The housing market across Europe varies greatly. While overseas specialists point to the differences in the growing Bulgarian, French and Spanish markets, there are also marked differences between the English and Scottish housing markets.
Improvements to the way in which houses are bought and sold are being sought by both the English and Scottish governments, according to a recent review of the market by the Council of Mortgage Lenders (CML). But while both governments are currently pursuing different methods of reform to tackle the issues surrounding the house buying process, mortgage lenders may find themselves having to adhere to two different sets of reforms.
Addressing the issues
In England and Wales, the government’s scaled-down plans for reform had originally intended to address the problems of gazumping, delays in the home buying process and the number of sales that collapse. In Scotland however, the onus is looking to address disrepair in the private housing stock, the commissioning of multiple surveys on the same property and the setting of low thresholds for bidding by sellers to try and drum up interest rates, which will undoubtedly have an impact on borrowers, lenders and brokers.
Home buying and selling in Scotland is a very different process to that of England and Wales, and in many ways, has been claimed to better manage the problems facing borrowers. For example, the blind bidding system in Scotland, coupled with the binding contract that ensues after an offer has been made and accepted, means the speed of the process and the chains of buyers and sellers have not raised the same concerns as they have in England. Indeed in the run up to the initial Home Information Pack (HIPs) plans, many people viewed this as a good model to follow.
One of the key difference is the fact that the Scottish executive is proposing a combination of a single survey and a purchaser’s information pack (PIP). While the content of the survey has yet to be finalised, the aim of the reforms is that the seller will commission it with the liability of the surveyor passing to the buyer and lender when the property is sold.
A spokesperson for the CML said: “By and large, the Scottish executive appears to be taking a more pragmatic approach to reform than the measures proposed for England and Wales. Only time will tell if the systems proposed for England and Scotland are the right ones, and if they will address the problems associated with home buying in their respective countries.”
Key differences
While the objective of each government is to overhaul elements of the home buying process, there are a number of key differences. The first is that unlike the Home Condition Report (HCR) proposed for England and Wales, the single survey in Scotland is likely to contain a valuation. Scotland is also unlikely to create a single surveys database or have a home inspector regime as planned for England and Wales.
Jonathan Cornell, director at Hamptons International Mortgages said: “Scotland certainly has a more efficient system as it has one that negates gazumping, which means less wasted time, transactions and money. In England and Wales, what HIPs set out to do was tackle the issue of gazumping, but now it is unclear what exactly is going on with HIPs.”
