Page last updated at 13:52 GMT, Friday, 6 February 2009

Home reports 'changed the market'

By Steven McKenzie
Highlands and Islands reporter, BBC Scotland news website

Mortgage application papers
Difficulties securing mortgages is also having an effect on the market

The introduction of single surveys in the Scottish housing market saw a rush of new properties followed by two "wilderness" months, solicitors say.

The BBC Scotland news website contacted property centres across the country to examine the impact of home reports, which came into effect in December.

They said December and January had been far quieter than expected.

However, they said other factors could have contributed to the decline in the number of homes coming on the market.

The Scottish Government introduced home reports, which were initially brought forward by the previous administration, on 1 December.

There is no doubt in my mind at all that what was already a quiet period over December to January was turned into more or less a wilderness
John MacRae
ASPC chairman

From that date, Scottish properties being put on the market for the first time must have a report, which includes a detailed survey covering the condition, the valuation and the energy efficiency of the house.

The government said was not possible to assess the impact of the introduction of the home report at what was traditionally the quietest time of the housing market.

A spokeswoman added it was important that buyers had the best information available.

But property centres said hundreds of people had rushed to put their homes on the market in the weeks before its introduction to avoid paying for the new surveys.

Solicitors said December and January were slower than expected, although they suspected this could be down to a combination of factors.

These include the number of properties marketed before 1 December, the time it takes to complete a home report, the difficulties first-time buyers are having securing mortgages, and the general state of the housing market.

The Law Society of Scotland, which met with Communities Minister Stewart Maxwell last week to discuss the issue of home reports, said it was carrying out research into their effect.

Meanwhile, the Royal Institute of Chartered Surveyors (RICS) said that according to its latest housing market survey, buyer inquiries were at their highest in years.

It said the market was too volatile to draw any firm conclusions on the impact so far, but it believed the benefits of the reports would emerge soon.

The BBC Scotland news website contacted solicitors property centres in Aberdeen, Dumfries, Dundee, Edinburgh, Glasgow, Inverness and Perth.

WHAT SOLICITORS ARE SAYING
December and January were quieter than expected
Properties are now more likely to be advertised at a fixed price, or offers in the region of, than offers over
Speculative sellers will disappear because they must now commit to the cost of a home report
The market has started to pick up, but a resurgence in sales is still some way off

John MacRae, chairman of Aberdeen Solicitors Property Centre (ASPC), said: "What happened was a rush before 1 December.

"We had 344 insertions in the three days before 1 December. At that time of year we would be expecting 100-125 per week. We got a month's worth in three days.

"After 1 December to the end of the year we had 20 insertions, but these did not need home reports because they had previously been advertised somewhere else.

"Since 1 January, it has been a lower level than we would have expected.

"There is no doubt in my mind at all that what was already a quiet period over December to January was turned into more or less a wilderness by home reports.

"Does this mean home reports have stopped people, or just mean there is a drag because it takes three to four weeks to put a property on the market? It is too early to say."

Of the 2,000 properties on ASPC's books, up to 200 of them come with a home report.

One of the homes advertised has had its report accessed almost 200 times and Mr MacRae believed buyers were enjoying having such information available.

HOME REPORT FACT FILE
Introduced by Scottish Government on 1 December
The energy report gives a measurement of a property's carbon footprint
RICS said more than 300 home reports were carried out in the first three weeks of December

However, he said there were concerns that people who were struggling with mortgage repayments would not able to afford a home report if they were forced into selling their homes.

The Edinburgh SPC (ESPC) said advertised property with a home report to go to a closing date did so this week.

Willie Hunter, of ESPC, said it was too early to say what the true impact would be.

Mr Hunter said: "The most significant figure is that the number of properties registered has been very, very slow.

"Interestingly, leading up to 1 December, Edinburgh and Glasgow saw double the properties being put on the market than in the same time the previous year."

On the drop off since the end of last year, he said: "It's very difficult to say if it is because of home reports or the general state of the market, but it is bound to have had a negative effect on the number of properties on the market."

Mr Hunter predicted that speculative sellers would "disappear" because people now have to pay for a report. In Aberdeen, the average cost is between 600 and 900.

Mark Hordern, of Glasgow SPC, said people whose properties have been on sale for a long period of time may have reports done as a "freshen-up".

Over the Christmas period he received no messages instructing the surveys do be done, but during January they increased from four or five a week to four or five a day.

However, he said the market was still some way off from a resurgence.

'Already changing'

Mr Hordern said home reports were likely to have various effects.

"The immediate impact has been that the way properties are advertised is already changing," he said.

More properties were coming on the market and being advertised at prices which were close to the valuation in the home report, he added.

"There may be a change in buyer attitudes with some buyers turning around to the sellers and saying: 'Well I have to have a home report for my property, so I want one for the one I want to buy', he said.

"The true reaction is partly masked by market conditions. Last year, we were down by 50% and while Scotland was not affected as badly as other parts of the country, UK-wide reports were spreading doom and gloom."

Tayside SPC has marketed 65 properties with home reports since 1 December.

John Hunter, of Dumfries and Galloway SPC, said the number of properties coming on the market were down by 60% in December and January.

Prior to the introduction of home reports on 1 December we saw an increase in the amount of property insertions in November to avoid the home reports
Anne Begg
Perthshire SPC

He said the economic downturn and the introduction of home reports had come as a double whammy - putting off speculative sellers while those wanting to move to a bigger property, or downsize, were holding off until the market improved.

Sarah Woodcock of Highland SPC said that although some sellers did avoid the home report by marketing early, home reports were being viewed by some as a distinct advantage to buyers.

Perthshire SPC said it has noticed a substantial change in the market following the introduction of the reports with a downturn in insertions in January of 52%.

Anne Begg, centre manager, said: "Prior to the introduction of home reports on 1 December we saw an increase in the amount of property insertions in November to avoid the home reports.

"During December the amount of properties inserted was lower than previous years.

"It has been quieter than expected but it is hard to say if this is to do with the general financial climate or solely the introduction of home reports."

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SEE ALSO
Views on the new single surveys
06 Feb 09 |  Highlands and Islands
Market 'not all doom and gloom'
06 Feb 09 |  Highlands and Islands
New home report system introduced
01 Dec 08 |  Scotland
Shake up for Scottish home sales
29 Nov 08 |  Moneybox
Concern over new home reports
29 Nov 08 |  Scotland
Single survey delay calls backed
26 Sep 08 |  Scotland
MSPs support single survey plans
30 Jan 08 |  Scotland
Single survey plan moves forward
20 Feb 07 |  Scotland

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