What is a home report?
In this episode of ESPC's First-timers Club we are talking all about Home Reports. In Scotland, it is a legal requirement for sellers to have a Home Report for their property. This allows prospective buyers the chance to find out more about the structural condition of the home and alerts them to any issues that they face if they were to purchase the property. Megan is joined by Kirsten Nicolson, a director at DM Hall, who explains what a home report includes, how to read it and what first-time buyers should look out for.
Key points
What is a home report?
A Home Report is a legally required document in Scotland for properties on the market, designed to provide buyers with vital information about the property's condition, market valuation, and energy efficiency. It helps buyers make informed decisions before submitting an offer.
Home report sections breakdown
Condition Report and Valuation section outlines the property’s structure, materials, and condition, with issues graded into Categories 1 (no immediate concerns), 2 (repairs needed soon), or 3 (urgent repairs). The valuation provides an estimate of the property’s market value. In the Property Questionnaire, which is completed by the seller, you'll find details like council tax band, past alterations, and whether utilities like Sky or septic tanks are connected. The Energy Performance Certificate (EPC) shows the property’s energy efficiency rating and offers suggestions to improve it, such as upgrading insulation, windows, or heating systems.
Importance of EPC ratings for buyers
EPC ratings are gaining more attention as buyers look to control energy costs amidst the cost-of-living crisis. New regulations are also pushing for more energy-efficient homes, which will eventually impact sold properties, not just rented ones.
How to understand condition ratings
Category 1 indicates no immediate issues but emphasizes that regular maintenance will still be required over time, even for new builds. Highlighting areas that need attention in the near future, such as aging electrical systems or minor structural wear, Category 2 ratings allow buyers to plan for potential costs. Category 3 flags urgent repairs that need to be addressed before moving in or as a condition for securing a mortgage. These could involve major structural or safety issues.
Non-traditional properties and mortgage considerations
Non-traditional properties (e.g., post-war builds made with unconventional materials) can present challenges for financing, as some lenders view them as higher risk due to potential structural defects. This is an issue that buyers should review with their solicitor.
Do buyers need additional surveys?
While the Home Report reduces the need for extra surveys, buyers may still seek a second opinion for older homes or properties requiring significant renovation. This could involve hiring a builder or surveyor to estimate repair costs.
How a home valuation works
A home valuation reflects what the property is likely to sell for on the open market under standard conditions. It doesn’t account for competitive overbidding, which is common in Scotland, especially in sought-after areas.
Advice for first-time buyers reading a home report
First-time buyers should carefully review Categories 2 and 3 for immediate or upcoming repair needs but not overlook Category 1 items for future maintenance planning. If unsure about any aspect of the home report, First-time buyers are encouraged to ask their solicitor for guidance to avoid misinterpretations.