Scotland - buyers Lender refuses sellers Home Report

BigAunty

In Scotland, it is the practice in property purchase that the seller provides a Home Report to the buyer. The report consists of three components:

• a single survey
• an energy report
• a property questionnaire.

We commissioned a HR from a national company that says it is regulated with RICS and whose surveyors are trained and qualified.

Now the buyer's lender has refused them a mortgage until we pay for another one as they say the company we use is not on the list of the ones that they approve. Not only that, this rejection came 6 weeks after we accepted the buyer's offer so seems quite tardy.

Has anyone heard of this issue before?

kingstreet

IMHO in such circumstances, the buyer should pay for a mortgage report and valuation by the lender's surveyor as would happen in England.

I don't think it's the vendor's responsibility to have a report acceptable to a particular lender.

One of the scots law specialists will be able to give you a better steer.

BigAunty

It's a buyers market so we are going to take the hit to keep the conveyancing process on track. It's also not the buyer's fault that their lender has some kind of blacklist on HR companies.

It's just a bit frustrating that I never anticipated that the HR report would be rejected, assuming that RICs approval was probably the main criteria. I did reject the estate agent's suggested supplier because the fee was so high but obviously it was a false economy now I will be paying twice (but then again, nothing to say the lender wouldn't have rejected the estate agent's choice either).

It's the first time I've gone through the property selling process since the Home Reports were introduced a few years back and I simply wasn't aware that lenders were in the habit of rejecting them.

googler

so...they ARE giving you their list before you go looking for another surveyor, aren't they?

BigAunty

googler wrote: »

so...they ARE giving you their list before you go looking for another surveyor, aren't they?

Yes, since the lender is not going to let our buyers proceed until we use one of their recommended survey/HR companies, we've no choice but use a company from their list. In Scotland, the HR must be produced upfront before the property is put on the market - it's not like we sellers know what lender our potential buyer will use, nor will we know which survey companies that each and every potential mortgage company may prefer.

The point is - why didn't I know that it is the practice of lenders to discount the home reports that accompany mortgage applications and what is the criteria for accepting or rejecting a company on their list?

Home Reports were introduced to stop the practice of buyers from having to pay for multiple surveys on multiple occasions as the offers over system means that the buyers can be outbid and not secure the property and it might have 10 bidders who each pay for a suvey. Now they seem to have merely moved on the multiple costs to the seller.

bris

It's not uncommon, and one of the reasons we want it abolished like it has been in England. HBR's can also time out for most lenders, so even if the surveyor is on their list, if the report is over 3 months old most will reject it for a more up to date survey.

rpc

It depends a lot on your choice of surveyor. There are plenty that are on the panels of all major lenders (but they may not be the cheapest). Evidently you didn't choose one of these surveyors or the buyer didn't choose a mainstream lender. **** happens.

The mortgage valuation report is much less work that the full home report so you shouldn't be paying double. It is common place to have to repeat the MVR anyway as most lenders have time limits on these.

Last time we moved, our solicitor said that

- if he was acting for a buyer he would ask the seller to cough up as the home report is their responsibility
- if he was acting for a seller then he would tell the buyer that they should foot the bill as it is their lender causing problems.

Although it would be nice to see this issue ironed out, a couple of hundred quid isn't much in the scale of a house purchase and the home reports make life much better for buyers. You still occasionally had this problem under the old system if the buyer rushed through a survey to make an offer, then went to the lender without having checked their panel.

BigAunty

Clearly, I didn't do my homework on this one as I also wasn't aware of lenders imposing a time limit on the Home Report, either, though it would make sense for some kind of basic time related condition.

When getting quotes from local estate agents to sell the property, one of them did claim that a rival estate agent forced its sellers to pay for another HR after a certain time period (which I assumed was either a fib by this estate agent get my business or a practice to extract more fees from the seller by estate agents).

What a rum thing, feel really disappointed that our conveyancing process was derailed so far along from accepting the offer and that I hadn't anticipated this.

We've got quite a long date until completion because of a request from another party in the chain but normally our missives would have been concluded around now based on the last time we bought property in Scotland which is much swifter than the English process.

BigAunty

rpc wrote: »

It depends a lot on your choice of surveyor. There are plenty that are on the panels of all major lenders (but they may not be the cheapest). Evidently you didn't choose one of these surveyors or the buyer didn't choose a mainstream lender. **** happens.

The mortgage valuation report is much less work that the full home report so you shouldn't be paying double. It is common place to have to repeat the MVR anyway as most lenders have time limits on these.

...

Are you talking about the Scottish system - because the valuation is an integral part of the HR survey, not an addendum?

We are paying pretty much the same fee as we paid before so our costs are doubled - the whole HR is being redone, the whole HR has been rejected.

googler

BigAunty wrote: »

Now the buyer's lender has refused them a mortgage until we pay for another one as they say the company we use is not on the list of the ones that they approve. Not only that, this rejection came 6 weeks after we accepted the buyer's offer so seems quite tardy.

I'm tempted to suggest that your solicitor should have been chasing the buyer's solicitor to remove the 'subject to Home Report' clause from their offer long before that.

Also sympathise with the view expressed earlier that if the buyer's lender isn't happy with the report you've provided, that your sol argues that they could pay for a revised one. You've satisfied your legal obligation, and provided a perfectly valid report in accordance with the current legislation, they're the ones being fussy.....

googler

BigAunty wrote: »

Clearly, I didn't do my homework on this one as I also wasn't aware of lenders imposing a time limit on the Home Report, either, though it would make sense for some kind of basic time related condition.

There's nothing in the legislation that imposes a time limit on a Home Report, but the mortgage lenders, whether through their council (CML), or independently, seem to have decided that 12 weeks is their limit, and that if a seller has an HR older than this, and a buyer (their borrower) has made an offer, that they'll insist on the valuation being 'refreshed' by the same surveyor as did the original report.

However, the same situation of 'who pays?' arises here - the lender is unhappy on behalf of their client, so why shouldn't they pay? Why do they insist that the seller pays, since the seller has fulfilled their legal obligations and provided a valid HR? There's nothing in the legislation that says a seller HAS to pay for a refresh, and I suspect that most, if not all, sellers, when confronted with a demand from a buyer's solicitor/lender that they cough up, will yield in order to keep their sale on track.....