It’s fair to say the old rivalry between Scotland and England is as strong and healthy as ever. Take a millennia or two of battles, bitterness and the occasional break for cups of tea (or a wee dram) and you arrive in 2007, with very individual countries making up one United Kingdom. Differing legal, education and health systems help us retain that individuality and offer each other an alternative view on how things can work.
The homebuying process is a case in point. Scotland has ‘offers over’, binding contracts and blind bidding, while England has asking prices, non-binding offers and open bidding, which can lead to gazumping and bidding wars. Both systems have their strengths and weaknesses, so what can be learned from the other side?
A fairer system?
Colin McCallum, chief executive of the Mortgage Intermediary Alliance Scotland, points out the best feature in the Scottish market is that the chance for gazumping is almost non-existent, as once an offer is made on a property it is a legally binding contract. He adds: “The process is speedy and a vendor can have a property on the market on a Friday and it will be sold two weeks later, with the transaction completed in three months. In England, if someone drops out, the whole chain disintegrates.”
Ashley Clark, director of Need An Adviser.com, agrees that the certainty the Scottish system offers both the vendor and buyer is important. “I don’t think the purchase is particularly well protected in England. There is no recourse, bearing in mind people are paying all kinds of fees, and it’s still like roulette whether you complete
or not.
“Scotland offers a clearer route to buying property. It seems a fairer system, as it’s not written effectively by thousands of years of common law. The law makers in Scotland seem to have more of an eye on consumer protection. In England, it seems based more on common law rather than the law makers laying it down in statute.”
Lacking flexibility
Chris Andrews, mortgage adviser for Brooks MacDonald Financial Consulting Ltd, says the English house purchase system has a flexibility that Scotland lacks, as people do not have to get valuations on every house they consider before making an offer. However, he notes lenders’ attitude to Scotland appears to be different: “Lenders seem to pull out all the stops to get an offer out in 28 days for a Scottish purchase. They make an offer in the correct turnaround time because of the different legalities and binding offers. I’ve had offers in England wait much longer, despite our insistence we need the offer quickly.”
McCallum admits the blind auction aspect of the Scottish system is not liked by all, as there is no way of knowing what someone else has offered, which can lead to some buyers bidding too high. Despite the negatives that exist in each system, whether integration would help, or even be possible, is unlikely in his view. “It would have to be a wholesale change, as I don’t think it could be done in a piecemeal fashion. There is a case for one set of rules, yet I feel, to an extent, that Scotland is jealously defending its legal system, which dictates the procedure of purchase.”
HIP shake up
England and Wales are certainly about to see a shake up of the house buying system with the contentious introduction of Home Information Packs (HIPs).
James Cotton, mortgage specialist for London & Country, says the government is essentially trying to find a middle ground to allow the market to retain its flexibility, but enable consumers to hold back from committing to a major purchase without knowing the whole history of a property. “In England, you can agree an offer, but you don’t know what you’re getting into until much further down the line and that’s when things fall through.”
Cotton adds the changes to electronic conveyancing and the Land Registry will also help speed up the process. “The Land Registry now holds deeds and other documents online. It has introduced a ‘Chain Matrix’, which allows someone to see what stage the transaction is at, and is all part of the Land Registry’s move to make transactions more high-tech.
“Nevertheless, which system is better depends on peoples’ experience. If you’ve been burned by the English system, you might think the Scottish one is better and vice versa. Buying property is a large and cumbersome process and there’s no doubt the English system needs reform in the way the government hopes HIPs will.”
Whether you firmly believe the Scottish or English system is preferable or would rather have a hybrid of the two, lessons can be learned from both. Though neither is perfect, the industry as a whole and those active in both markets should be open to new ideas. Looking beyond your own market is always of benefit, to bring fresh ideas and prevent stagnation.
