Buyers Pay Out As Big Lenders Spurn Home Reports
Scottish banks are refusing to accept controversial home reports that were intended to save homebuyers money and are instead forcing them to pay for second independent surveys. Edinburgh Letting Agents
The compulsory home reports were introduced by the Scottish Government a year ago and contain a valuation commissioned by the seller from a surveyor, which is meant to be acceptable to both parties.
Yesterday the Government said that more than 75,000 home reports had been prepared on properties across Scotland with Alex Neil, the Housing Minister, insisting that they had been “good news for everyone”.
But research by property experts has revealed that banks and building societies, including RBS, HSBC, Alliance and Leicester, Nationwide and the Clydesdale Bank, are refusing to accept one in four valuations as a basis for home loans. Homebuyers are being forced to pay about £500 for a second survey.
Scott Brown, of the estate agency Warners, said that about one quarter of offers were falling through because many of the largest lenders were routinely rejecting home report valuations.
He said: “It is absolutely crucial we get 100 per cent acceptance of the valuation, at least among the biggest lenders, if this system is to work as intended.”
With around 50,000 house deals a year in Edinburgh, buyers are having to fork out almost £7 million a year for surveys that they should not need under the new system.
The research, by the Edinburgh Solicitors Property CentreESPC, also found that up to one third of sellers had managed to find a loophole in the system by commissioning up to three surveys and then choosing the one that offered the highest valuation.
Michael Marwick, of the estate agents Marwicks, said: “There are major flaws with home reports, not least a sharp increase in beauty parades, which completely undermine their validity.
“Sellers invite two or three surveyors to view the property and then choose the highest. Another problem is that any valuation is out of date within a month in the current market.”
The compulsory home reports, introduced last December, mean that anyone selling their home has to commission a pack, which includes a condition survey, valuation, energy report and basic questionnaire, at a cost of between £500 and £800.
Lloyds and RBS said that they would only accept home report valuations if the seller used a surveyor approved by them.
An HSBC spokesman admitted that the bank was seeking independent valuations in many cases.
He said: “For us it comes down to the issue of liability. If we lose money because of a poor valuation we have to have the legal right to sue the surveyor, which we believe means we have to commission the survey ourselves.”
A Clydesdale Bank spokesman confirmed that the bank required a new valuation if the home report was more than 12 weeks old or the mortgage was above 75 per cent of the property’s value.
However, Mr Neil, the Housing Minister, said: “The home report has been good news for everyone. It has given would-be buyers about to take the biggest financial leap of their lives the best possible information up front.
“Buyers can now keep hold of their savings for deposits, without having to shell out for surveys on properties they don‘t get to buy.” Edinburgh Property Management
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