Treat RICS “research” with a pinch of salt

I suppose, I should not be surprised at the latest RICS attempt to suggest Home Reports are a great thing for the Scottish house market.  After all, some parties have suggested surveyors are making a killing to the tune of £36 million a year out of Home Reports and Energy Performance Certificates – but it is not for me to comment on that since I do not know the figures.  I think it fair, however, to point out that surveyors do not generally carry out Estate Agency or conveyancing and therefore their experience in the house market is limited to just one part of the sales process. 

What I find pretty disquieting is that the RICS simply interview their own members, who clearly have a financial interest in Home Reports continuing, and then they present to the unsuspecting public their “findings” as “research”. Then the RICS public relations staff pull in some quotes from sponsors of the legislation who are only too desperate to see some good PR for this legislation whether or not it fits in with the facts.

We deserve better than that but we are not going to get it from the RICS, politicians or consumer groups.

Here is some information I have gathered from our experience at Caesar and Howie since Home Reports became compulsory on the 1st December 2008.  Unlike the RICS I would not dream of claiming this to have the title of “research”.  But as a collection of experiences it may be of interest to some.

• House sales in Scotland averaged 8571 per month throughout 2008 when the recession was at its height and mortgages were desperately difficult to get.
• Various government initiatives including reduced stamp duty and £61m of Lift mortgage finance were available for most of 2009, mortgages generally were easier to come by also, yet house sales slumped to a mere 5347 per month from January to September 2009 (the last date on which Land Register figures are available).
• Our own listings at Caesar and Howie halved in number from precisely the date of the introduction of Home Reports and have never recovered.
• Multiple surveys had been unknown in our firm for years until the introduction of Home Reports – now we are aware of them happening all the time – and who pays for them is often a cause of dispute.
• House Purchase and Sale transactions are taking longer and are usually more expensive for both buyer and seller because of the Home Report and related fees.
• Many sales clients have complained bitterly to us about the cost of Home Reports, many buyers do not trust them and lenders frequently reject them.
• Potential sales clients have simply said they would rather not sell than meet the cost of a home report when a sale might be difficult..
• Sellers and buyers alike treat Energy Performance Certificates with open contempt and see them as worthless.
• In many Home Reports some and even most of the questions in the Property Questionnaire  are answered “don’t know”.
• Hard up sellers are selling off market at reduced prices because they can’t afford the Home Report and can’t get credit.

I could go on a lot longer but it does get a bit boring.  However in the face of our experiences I am at a loss to see how any objective view of Home Reports could fail to confirm that they actually hinder the house market not help it.  We have had a recession since early 2008 and yet the largest falls in listings and sales have come since the introduction of Home Reports – most markedly so.  Many predicted aspirational sellers (in our view the majority of sellers) would leave the market if it became too expensive to sell – and they have done just that in their thousands.

As an aside, it seems pretty remarkable to me that a policy introduced to stop the non existent problem of multiple surveys can actually cause multiple surveys and still be declared to be a success by our Housing and Communities Minister.  If this mess is a success what on earth would constitute failure?

There is an easy fix to this shambles.  Just remove the compulsory nature of Home Reports – get rid of the civil fine for selling without one - so the public can freely decide whether to commission a Home Report or not.  Then we will soon see who is right in this debate – because the public will decide whether Home Reports are a good thing worth paying for or whether they are not.  

David Borrowman
Managing Partner
Caesar and Howie