How not to buy a house in the Southside

A year ago I was lucky enough to be in a position where my partner and I were ready to buy our first home in Glasgow. I approached this task with charming naivety. 

I thought we must have gotten lucky; there seemed to be no housing shortage when we began to search. Browsing estate agents’ websites, we were greeted by page after page of lovely properties available in our price range. Quickly, we alighted on a large two-bed, top-floor tenement flat, overlooking leafy Queen’s Park. It was valued at £150,000 in the accompanying home report. 

I thought it would be simple. I was vaguely acquainted with demands of Scotland’s ‘offers over’ system but didn’t foresee it to be much of an obstacle. I told myself: ‘just offer 8% above home report, inform the seller that you’re a first time buyer who can move in quickly and intends on actually living in this property, and you’ll have a good chance of being near the top’. My solicitor laughed when I clued them in on the plan. 

I brushed off their reaction as being long in the tooth. After all, my offer was fair. Why would I offer tens of thousands of pounds over what experts in the market believed the home was worth? 

To absolutely no one’s surprise except my own, I don’t currently live in Queen’s Park — my £162,000 offer didn’t come close to being considered. 

There are two main elements to the housing crisis in Scotland. One is shortage: not enough new houses are built. The other is affordability: what’s on the market is increasingly out of reach for large swathes of people. And when it comes to home ownership, two particularly peculiar mechanisms, unique to the Scottish property market, are exacerbating this unattainability. Home reports, let me introduce you to ‘offers over’ and ‘blind bidding’. 

In particularly popular areas, prospective buyers must engage in a bizarre, stressful and often disappointing rigamarole which sees them essentially forced into blind auctions. Bidders are asked to stump up — at minimum — tens of thousands of pounds more on a potential property than its advertised market value, in order to have a sliver of a chance of winning it. 

In a city like Glasgow, Scotland’s largest with multiple neighbourhoods seen as desirable all while experiencing a housing emergency, this system runs especially rampant. Anecdotally, we can probably all recount tales of a small flat going for baffling amounts. Thirty percent over home report in G4? Yup. Partick averaging 15% over — that too. For those entering the market, it can be demoralising. But I want to get to the bottom of how this all came about and what it means for Glaswegians today. 

It started with the crash

How did we get here? Well, like with many modern economic issues, the tipping point happened in 2008, post-crash. The Scottish Government introduced ‘home reports’ — a handy document compiling key information about a property up for sale — and made sellers provide them to potential buyers before offers are placed. 

Included in home reports is a valuation of the property — unlike in England and Wales, the seller doesn’t have to cough up to produce this. This valuation (conducted by a chartered surveyor and assessed via the condition of the property, the area, and the current market), is what banks use to decide mortgages. 

But in Scotland, there was already another system in place: offers over and blind bidding. Add to these the mandatory home report and suddenly, the valuation of the house is taken as a starting point, rather than a fixed price. If you like a house, you’re given its value and then invited to submit your absolute best offer on a certain closing date, in a sealed auction. One is then picked from the bunch. 

As you can imagine, asking a gaggle of people to blindly compete with other buyers for a property can push the eventual purchase price sky high. According to Dr Philip O’Brien at the University of Glasgow, a senior lecturer in Urban Studies and Social Policy, whereas open auctions are a widely-accepted way to determine the market value of something, these sealed auctions can “inflate values” as people are risk-averse and don’t want to lose out on something desirable. 

In Glasgow, this combination of the home report being available up front plus a sealed auction has led to “staggering” amounts being offered, says Dean Fleming, a mortgage and protection expert based on West George Street. He says the current system “favours the rich and people who’ve got inheritance”. First-time buyers are losing out, big time, especially low-income and lower middle-class Glaswegians, whose salaries can’t withstand the challenges from buyers who have family wealth, or have built up equity from previous properties or investments.

Particular hot spots for the offers over system running rampant are the West End (no surprise there), and parts of the Southside, where a “postcode premium" has entrenched, says Fleming. 

A graph is coming

Now, it’s an extremely privileged position to be in to buy a house. I seek no sympathy in writing this and eventually found a flat I’m happy in. But the impact of Scotland’s unique(ly hellish?) property market has not been mapped. Research on the trends caused by offers over is felt — see the spectre of the ‘Southside gentrifier’ — but it hasn’t been shown. So I’ve used my own data to build a picture of what’s going on in Glasgow.