Ross + Liddell

Despite the government’s recent decision to drop a similar mandatory scheme for England and Wales, despite a disastrous pilot scheme and despite a slew of serious concerns raised by various professional organisations, the Scottish Executive has reaffirmed its determination to proceed with the introduction of a single survey system for house purchases early in 2008.

Yet a serious flaw of the Housing (Scotland) Bill is its proposal that the individual responsible for marketing a house must comply with any request by a potential buyer for a copy of all relevant documents, unless the selling agent ‘reasonably believes’: that the person making the request is unlikely to have sufficient means to buy the house; is not genuinely interested in buying the house or is not a person to whom the seller is likely to be prepared to sell the house.

Just how a selling agent is expected to determine such matters is not, of course, addressed.

Another flaw of the Bill is the selling agents will be required to provide information on ‘any matter connected with the house, or the sale of a house, that would be of interest to potential buyers’. Once again, no guidance is given about how an agent is expected to determine what information will be of interest to potential buyers. In practice, therefore, sellers will need to have exhaustive details about their house to give to potential buyers in order to comply with the Bill.

The single survey system will most likely give property managers a major headache because it is likely that, in practice, there will be numerous instances where a surveyor commissioned by a property seller to produce a single survey will be required to contact the property manager for various details about the condition of the overall building, particularly those aspects of the building, such as the stairwell and the roof, which are under common ownership.

The property manager might well be reluctant to divulge such information to the surveyor. There might, for example, be issues about the condition of the property that require investigation, such as whether or not the roof is in need of repair, or whether the common stairwell might require a damp proof course treatment.

Or a property manager’s reluctance to assist a surveyor might stem from the not-uncommon fact that, at any point in time, there might be a sum of money outstanding so that a manager will choose to delay processing any request for information until such time as the surveyor’s client settles an outstanding bill.

And in addition to a reluctance to divulge information, it is possible that property managers might be prevented from furnishing surveyors with certain information about the condition of the property by the Data Protection Act which could require that the manager must obtain written permission to share information from all the other property owners with an interest in the common aspects of the property.

But even with a property managers’ agreement to divulge information, it is by no means certain that a single survey will provide the extent of detail about a property’s structural condition that the Executive seems to think. Rather, the single survey is likely to be broadly equivalent to the existing Scheme II type survey and it will not, for example, go into any detail about the condition of a property’s underfloor areas.

Of course, should a single survey indeed highlight a series of repairs necessary to a property, then it is unlikely to be welcomed by those sellers required to stump up the £500-£700 for the privilege of being told that their property is in a poor state of repair and requires a substantial sum of money to carry out the work required. Such a report would make their property much harder to sell and, thereby, lessen the prospect of the seller successfully recouping the cost of the survey in the first place.

And how well will the single survey work when house prices are falling rather than rising? After all, the single survey is designed to work on the principle that a seller will commission and pay for it, it will then be distributed to interested buyers and then the seller will only recoup the cost of the single survey once it is sold, at which point the survey is paid for by the successful buyer.

That means, therefore, that, should the property remain unsold, then the seller remains out of pocket. In a stagnant housing market, the period a seller could remain out of pocket could easily run to months. And with a single survey likely to cost somewhere around £500-£700 for the average property, that represents a substantial sum to be out of pocket for such an extended period of time.

But the biggest flaw of the single survey system is the fact that it seeks to act in the best interests of both the buyer and seller. That is just not possible because sellers want to get as much for the property as they can while buyers want to secure it as cheaply as they can.

As such, the headaches produced by the introduction of a single survey for buying and selling houses would not be confined to property managers and surveyors - but would likely be shared amongst all professionals involved in the process, including conveyancing lawyers and estate agents. Indeed, the only people convinced of the merits of the proposed system would appear to be Scottish Executive ministers.

Jack Fulton is a Director at Ross + Liddell property managers www.ross-liddell.com

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