Ok, so we may be biased, but in our view Scotland’s house buying system is among the best in the world.
So good, in fact, that it could be a blueprint for the rest of the UK.
Every so often some industry body or spokesman south of the border suggests that England and Wales should co-opt the Scottish system in its entirety. It is understood that the Law Society in England are looking at the Scottish system to see if it, or parts of it, should be introduced south of the border.
Among the benefits, it is pointed out, are the blind bidding system, the morally (if not legally) binding nature of accepting an offer (with the usually swifter concluding of missives/contract thereafter), solicitor’s rules that largely prevent gazumping and the system of Home Reports which has ended the need for multiple surveys and which sets an independent valuation on a property.
The Scottish system works because it provides transparency from the outset, allowing potential purchasers to make an informed offer, which is key in achieving quicker, smoother transactions. It may be the case that people in Scotland are generally happier to do the correct thing (and may be guided by their solicitors as to what is and is not correct).
Before marketing their homes, sellers have to commission a Home Report, which includes a basic survey, an energy performance certificate and a completed property questionnaire that provides information about the property.
This ended the practice, still prevalent south of the border, of each prospective buyer having to obtain their own survey and potentially discovering problems that may lead to their offer falling through.
This upfront approach means missives can be exchanged in a few weeks, or sooner if the buyer does not require a mortgage.
The first stage in this process is when a formal offer is submitted by a buyer’s solicitor and accepted by the seller’s.
After being verbally accepted, the seller should not seek a higher price either from the purchaser or any other interested party. If the seller accepts the buyer’s offer, then changes their mind, their legal representative may have to walk away from the sale.
A buyer can walk away from the agreement at any point, but this is unusual. Because lending and the Home Report are sourced ahead of an offer being made and accepted, buyers have most of the relevant information they need up-front.
In contrast, south of the border, where these safeguards are not in place, sales frequently fall through. Recent estimates have put the fall-through rate as high as 34%. One transaction falling apart can lead to the whole chain of related transactions doing likewise. This means that it can be very hard for someone moving to Scotland and wanting to buy here without having exchanged contracts in England (something that often happens just a few days before the move). However, that does not mean the Scottish system is perfect.
For example, it is a common fallacy that a verbal offer in Scotland is legally binding. In fact, either party can still walk away without penalty until the missives are exchanged.
Moreover, the Home Report and the valuation are costs borne by the seller, of up to £2,000, although they have the advantage of not usually having to obtain one if they are buying elsewhere.
The price of a property in Scotland is often set by the valuation, with the seller inviting offers over an amount that is often just below valuation. As can be seen currently, where the market is very hot at present, it can lead to a price being achieved way over valuation. In England the pricing structure is often different.
Scotland’s way can seem fairer, although a lack of stock has recently meant that there are more buyers chasing fewer properties, and bids are becoming more competitive in many areas of Scotland, with reports of offers in some areas of Glasgow being accepted at 30 per cent more than the valuation.
To have your home valued by trusted experts, call Purdie & Co on 0131 346 7240 or visit www.purdiesolicitors.co.uk