How does the Scottish system work?

Hoploz

Just out of interest, how does the house buying system work in Scotland?
I know they have 'offers over' and things go via solicitors from the initial offer onwards.
What is the significance of the Home Report Value?
Someone has mentioned on another thread the system avoids chains - how?

booksurr

for basic facts read:
http://lmgtfy.com/?q=scottish+house+buying+system

googler

Hoploz wrote: »

Just out of interest, how does the house buying system work in Scotland?

Too big a question. Too much to type.

I know they have 'offers over' and things go via solicitors from the initial offer onwards.

Yes.

What is the significance of the Home Report Value?

It's the valuation that a surveyor would typically arrive at if they'd been asked to value the property later in the process. It has the same significance. If you had a survey done AFTER making an offer, your lender would lend on the basis of that valuation. The lender still (typically) lends on the basis of the valuation, but the valuation is carried out earlier, and is available to all potential buyers.

Someone has mentioned on another thread the system avoids chains - how?

My understanding of the 'chain' in E&W is that someone at the bottom makes an offer, without any firm agreement on either the amount, the conditions, the inclusions in terms of fixtures and fittings, or - crucially - the completion date. There's not even any agreement on what form the contract will take. So the seller then faffs about looking for a house themselves, repeats the process, and you have a stack of people with no firm indication of when any will move. The chain.

In Scotland, an offer is made up of, typically, some standard contract clauses; an offer price; any terms and conditions applicable; inclusions and exclusions (white goods included, curtains excluded, for instance), and - an entry date.

If the offer is accepted, the seller has not only agreed on the sale price, but they've also agreed when they will hand over the house to the buyer. They've agreed the form that the contract will take, and agreed on what will be included as well as the bones of the house. It's pretty much all agreed upon at the offer stage. Whilst there might be some limited variance, and the variables, including the entry date, could be varied in later negotiation, in most cases, the sale goes through on the basis agreed in the offer. When sellers accept an offer, they pretty much know that they HAVE to be out on the entry date in the offer, and can plan their onward move (if necessary) accordingly.

Some guides to the Scottish system on the internut are out of date (don't take account of Home Reports), some are plain wrong.

googler

First step in buying; hire a solicitor, one who is experienced in the market where you want to buy. If you want to make an offer in a hurry, if there's competition for a house you like, you want to be ready.

Hoploz

That's interesting, thank you. The entry date is a good point. I wonder if it's normal for it all to come together, or whether people frequently find themselves stuck homeless as they've had to move out before the pir vendor is ready. I suppose changing your entry date further down the line might be less challenging as you would not be risking losing the deal, as it is all pretty binding from the beginning.

I have no plans to buy in Scotland, I am just interested, as problems are so common with the english system. I think other people are probably interested too.

AdrianC

googler wrote: »

My understanding of the 'chain' in E&W is that someone at the bottom makes an offer, without any firm agreement on either the amount, the conditions, the inclusions in terms of fixtures and fittings, or - crucially - the completion date. There's not even any agreement on what form the contract will take. So the seller then faffs about looking for a house themselves, repeats the process, and you have a stack of people with no firm indication of when any will move. The chain.

Not quite. All the legal procedure and timescale is the same whether somebody's an FTB, an investor, or needing to sell their own place first.

The chain comes in only for that last buyer - you want to move from a £200k house to a £300k house. You need to raise £100k in cash, and the other £200k comes straight from the buyer of your old place. Obviously, you need them to pay to be able to pay your vendor.

Chains can work smoothly, or they can have lots of problems - but they'd be the same problems for one buyer buing from one seller with nobody dependent on either side. The dependencies only magnify the problems.

So how does the Scottish system work, where you need the money from the place you're selling in order to buy the one you're moving to?

Pixie5740

AdrianC wrote: »

So how does the Scottish system work, where you need the money from the place you're selling in order to buy the one you're moving to?

It used to be that the vendor's solicitor would automatically reject all offers made where the buyer didn't have funds available to complete the purchase which they wouldn't have if they were waiting for someone to buy their home.


There is a bit more flexibility now but buyers really need to ensure that the missives have been concluded on their own property (assuming it's not a FTB, BTL investor or a second home) before making an offer on a property they want to buy.

comeandgo

You must have the money for purchase. You either sell your house prior to looking for new property or you get a bridging loan.

Hoploz

Wow that is different!

AdrianC

Pixie5740 wrote: »

It used to be that the vendor's solicitor would automatically reject all offers made where the buyer didn't have funds available to complete the purchase which they wouldn't have if they were waiting for someone to buy their home.

So you'd have to move to rented between the sale of your old place and the purchase of the new one?

There is a bit more flexibility now but buyers really need to ensure that the missives have been concluded on their own property (assuming it's not a FTB, BTL investor or a second home) before making an offer on a property they want to buy.

So there's still a chain, with everybody financially relying on everybody else doing what they're expected to do. And, because of that, it wouldn't help the situation in the recent thread where the buyer at the start of the chain had exchanged but failed to complete.

The only difference is that the exhcange is moved much further forward in the process, with - presumably - the legal costs incurred even earlier?

So, to take a situation like our neighbours, who put their house on the market, didn't get any offers at a price that would allow them to do what they wanted to do, so have decided to stay put - they'd have incurred much higher costs?

rpc

Hoploz wrote: »

I wonder if it's normal for it all to come together, or whether people frequently find themselves stuck homeless as they've had to move out before the pir vendor is ready.

Both.

It can happen on the same day or you move into mum&dad's for a week or go on holiday or all sorts.

I have only ever moved by trying to sell first and setting a long completion date. In my last move, we were selling two properties and buying one. One property didn't sell but we could take a larger mortgage to cover the gap with no early redemption charges on the extra bit.

First time round, we completed on both the same day.

I suppose changing your entry date further down the line might be less challenging as you would not be risking losing the deal, as it is all pretty binding from the beginning.

The entry date is part of the offer and is as binding as any other part. You can ask to change it, but the other side it not obliged to. Prior to conclusion of missives, you can still withdraw. After missives are concluded, you are committed.

I would say that changing entry date during missives is probably harder than doing it pre-exchange in England because you are really at the draft contract stage as soon as the offer is accepted.

AdrianC wrote: »

The only difference is that the exhcange is moved much further forward in the process, with - presumably - the legal costs incurred even earlier?

So, to take a situation like our neighbours, who put their house on the market, didn't get any offers at a price that would allow them to do what they wanted to do, so have decided to stay put - they'd have incurred much higher costs?

That's up to you and your solicitor, but I have never paid anything other than survey, home report and advertising costs before completion.

Some are no sale no fee, others charge a fixed amount (excluding advertising costs incurred which are normally payable in advance). Purchases are usually no buy no fee (i.e. no charge per offer made) provided that you do go on to buy using that solicitor.Again,