Request the Home Report

So, you’ve found a property you want to buy. The first thing to do is request a Home Report. When it is known that a property is for sale (i.e., it is advertised) then the property should have a Home Report. The only exceptions to this are:

• Newly converted properties (they must not have been used in their converted state yet)
• New build properties being sold off-plan (see below, ‘Buying a New Build or Newly Converted Property)
• Dual-use homes (for example, properties with residential and non-residential sections)
• Seasonal holiday homes that cannot be used all-year round
• Properties that have been on the market prior to 1st December 2008.

The seller or estate agent should provide you with a Home Report within nine days of your request. However, the Law Society of Scotland recommend that buyers do not rely on a Home Report that is more than 12 weeks old, so it is worth checking this document is up to date before you proceed.

In a few instances, sellers do not have to provide a Home Report: if they do not believe the person(s) is interested in buying the property and/or have the finances to do so, or if they prefer not to sell to that person(s) (so long as they are not discriminating against the buyer).

The Home Report consists of three parts: a single survey and valuation; property questionnaire; an energy report.

Single Survey and Valuation

As the name suggests, this section provides information from a survey of the property. It tells the buyer more about the property, its general condition, features and likely repairs needed. Some may be marked as urgent or requiring future attention. At this point, buyers should seriously consider whether they can afford to take on the additional costs this would entail – they can walk away without financial penalty if not.

It also contains an estimate of the value of the property.

Property Questionnaire

This section provides additional information on the property, over sixteen categories. Here, buyers find out information such as:

• length of ownership
• what Council Tax Band the property is in
• any public right of ways, shared access arrangements and responsibilities
• parking
• if there have been issues which have had an impact on the property in the past (such as fire, floor or storm damage, or asbestos)
• whether the property has been extended or altered
• any major repairs that have been carried out (e.g. a new roof)
• any specialist works that have been carried out (e.g. for dry or wet rot, damp etc
• guarantees of any specialist works that have been carried out
• any preventative treatments that have been carried out for such issues
• any notices on the property (such as for planning applications, or those requiring maintenance or repairs)

Energy Report

Buyers find out the property’s Energy Performance Certificate, information on energy use and how much (on average) they can expect to spend in their energy bills.  The property is rated in terms of its environmental impact and carbon dioxide emissions. This section should also provide details of who to contact for advice on improving the energy efficiency of the property.

Note, new build properties being sold to first occupants will not require a Home Report, however an Energy Performance Certificate will still be available (see ‘Buying a New Build or Converted Property’, below) 

Note Interest

Buyers will need to instruct a Scottish firm of solicitors to act on their behalf if they wish to buy a property in Scotland. If the Home Report fits the buyer’s expectations, the next step is for buyers to instruct their solicitor to ‘Note Interest’ with the seller’s solicitor or estate agent. The seller will then ask for offers for their property; if many potential buyers have noted interest, the seller could set a closing date for offers. This gives buyers time to carefully consider their offer and ensure their finances are in place to proceed with the purchase- a particularly important point as the process can move quickly from offer acceptance to a binding contract (see ‘Missives’ below) without further input from the buyer; therefore if a buyer struggles to get their finances ready to buy the property, they could be liable to pay damages in the form of the legal fees that the seller has incurred.

If the market is slow and no closing date has been set, it could be that no other party has noted interest; here, it could be possible to negotiate a price with the seller, rather than make an offer.

Make an Offer

An offer must be sent in the form of a letter, through the buyer’s solicitor. It must contain a brief description of the property, the date the buyer would like to collect keys and move in (Date of Entry), the price they want to pay, any items they wish to buy from the seller (appliances or large items of furniture), and any other conditions attached to the offer.

If the seller agrees with an offer, their solicitor will return a ‘Qualified Acceptance’ letter, stating the seller accepts the offer under certain conditions (to be negotiated by the respective solicitors). Here, the process has reached an ‘Agreement in Principle’, such that both parties could walk away from the agreement without penalty. Generally, at this point Scottish Estate Agents will cease marketing the property so no further offers will be considered.

Missives

The buyer’s and seller’s solicitors will then exchange missives to negotiate the conditions of the property sale. Once both parties reach an agreement on these conditions, a binding contract is achieved; this is known as the ‘Conclusion of Missives’.

At the Conclusion of Missives, buyers have to be certain they can commit to the property purchase; if the buyer pulls out at or after this point, they are liable to pay significant damages to the seller to cover legal expenses.

It is also important to consider whether the buyer needs to insure the property at this point. Buyers often need to insure the property from the Conclusion of Missives, but on occasion the missives may state otherwise. It is therefore worth the buyer double checking with their solicitor to ensure they have the correct insurance in place at the correct time.

Conveyancing

Once a binding contract has been reached, the buyer’s solicitor can then begin the conveyancing process. The property’s deeds will be examined to ensure: the seller currently owns the property; there are no conditions or legal restrictions that will have an impact on how the buyer lives in or uses the property; the buyer is fully aware of any planning obligations attached to the property; if there is an existing mortgage on the property, this is paid off when ownership of the property is transferred to the buyer.

Settlement

Solicitors then agree a ‘Date of Entry’, when the buyer actually takes possession of the property. If a mortgage lender is involved, the buyer’s solicitor will confirm with them that the property is now in the buyer’s name, obtain the finances from the lender and collect the buyer’s money to be put towards the cost of the property. When the seller receives the money, the buyer’s solicitor will receive a document called a ‘Disposition’, which transfers ownership to the buyer, as well as the title deeds and keys.

Registration

Next, the deeds are added to the Land Register (previously the Sasine register in Scotland). The entry will detail: the current owner, price of the property, mortgage deeds (if any), and any conditions that impact the property. 

Fees and Expenses

As with any property transaction, there are considerable outlays involved in purchasing a property in Scotland. On top of the usual solicitors’ fees and deposit (if applicable), buyers must pay fees and taxes to the government when their ownership of the property is added to the land register, search fees on the property (during conveyancing), and Land and Buildings Transaction Tax (LBTT).

The most significant of these outlays will undoubtedly be LBTT. The amount of this tax is proportional to the price that the property purchased for and the type of property (whether it is residential, residential with additional dwellings, non-residential etc.). As a guide, buyers can expect to pay LBTT as follows:

Up to £145, 000: 0%
£145, 000- £250, 000: 2%
£250, 000 - £325, 000: 5%
£325, 000 - £750, 000: 10%
Over £750, 000: 12%

(figures correct as of November 2021)

Buying a New Build or Newly Converted Property

If the property you are interested in has been newly converted or is to being sold ‘off-plan’, the process of purchasing is slightly different. As mentioned above, the builder does not need to provide buyers with a Home Report; there should however be an Energy Performance Certificate provided.

Rather than making an offer to buy the house from the builder or seller for a certain price, the builder or seller will make an offer to sell the house to the buyer at a fixed price. This offer will detail a list of conditions which the buyer must agree to in order to buy the property. Before accepting the builder’s offer, the buyer must arrange their finances to enable them to buy the property; it is also advisable to seek legal advice to ensure the offer and conditions are fully understood.

Once the buyer accepts the builder’s offer, a legally binding contract has been reached. As with buying any other property in Scotland, if the buyer pulls out after this point or does not have the finances in place to proceed with the purchase, they are liable to pay significant damages to the builder. 

If you are thinking of buying or selling your home, you may find some of these services useful: