has the right to request a home report, which costs the seller between £500 and £700 plus VAT. 

Properties exempt from a home report requirement are new builds being sold by the developer for the first time, properties that also have a commercial use (such as a flat above a shop) and newly converted homes that weren't used before they were converted. 

The Scottish Government said both buyers and sellers would benefit from the home report system and claimed it would help more first-time buyers get into the property market, but it has been widely criticised from the start.  

New research from Home Report Scotland reveals that almost a third of Scottish sellers are concerned that the home report will undervalue their home and make it more difficult for them to sell. Younger sellers are more worried about the impact of home reports than older ones: while 19 percent of respondents overall said they feared the home report would cause them to lose a sale, this number rose to 38 percent among sellers aged between 16 and 24. Additionally, 12 percent were worried about getting a category three rating on their home report, which means that urgent repairs are required. 

By comparison, only 16 percent of respondents said they had total confidence in the reporting and had no problems whatsoever with the home report process. This rose to 27 percent for those 55 and older.   

And it's not only sellers who don't have faith in the home report process. A recent survey of mortgage advisers by the TMA Mortgage Club found that the 76 percent of advisers advise borrowers to take out a private survey before buying, claiming they are the only reliable way to identify defects in a property, which saves buyers money in the long run. And 43 percent of advisors don’t believe that the home report should become mandatory throughout the rest of the U.K.

On the plus side for buyers, a home report gives you a written breakdown of the condition of the property before you go any further. For the seller, it’s the opportunity to highlight the main selling points of your property and nip potential problems in the bud early on — hopefully avoiding issues further down the line. It can also identify things that can add value to the property over time with improvement or renovation. 

The future of the home report — both in Scotland and the rest of the U.K. — remains to be seen. Perhaps the concerns of the younger generation of buyers in Scotland will lead to a review of the current system. The introduction of a similar scheme in England and Wales seems unlikely, but it's not impossible.

From an investment point of view, the home report is — if nothing more — a great way to quickly assess whether a house is a good deal or not. While there may be bigger issues lurking, the home report gives a potential investor a great first account of the property and its merits, and those bigger issues will be touched on to give an indication of future work and costs.

Like all systems, the home report has its flaws. But if you do your due diligence and value a common sense, proactive approach, it can be seen as a positive part of the home-buying process. 

If you're buying or selling a house in Scotland, you can find out more about home reports here.