Comment: Nearby solution to English house-buying woes

Comment: Nearby solution to English house-buying woes

By David Alexander

I am always wary of fellow Scotsmen with the attitude of “Here’s tae us/wha’s like us?” It tends to smack of a sense of insecurity rather than self-confidence.

However, there are some areas in which Scotland is superior, especially to our nearest and (sometimes) dearest neighbour and of these our house-buying system is at or very near the top of the list.

Hence I questioned the need for the latest of this government’s many “consultations” – this one on gazumping, gazundering, housing “chains” and other negative aspects of buying and selling in England and Wales.

The simplest, least expensive and most productive course of action would be to cross the Border and hold an instructive meeting with Scottish property professionals.

Indeed, not only has the Scottish system been superior to the English one for many years but the gap between the two has actually widened as a result of the introduction of “home reports”, which are supplied to every party which has formally submitted an “expression of interest” in a house or flat.

This has been a blessing to prospective buyers – especially first-time buyers – because it has negated the previous process whereby everyone who put in an offer for a property was compelled (or strongly advised) to have a valuation carried out by a chartered surveyor beforehand, leading to those whose offers were unsuccessful being out of pocket as well as stressed.

During earlier periods of local “booms” in Edinburgh, it was not uncommon to hear of prospective buyers shelling out for valuation fees for seven different properties – and still being unsuccessful.

But best of all is the fact that the mainstay of the Scottish system is “my word is my bond” (unusual nowadays, I know, but there you are). An acceptable verbal offer is sufficient to secure a bargain (as long as it is quickly followed up by a formal written offer, of course).

True, the deal is not complete until missives have been concluded (in England, called “exchange of contracts”) and a few less-than-honest vendors have attempted to use this period to wriggle out of a sale or cancel the earlier acceptance in favour of a later, superior offer.

However, should a client behave in this manner, Law Society rules would compel a solicitor to withdraw from acting on his or her behalf.

Critics do point to the “sealed bids” aspect of the Scottish system which, they claim, leads to some buyers paying way over the sum necessary to secure a property (20 per cent above the “offers over” or “uplift” price is not uncommon in Edinburgh).

Surely, however, the “true” market value of a house – or any commodity for that matter – is the figure someone is prepared to pay. And sealed bids operate on the basis of swings and roundabouts.

By implication, any buyer will one day become a seller and if someone paid over the odds for a house, they are likely to be more than compensated when the time comes for them to sell it (assuming it was properly maintained). There’s a lot of truth in the old adage that “a house difficult to buy is a house easy to sell”.

It did look likely for a while that fixed prices might become the norm, even in Edinburgh, where some prime New Town properties were offered for sale on this basis in addition to some of our lower-priced market towns where the practice is more common.

However, that turned out to be a temporary symptom of the fall-out from the financial crash when properties struggled to find a buyer. The capital’s market is currently buoyant and the practice of listing most properties at “upset” prices has been re-established, with perhaps the exception of modern suburban estates.

So my message to the Westminster Communities Secretary, Sajid Javid, who has called for “evidence” on the English system, is to come up and see how Scotland does things. In house-buying, if in nothing else (eg international football) it really is a case of “Here’s tae us/wha’s like us?”

Originally published in The Scotsman, 26 October 2017

Photo via Adam Wilson