Home Reports in Scotland explained

Organising a Home Report before selling a residential property in Scotland has been compulsory since 2008. Introduced to address the need for a more straightforward and efficient property market, Home Reports provide transparency and fairness when buying and selling homes.

Producing a Home Report before a property is listed on the market benefits both sellers and prospective buyers by ensuring that all parties are well-informed before proceeding with a sale. This system incentivises homeowners to carry out repairs before selling a property and aims to reduce surprises and disputes later in the purchase process.

Sellers benefit from knowing the market value early on and the opportunity to resolve issues before the property goes on the market. Buyers are given a good understanding of the home’s condition, allowing greater confidence to make decisions with all the information they would need.

What is a Home Report?

In Scotland, a Home Report is a legal requirement for most residential property sales (we explain the exceptions further on). This differs from other parts of the UK, where detailed surveys are optional and typically arranged by the buyer after an offer is accepted. Sellers must provide a Home Report before putting a property on the market, ensuring prospective buyers have access to key information about the home’s value, condition, and energy performance.

Rather than being a single document, the Home Report is a bundle of reports designed to offer clarity and transparency. A qualified Chartered Surveyor (a member of the Royal Institution of Chartered Surveyors, or RICS) prepares the survey and valuation documents, while the current owner completes the Property Questionnaire. This process aims to establish a fair selling price, minimise surprises later in the buying process, and foster confidence for both buyers and sellers.

Why do you need a Home Report?

1. It’s a legal obligation
   In Scotland, a Home Report is legally required before listing most residential properties for sale, with a few exceptions.
2. It reveals the property’s value and condition
   A Home Report provides a thorough assessment of the interior and exterior of the property, helping everyone involved understand its true condition and market value. Sellers benefit by identifying and having the opportunity to resolve any issues before listing, which can increase the property’s appeal and potentially boost its price. Buyers gain peace of mind and can make more informed decisions, knowing exactly what to expect from the home they’re considering.
3. It provides energy performance details
   The Energy Performance Certificate (EPC) within the Home Report highlights how energy-efficient the home is, estimates running costs, and suggests improvements.
4. It covers vital legal information
   From planning permissions and building warrants to any additional factors that might affect the property’s use, the Home Report’s documents bring crucial legal details into clear view.

Key components of a Home Report

A Home Report contains three main documents:

1. Single Survey: A Chartered Surveyor’s assessment of the property’s condition, structure, and current market valuation.
2. Energy Performance Certificate (EPC): An analysis of the property’s energy efficiency and environmental impact.
3. Property Questionnaire: Seller-provided information on council tax bands, previous alterations, parking, and more.

These documents work together to give a clear view of the property’s condition and running costs, putting prospective buyers.

Single survey

A Single Survey is a written report carried out by a qualified Chartered Surveyor to assess the property’s overall condition and identify any potential repairs. They visually inspect everything from walls and windows to the roof and plumbing. The survey also includes a market value assessment, which lenders can use to inform their mortgage valuation.

Interpreting condition ratings

In the survey, the property’s features are assigned condition ratings on a scale of 1, 2, or 3:

1. No immediate action needed.
2. Repair or replacement will be required soon.
3. Urgent repair or replacement is needed.

If the survey highlights urgent repairs, it’s wise to either consider making these repairs before selling the home, or to get repair estimates and factor these into any negotiations or decisions about whether to proceed. High condition ratings can impact buyer interest and offer strategy, as urgent issues often lead to renegotiation or a lower offer.

Understanding the property valuation

Surveyors typically determine a property’s market value by assessing its location, condition, and size, alongside recent comparable sales. This value is included in the Home Report, to help set a fair price.

It’s important to note that a mortgage valuation conducted on behalf of lenders may not match the Home Report valuation. The lender’s primary concern is to ensure the house offers enough security for the loan, so their figure can differ if they believe the market value is lower.

Should you disagree with the valuation, you can contest it by providing additional detailed information, such as evidence of planning permission for future extensions or proof of recent upgrades that enhance the property’s condition. You may also benefit from an updated home survey if the property has undergone improvements since the initial report was carried out.

Enerey Performance Certificate (EPC)

An Energy Performance Certificate (EPC) assesses how energy-efficient a property is, considering factors like insulation, heating systems, and energy consumption. The EPC also measures carbon dioxide emissions and the property's overall environmental impact. Recommendations to help improve efficiency and potentially reduce energy costs are also provided.

A high EPC rating generally means lower running costs, an attractive feature for many buyers.

Property Questionnaire

The Property Questionnaire covers key legal and practical details from the seller’s perspective. This includes, but is not limited to questions regarding:

• Council tax bands
• Parking arrangements
• Planning permission and past alterations
• Any history of issues like storm damage or asbestos
• Notices or factors affecting the property (e.g. shared maintenance costs)

Providing accurate information that is clear and honest reduces the risk of disputes later in the selling process. Misleading or incomplete data can derail a sale and lead to legal complications for the seller.

How long does a Home Report last?

A Home Report in Scotland doesn’t have an official expiry date once a home is on the market. However, the documents must be no more than 12 weeks old when the property is first listed.

While the Home Report remains valid legally, many mortgage lenders consider it outdated after about three months. Lenders often require an updated Home Report to confirm the property’s value and condition before approving a mortgage, so a buyer or their lender may ask for a refreshed Home Report.

Common misconceptions about Home Reports

When it comes to understanding Home Reports in Scotland, there are a few common misconceptions that can cause confusion. Here’s a quick look at the key areas where misunderstandings often arise:

1. The Home Report does not guarantee a flawless propertyA Home Report provides information on a property’s condition, but it’s not a substitute for a full structural survey. While the survey can highlight some of the main problems, it doesn’t cover every potential defect. In complex cases, e.g. purchasing a house with significant alterations, a more detailed assessment may be required to uncover any hidden issues.
2. Home Report value vs mortgage valuation

   It’s important to differentiate the Home Report valuation from the mortgage valuation a lender may carry out. While both are based on similar criteria, the lender’s mortgage report value might not match the initial Home Report value.

   Buyers should be prepared for this potential difference when budgeting. If the lender valuation is lower, the lender may only be prepared to lend based on their mortgage valuation.

3. Seller obligations and required repairs

   Many believe that sellers are obligated to carry out repairs flagged in the Home Report, but this isn’t the case. Instead, the report highlights areas for improvement, leaving it up to the buyer and seller to negotiate repairs as part of the selling process.

Tips for sellers

Do I need a Home Report?

By law, to sell a residential property in Scotland, you need a valid Home Report putting the property on the market. However, there are some exceptions.

Which properties are Home Report-exempt?

Newly converted homes (unused in their converted state), new build homes, holiday accommodation with limited annual use, Right to Buy homes, and properties to be demolished are among the exemptions. In these cases, you may still be required to supply an Energy Performance Certificate.

Preparing your property for a Home Report

Getting ready for a Home Report doesn’t have to be daunting. By taking care of a few key steps before commissioning the report, sellers can present their house at its best and secure a competitive price.

1. Gather essential documents

   Having relevant paperwork at the ready makes for a smoother process. Compile warranties, council tax details, and any Planning Permission certificates for a house in a converted state. This preparation is helpful for the surveyor and will make the Property Questionnaire easier to complete.

2. Address minor repairs and maintenance

   Before the home survey is carried out, it’s wise to tackle any small fixes. Things like leaky taps, peeling paint, or cracked tiles can influence the property’s condition noted in the Single Survey report. Attention to detail can reduce potential costs later and help achieve a fair selling price.

   For more helpful information on what minor repairs and maintenance is worth addressing, check out our tips on how to add value to your home.

3. Present your property in its best condition

   A clean, well-presented home instils buyer confidence and can positively impact the final report. A tidy garden, fresh décor, and clutter-free rooms all contribute to forming a good first impression both in listing photos, and when prospective buyers view the property. Investing a little time in presentation often pays off with a stronger position when selling and can contribute to a good selling price.

How do I get a Home Report?

You will need to instruct a RICS Chartered Surveyor to carry out the Single Survey and Energy Performance Certificate. Once the surveys are complete, you will need to fill in the Property Questionnaire with additional information. Many estate agents offer support organising the Home Report.

How much does a Home Report cost?

In Scotland, the seller of a residential property is liable to pay for the Home Report, unless their home is exempt.

Fees vary by company, but typically start around £300 and are usually charged on a sliding scale in relation to property value, factoring in location and size. Estate agents often offer to help organise the Home Report, and may incorporate this and other services such as mortgage advice or legal work into their fees.

How long does a Home Report survey take?

The survey portion of a Home Report in Scotland usually takes a few hours to complete on the day of inspection. Completing the survey report, Energy Performance Certificate, and Property Questionnaire often spans a few working days, depending on the surveyor’s availability and the size, age and condition of the house. A straightforward, modern home may only take a few hours of on-site inspection.

Providing documentation such as evidence of past improvements or repair work can speed up the time frame. If paperwork is missing or incomplete, it can cause delays in finalising the survey report.

When is a refreshed Home Report necessary?

Updates to the Home Report, commonly called a “refresh", are typically requested under two main circumstances:

1. Extended time on the market: If the home has been on sale for three months or more, potential buyers or their lenders may request an updated survey to ensure the property’s condition and valuation are at the same as initially reported.
2. Significant changes or repairs: Changes such as major repairs, conversion or new planning permission may warrant an updated survey report to ensure accurate information about the home’s new features or improvements.

Implications for Home Report refresh costs

In Scotland, the cost for an updated Home Report remains the seller’s responsibility. The cost of a Home Report refresh depends on the individual company or surveyor you choose to work with but expect to pay around one-third of the original Home Report fee.

This usually involves a surveyor revisiting the property to check its current condition and produce a new home survey and valuation if necessary. If no major changes have been made to the property, the Energy Performance Certificate and Property Questionnaire are usually not replaced during this process, so you will not have to complete the entire Home Report again.

Tips for buyers

Carefully review the Home Report

Before making an offer on a property, take time to review the Home Report thoroughly. Focus on the Single Survey, which identifies any urgent repairs or likely future maintenance issues. Check the EPC rating for insights into potential long-term energy efficiency savings. This can help you plan for potential running costs.

Carefully read the Single Survey and Property Questionnaire. They can reveal if the property has any obvious issues that may require further investigation or affect its market value. If defects or higher renovation costs emerge, you may want to negotiate a lower price or set aside a budget for improvements.

Should I offer more than the Home Report valuation?

In Scotland’s competitive property market, it’s common for buyers to offer more than the Home Report valuation. If there’s strong interest in a particular home, offering more than the Home Report value can improve your chances of success.

However, be cautious: mortgage lenders often use the Home Report valuation to support their mortgage valuation. Whilst these two figures can differ, they may only be prepared to lend based on their valuation. If this is lower than the amount you offer, you will need to cover any additional funds yourself.

Before offering more than the valuation, consider your budget, the property’s condition, location, and its potential for future value, and how long it has been on the market. Weigh the extra costs against long-term benefits, especially if the Home Report highlights possible repairs or planning application requirements. Ultimately, aim for a balanced offer that aligns with your financial comfort and the property’s potential growth.

Does a Home Report include a detailed survey?

A Home Report includes a Single Survey, however, this does not contain the same level of detail a full structural survey would cover. The Home Report’s Single Survey provides a general overview of the property’s condition and includes a valuation. A full structural survey (sometimes called a building survey) is more comprehensive, examining aspects like the structural integrity of older or converted state properties. Property sellers are only obligated to provide the Single Survey as part of the Home Report requirements. A more extensive survey is entirely optional and usually carried out by specialist surveyors.

Why commission specialist inspections?

Buyers may need a more detailed Home Report if they have concerns about specific areas, such as damp, rot, or planning permission queries. Older or larger houses may benefit from a thorough survey report to assess potential environmental impact or unique structural features. This can offer helpful information on costs for future repairs, allowing prospective buyers to plan ahead or negotiate a more competitive price.

A Home Report doesn’t remove all risk

While the Home Report covers various aspects of a building’s condition, it doesn’t guarantee zero issues.

Unforeseen problems can surface, especially if the building hasn't been fully inspected at a structural level. Commissioning your own inspections can provide peace of mind, ensuring a more complete understanding of the property’s condition before finalising a purchase.

Conclusion and final thoughts

A Home Report is not just a legal requirement, it’s an important factor in creating transparency and confidence in Scotland’s property market.

Insights gained from conducting a Home Report prior to a residential property going to market benefit both buyers and sellers. Sellers get a clear idea of the potential market value of their property. Meanwhile, buyers gain a comprehensive understanding of their prospective investment.

For expert advice, contact our Edinburgh office today. As a solicitor estate agency, we offer a one-stop shop for all your property needs. Our friendly, local property specialists are well-versed in the nuances of the market and will offer a personal service tailored to accommodate your individual needs.