Snag with the Single Survey Scheme
The Housing Improvement Task Force (HITF) was set up by the Scottish Executive to review the house buying and selling system in Scotland. The HITF concluded that it was in the public interest to introduce a single survey, commissioned by the seller but ultimately relied upon by the buyer. The Single Survey Steering Group was established to ‘pilot’ the single survey and here Ian C Gillies, a member of the Steering Group, provides an update on its progress.
The Communities Minister, Malcolm Chisholm, announced in March 2005 that the proposed single survey scheme would become Mandatory in 2007, despite a poor response during the pilot when only 73 single surveys were commissioned throughout the four pilot areas, over an eight month period.
The Scottish Executive is convinced that the introduction of a mandatory single survey scheme will greatly assist in achieving their 3 objectives:
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• better information to both the buyer and seller on the condition of the property which will lead to an improvement in the condition of the private housing stock in Scotland
• eradication of setting low upset prices by estate agents and solicitors
• eradication of multiple surveys
Whilst the objectives are commendable, one must question why there was such a low uptake during the period of the pilot. Various suggestions have been put forward including:
• No support from the selling agents, i.e. estate agents & solicitors
I think it is fair to say the majority of solicitors/estate agents were less than enthusiastic regarding the new scheme with particular concerns raised regarding ‘conflict of interest’. Was it reasonable to expect a purchaser to rely upon a survey and valuation commissioned by the seller?
• Upfront cost of the survey report to the seller, allied to the concern that the cost may not be recouped from the eventual purchaser.
Feedback leads me to believe that the purchaser’s solicitor, when submitting his formal offer, was introducing a clause which stated that the offer price included the cost of the single survey. In other words, the cost of the single survey will, in most cases, be borne by the seller.
• Survey too expensive
To assist with the pilot, the RICS agreed, on behalf of its member firms, to undertake the single surveys at a ‘minimum’ charge, often in the region of £350, in an effort to ensure the cost did not act as a disincentive to the seller to commission a survey. It is likely the average cost of a single survey once the system become mandatory will be in the region of £500- 750. If you consider that a surveyor will be unlikely to undertake more than 2 surveys in one day plus prepare the report, which extends to 25 pages, you can imagine the minimum charge is unlikely to be less than £500.
• Sellers fear what may be revealed by a detailed survey
Several sellers who commissioned single surveys during the pilot refused to make the survey available to prospective purchasers, presumably because the content of the report revealed problems which may have deterred a purchaser from proceeding to make an offer. It begs the question whether sellers will ‘shop around’ for the ‘best’ report or, more worryingly, carry out patch repairs and invite the surveyor to amend his report, which would place the surveyor in a very difficult position if he feels the repairs have not been carried out to the required standard.
• Market entered both the usual annual slow period and also a market down turn
Some sellers were concerned that they may instruct a single survey which could ‘sit’ for a few months until the market picked up, by which time it would be out of date. They would then require to commission an updated report, leading to more cost.
The pilot will be evaluated at the end of April and the Steering Group will then advise on all aspects of the implementation of the Purchasers Information Pack (PIP), including the single survey. The anticipated timescale of 2007 for the introduction of the PIP, including the single survey, appears optimistic.
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