The Government’s controversial home information packs (Hips) are to be
extended to cover all properties by December 14 despite warnings from the
industry that the market could “grind to a halt”.
Yvette Cooper, the Housing Minister, said yesterday that the extension to all
two-bedroom and one-bedroom properties would help first-time buyers. But
surveyors gave warning that the extra £350 to £500 cost of the packs to
sellers would wipe 300,000 properties off estate agents’ books within
months.
Hips, which were first introduced for four-bedroom houses in August, aim to
speed up the selling process by giving potential buyers advance information.
The packs, which include energy performance certificates, title deeds land
search and leasehold details, were extended to three-bedroom properties in
September.
The policy has already been delayed twice because of the lack of assessors,
and the housing industry says that the first wave of Hips has affected the
market.
The Royal Institute of Chartered Surveyors claimed yesterday that 67 per cent
of its members had seen a fall in the number of new properties with three or
more bedrooms coming on to the market compared with the previous year. The
fall was greater for those with three and four bedrooms than for smaller
houses, it maintained. Jeremy Leaf, a spokesman for the institute, said:
“With prospective buyers and sellers taking a wait-and-see approach to
moving, activity in the housing market is grinding to a halt.”
Ministers have also come under pressure from Hip providers who have invested
money in training assessors and wanted the scheme to be brought forward for
all homes.
Ms Cooper said that 60 per cent of the market was already covered by Hips and
there were enough accredited assessors to provide certificates for all
properties bought and sold. She also claimed that the Government had
independent evidence that any impact on the market would be temporary.
Grant Shapps, the Shadow Housing Minister, said: “At a time when the housing
market is under great pressure, the last thing anyone needs is the
introduction of Hips on one and two-bedroom homes. This latest move will
dismay hard-working families because it increases instability in an already
fragile market.”
Earlier Ms Cooper backed plans from John Calcutt, the former head of English
Partnerships, to fast-track the building of hundreds of thousands of homes
in town centres and cities over the next eight years.
The Calcutt review on housing provision says that developers should be given
much tighter timetables to build homes and would only be given access to
public land if approved by independent customer satisfaction surveys.
Mr Calcutt’s report concludes that Gordon Brown’s ambition to build 240,000
homes a year by 2016 and create eco-towns is attainable without wrecking the
green belt, but only if the Government lays down much stricter guidelines
for property developers and councils to ensure that homes are built more
speedily and companies do not “bank” land. In addition companies would only
be given access to public land if approved by independent consumer
satisfaction surveys.
Ms Cooper backed John Calcutt’s recommendations for tougher planning laws on
building starts. Developers only have to dig a trench within three years of
signing a contract before planning permission expires. But there are no
completion deadlines. Ms Cooper will consider proposals that firms would
have to lay out a much greater capital investment initially and planning
permission could be limited to one or two years.
In addition the Government will boost development on spare public-sector land
by ensuring that a tight timetable is part of any contract between a council
and a private developer. Ms Cooper is likely to endorse plans for town halls
to enter contracts with just one developer for both social and private
housing across an entire council.
Mr Calcutt’s plan could lead to more high-rise developments and fewer gardens
in town centres with some building extending at town edges. But he opposes
urban sprawl generally and has recommended protecting green belt land and
building instead on brownfield and undeveloped greenfield sites. “New
settlements and edge of town development will be needed if the target is to
be met, but we must avoid urban sprawl: it is wasteful, both of valuable
green space and of potential value in our urban areas,” Mr Calcutt said.
Ms Cooper said: “We urgently need to build more affordable, greener homes for
this and future generations. But we cannot afford to wait for developers who
may drag their feet once planning permission has been granted, hoping to
benefit from increases in land value. We also want to stamp out any
potential for hidden land banking by making sure that land assets are
completely transparent in financial statements.”
Moving home typically costs upwards of 10k. Many people are put off moving by this huge cost. Anyone half serious wont be put off by an extra couple of hundred pounds - what nonsense. In fact, it will keep homes off the market where the seller is trying their luck with silly high prices and this will lead to less sellers who pull out in future and decide to stay put. A great idea
Andrew Banks, London, UK
Working in the industry, I have had first hand experience in the issue of HIPS since their unfortunate intitial roll out earlier in the autumn. We also have had little or no interest from buyers in seeing a HIP. Funny how this was bought about for them! Again, we also note that most buyers solicitors are not interested in seeing them either. As auctioneers, we already made available a genuine set of legal documents, provided by the sellers solicitors, the most qualified people to provide such information. These packs were always made fully available to any interested party on the basis that they could get the full information before committing at auction. Imagine the confusion with the introduciton of HIPs now instead which we must supply in line with these ridiculous, ill thought out regulations that seem to change with every passing wind. The HIP is designed to give a "snapshot" of the situation and is not legally binding. Great use therefore in a legally binding auction sale!
Andrew, Colchester,
In reply to B Ward, Torbay, you only have to read the comments from Roger, London and Jeff Reigate. for the answer to the benefits of HIPS. No one likes change but we have to move with the times,
My cousin is an estate agent and he says he is very impressed with the efficiency and speed of ordering a Hip for his clients. It certainly saves 1st time buyers the expense of a survey and stops time wasters.
Several years ago we paid out for 3 different surveys on 3 different houses and were guzumped each time, that would never had happened with Hips.
Lynn, Hampshire
Lynn, Hampshire,
The Europe Economics report, HIPs - Housing Market Analysis, conclusions state that:
"... HIPs may have had an additional modest-but-material effect on listings activity but no discernable impact on transactions, mortgages, or prices."
"Going forward, with further potentially even more significant factors adding to pressures upon the market - such as unwinding of fixed rate mortgages, the credit crunch and a slowing economy, the effects of HIPS (if any) on prices, mortgages and transactions is likely to be an even more limited proportion of the total impact, and even less possible in practice to measure separately - it will just be to small to notice..."
HIP Provider, Staffs, UK
Estate agents and associates do not like the HIPS as it reduces transaction numbers (and so commissions) BUT lower transactions do not make big news or undermine confidence.
What does undermine confidence is falling house prices. Given demand has fallen off a cliff, the only thing preventing the market from falling is a lack of supply (on the market, not as in defined as not enough houses). This helps the government. I would take the comments from VI that HIPs is undermining the market with a pinch of salt....
their interests are in no way aligned with FTBs, because FTBs would want a fall, while these VIs want higher prices AND things to sell so they can carry on making thousands for the following skills: knowing how to drive a car, use a phone, use keys and make up why we should pay more than the house is worth.
Of course buyers solicitors do not trust the packs...by accepting them it is a bit less they can charge. The govt wanted a more useful pack but the VIs stopped it.
Raj, London,
p.s. and once the other two levels of pack are on the market the long run distortion is worse if it is then not applied toall houses. I say that even though I really do think the timing of the introduction is to support house prices in the one of the categories of housing now at risk of falls.
Raj, London,
If you were about to spend £250K of your own money on a house, would you trust a piece of paper provided by the seller? Of course you wouldn't. You will still have to get your own survey done. The only functions of the HIP are to provide a revenue stream to the Government and give employment to numpties - who then pay tax to the Government.
Sarah, Dorking,
i am an estate agent and after reading this, i think it will waist a lot of time for home sellers and buyers and put a lot of people off buying and moving in the UK as why should they have to pay a large price to sell there property.
Amit, chadwell heath, essex
The phasing in of Home Information Packs continues during December to include properties with 2 bedrooms or less.
What this means is that from 14th December all properties being offered for sale from that starting date will need to have commissioned a Home Information Pack at a cost of about £350 to the seller.
This document is to be available for inspection, or email, free of charge to potential purchasers and will contain about 32 pages of documents including legal titles and searches plus an Energy Performance Certificate showing how energy efficient or otherwise the property is.
HIPs as we now call them have been in force for larger properties for a few months now so estate agent are getting used to them. But the total indifference and unawareness of the public to this added bureaucracy has really surprised us, contrary to the propaganda put out by the government claiming they have been well received.
Few of our purchasers have so far asked to see the pack as they wisely regard legal documentation best left to their solicitor and the energy efficiency of the property does not affect whether or not they will buy the house as consideration like location, size and appearance take a much higher priority.
What has also surprised us is the reluctance of buyers solicitors to accept the contents of the pack and most are currently duplicating enquiries and searches at extra cost to their purchasing clients. This further devalues the very existence of the pack which a series of ill informed politicians and civil servants over a 10 year period thought would speed up the awful legal process.
Up till now home sellers had the luxury of a ‘ no sale no fee’ culture when dealing with us estate agents which still applies as far as our fees go, but this £300 + Hip fee has to be found sale or no sale despite any misleading advertisement you may see advertising ‘Free HIPs’. This tiny amount is thought by some to discourage the so called ‘speculative seller ‘ which many estimate as perhaps 25% of the properties offered for sale. Whilst this may improve the cancellation or withdrawal rate of agreed sales a 25%, or anything like it ,cut in any supply would have a profound effect on the market and prices would rise even further.
Incidentally, the speculative seller is not the monster implied but someone who says to us “if you can get this price†or “ If I can buy that house†they will sell their own. I honestly hope that these vendors maintain their common sense and are not deterred by the perceived extra paper work (which falls to the estate agent to sort out) and the small extra fee, as very little in life is more important than living where you want to live.
As always, the cynic in me sees the reason behind all this nonsense as financial. Eventually those found to be selling or buying non energy efficient homes, in the name of ‘Global Warming’ but to the benefit of the exchequer, will probably, pay more tax.
Ron Kennor is General Manager of Robinson Jackson Estate Agencies
Ron Kennor , Sidcup, Uk
I would ask Lynn of Hampshire, who's husband blew £10k on becoming a quasi-surveyor, just what benefit HIP's have proved to have?
B Ward, Torbay, UK
My Husband has spent the last 9 months training to be a home inspector and it has taken alot of work and studying to get to the stage of being able to finally sit his final ABBE exam.
The expense has also been in the region of £10,000
So in answer to the comment by B Ward that they would only get a real surveyor, I suggest they get their facts straight on the level of the qualification needed to be a home inspector.
Lynn, Hampshire,
Andy M, London. Property price inflation adds nothing to the net wealth of society. An economic boom based upon borrowing underpinned by people's mistaken belief that they are rich because their house has increased in value is an exercise in collective self-delusion and is bound to collapse - the only uncertainty is when. We need (and it looks like we are now seeing the start of) a major property crash to bring people to their senses so that they actually start producing genuine wealth - goods and services which other people actually want to buy. This will be painful, but the fault lies with the government and BoE for not allowing the correction to happen earlier.
Graham, Sussex, UK
For the buyer it might be useful or it might not be, and if not so what? If they don't trust it, they'll use a surveyor which they would have done anyway.
The fact that it weeds out those who are not serious about selling their properties in the first place is fantastic.
joanna, london,
Let us hope that Ms Cooper's independent evidence that the HIP's effect is only temporary is a lot more 'independent' than the advisors who gave us this fiasco.
Have HIP's speeded up sales? NO. Have HIP's saved sales falling through? NO. Does anyone have any evidence that buyers care a jot about the HIP pack? NO.
I would only pay a fully qualified professional (real) surveyor to evaluate my house - not a box ticker.
Meanwhile I'll stay put in a house that is now far to large for me.
B Ward, Torbay, UK
Well done to the government. Paying £300 for a HIP is not going to stop anyone putting their property on the market. It is going to stop all the time wasters who put their property on at an absurdly speculative price just to see if they can make a killing. They waste the Agents time and effort in marketing costs. It will also help first time buyers because they will get all the HIP information for free.
Seems to me that the old industry is against HIPs because it challenges the old fashioned ways of doing things, - ways that suits them rather than the consumer. The whole point about HIPs is that it gives more power to the poor old consumer and we shouldn't forget that.
Roger D, London, UK
Why would anyone think that net cost of about £100 per HIP (you already pay for searches) on an average sale price of £250,000 (rightmove) will spell the end of civilisation as we know it. Nearer the mark is that yet again we hear the howls of protest from the usual vested interests.
Jeff S, Reigate, UK
Another own goal- (don't they know the first rule when stuck in a hole is stop digging.)
US,Australia,Spain,France,Eire going through a property price fall. A credit crunch caused by the sub-prime and CDO losses that has already left the Labour government with a £20+billion open endede liability for "rescuing" Northern Rock and what do they do? Drive another nail in the property market.
Is this part of devious plot?
If not, wake up to the recession you are helping create. So much for prudence.
Andy M, London, England