Don't Go Round The Houses

Legal Requirements

The principle of Home Reports was introduced by the Scottish Government under the Housing (Scotland) Act 2006 and is required by law to be produced by the vast majority of Scottish home owners intending to sell their property.

The Home Report legislation is designed to do away with the need for multiple valuation surveys on properties and offers transparency for all potential buyers by providing free, upfront information about the condition of the property. This takes away, as far as is practicable, the possibility of buyers belatedly discovering expensive-to-repair problems with the property that they have just bought.

A further advantage of the Home Report legislation is that home owners, in the knowledge that a Home Report will have to be produced detailing the condition of their property prior to putting their home on the market, may be encouraged to take better care of their property and at the very least, ensure adequate maintenance.

VALUATION

Prior to the introduction of Home Reports, many home sellers promoted their property at unrealistically low asking prices simply to generate interest.

The legal requirement of the Home Report, which sets out the RICS surveyor’s professional valuation of the property for sale to all interested potential buyers to see, dispenses entirely with this misleading and unhelpful ruse.

LEGAL STIPULATIONS

The home owner is required to arrange and pay for the Home Report no more than 12 weeks before the property is put on the market, as by law, the Home Report documents cannot be more than 12 weeks old when the property is put on the market for sale. While there is no set “shelf-life” of the Home Report, if your property takes a long time to sell or there has been any effect on your home’s condition since the Home Report was commissioned, you should consult your RICS surveyor immediately as the single survey and valuation will need to be updated.

It is advisable to allow an average of one to two weeks for the Home Report to be completed before your home is made available for sale and perhaps even a little longer for a very large or remote house.

Interested potential buyers who request a copy of the Home Report from either the seller or the seller’s agent, must, by law, receive their copy within 9 days from the date of request. The copy may be provided in either email or hard copy format.

Any small charges to cover copying or postage that may be incurred in providing the requested copy of the Home Report should be advised in advance to the prospective buyer.

PENALTIES OF NON-COMPLIANCE

It is illegal to put your home on the market in Scotland without having a completed Home Report. The penalty of such failure is a fine of £500 imposed by the Department of Trading Standards. You will also find it unlikely that a solicitor or estate agent will help you sell your home without a Home Report as they will be aware that you are breaking the law. (See legal exceptions below.)

All potential buyers are actively discouraged from even considering purchasing a home without the receipt of a valid Home Report.

LEGAL EXCEPTIONS

Whilst it is true that most homes for sale in Scotland now require a valid Home Report produced before they are put on the market, there are some legal exceptions:

• Brand-new homes sold off-plan or recently completed and never occupied
• Newly-converted property converted to a home which has never been used in its converted residential state
• Holiday accommodation which can legally only be lived in up to a maximum of 11 months per annum. This does not include second homes or holiday cottages that could be used all year which must comply with the regulations
• Groups of homes sold as a portfolio to a commercial buyer and not as single homes
• “Mixed Sale” properties where living accommodation is sold as part of business such as a flat above a shop or a farmhouse as part of a working farm
• Dual use of a home which doubles as a residence and a business such as a commercial studio where the practitioner lives on the premises
• Homes that have been on the market continually since 1 December 2008
• “Right to buy” homes
• Unsafe properties that have the planning rights to be demolished and which consents have been obtained.

If a home seller believes that the property that they have put on the market for sale sits within one of the legal exceptions to the requirement to have a Home Report produced as set out above, it is necessary for the prospective buyer to ask for legal confirmation of this status from the seller in the form of a solicitor’s letter.

LEGAL INDEMNITY

RICS regulated firms must by law have special insurance called “Professional Indemnity” which protects both sellers and buyers in the unlikely event that problems may arise. The introduction of the legally-required Home Report provides this most welcome “peace of mind” to buyers and sellers alike.