Judith Heywood, Deputy Property Editor of The Times
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Owners of flats may struggle to sell their homes next year after the extension of the compulsory home information pack (Hip) scheme to one and two-bedroom properties from December 14.
Experts fear that compiling a sellers’ pack for smaller homes, many of which are leasehold flats, will prove too great a burden for vendors who are already suffering a market slowdown. A reduced supply of small homes would be to the detriment of already struggling first-time buyers.
Miles Shipside, commercial director of Rightmove, the property website, said: “The combination of wider economic uncertainty overlaid with legislative tinkering is an unhealthy mix.”
Owners of larger homes, which are already subject to the compulsory pack of legal and energy efficiency information, have reported delays and expense in securing leasehold and legal information from freeholders or managing agents.
Problems have also been reported with legal searches because some lenders have proved reluctant to accept those provided by search companies rather than solicitors.
One conveyance firm, Convex, said that leasehold information alone takes at least two, and as many as six, weeks to obtain. Yet the Government contends that a sellers’ pack typically takes seven to ten days to prepare, including four days for the energy performance certificate.
The Government today announced the extension of the scheme to the final 40 per cent of British homes but detailed a temporary concession that would allow sellers to supply only a lease document, rather than the full set of management and insurance records, for the first six months.
The extension of Hips comes as the market for starter homes looks increasingly bleak. Observers have cautioned that smaller homes, particularly newbuild flats, are likely to bear the brunt of potential falls in prices next year as buy-to-let investors and first-time buyers struggle to secure mortgages amid the global credit crunch.
The Royal Institution of Chartered Surveyors said that the supply of houses for sale had dried up because the Hips scheme had discouraged the speculative sellers that make up 20 per cent of the market.
A survey by the institution in October found that the supply of three-bedroom or larger homes had fallen 75 per cent in the South West and 72 per cent in the the West Midlands.
Jeremy Leaf, a spokesman for the institution, said: “Lack of smaller properties for purchase will force first-time buyers to remain in the lettings market, where rents are already climbing at the fastest pace in over eight years.”
The staged introduction of the sellers’ packs, which became compulsory for four-bedroom homes or larger on August 1 and for three-bedroom homes from September 10, has failed to dent criticism that the scheme does not help buyers, which was the Government’s aim.
But the introduction of the packs, which typically cost £350, may mean a sudden rush to market from some homeowners attempting to beat the deadline. Agents have reported an early start to the traditional Christmas slowdown amid uncertainty about interest rates and the direction of the market.
Mr Leaf said: “With prospective buyers and sellers currently taking a ‘wait and see’ approach to moving, activity in the housing market is grinding to a halt.”
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How can Trevor Kent justify his claim that HIPs has solely led to a 35% reduction in the number of properties coming onto agents lists? Even the spokesman from RICS- Jeremy Leaf has had to admit that the 25% increase in interest rates since August 2006 might have had more impact than the cost of a HIP.
Estate Agents are loathed by the British public. RICS residential surveys are only commissioned by 20% of home buyers. The UK residential property market is dominated by self-interest. Whilst the government may have got the implementation wrong it has now suceeded in bringing in thousands of new individuals into the industry all of whom will help break down the RICS monopoly.
The final roll-out announced this week is a wonderful two-fingered gesture towards RICS, NAEA and all the other vested interests.
Searching Google shows HIPS cost less than £300. With a HIP a colleague took 3 weeks from offer to exchange. £700,000 house. Money in the bank earning £800 a week. Get real please!
Richardo, Chichester, West Sussex
As a property professional (landlord, developer, trader) who also happens to be selling his own home at the moment I see the impact of HIPS from all sides. Valued by absolutely nobody, certainly not by purchasers who take one look at the pretty graphs printed in the blurb and either don't understand them or couldn't give a toss. Without exception derided by all professionals who see this as what it is, a policy that could possibly have helped watered down to the point where it is nothing more than entirely worthless beaurocratic nonsense helping only those paid to produce the meaningless data. Still, with this government can we seriously expect anything else?
Paul, Tunbridge Wells, Kent
I suppose I can understand the Estate Agents not liking HIPs. Theirs is the only industry that I can think of that knows NOTHING about the very products they sell. They have seen their fees rise astronomically as house prices went up. Did they reduce their percentage based fee? Do they refuse kick backs from conveyancers? NOT LIKELY! The only reason they don't like HIPs is because they think they might lose a little bit of their money spinning livelihood. HIPs will help me as a house buyer get a better picture instead of the agents hiding behind ignorance of the very product they sell. Long live HIPs I say.
David W, Leeds,
This is just another layer of useless bureucracy desined by this feckless and incompetant government which benefits nothing but a cabel of sponging 'energy investigators'. And all for what purpose - for a report that no-one reads or cares about. How typical!!
alastair.adams1@btinternet.com, Worcester Park, Surrey
It is not the cost of the HIP, even though a complete waste of money, it is the utter uselessness of a pack that no-one, except the providers, is interested in.
There is no evidence whatsoever that HIP's do either of it's projected aims.
Baggins, Torquay, UK
It never fails to amaze me how so many people write and speak so much rubbish about something they really know so little about. Lets get the facts right, the only NEW thing with hips is the Energy Performance Certificate, and that comes from an EU directive to be implemented by 01.01.2009. All of the rest of a hip ie, Land Registry Title and Plan, Sale Statement, Local Search and Land Charges and the Drainage & Water Search have always been part of property purchasing. Just ask your solicitor or conveyancer! They require this information to protect the purchasers interests. The only difference is that now the info is up front and paid by the vendor instead of the purchaser. I suppose this could be better that having to wait forever after having made an offer subject to.... One other point Guy from London, I personally know a couple of DEAs and they do not charge hundreds of pounds for an EPC far from it, average charges are UNDER £100 and even then business is hard to come by.
Peter, Bognor Regis, UK
Quite how the government can consider proceeding with a policy virtually every property professional in the land has ridiculed, is beyond me. On August 1st 4 bedroom and above were hit, with 3 bedroom homes incorporated on 10th September. The experience of this partial implementation had already proved HIPs to be an ineffective, unnecessary and expensive intrusion into the market and resulted in a 35% reduction in properties coming on to agents' lists.
Vendors are very unhappy to pay £350 - £700 for HIP reports, listing personal information on them and their homes and incorporating the Energy Performance Certificate, especially when they learn what is happening to the reports once prepared - nothing. Prospective purchasers have no interest in reading them, and their solicitors are asking that they should not be sent to them, and Lenders want nothing to do with them at all.Given all this, how can government possibly carry on regardless? Carry On is about right. Pinewood next?
Trevor Kent PPNAEA, Gerrards Cross, Bucks, England
I work for a firm of surveyoprs and estate agents. No my knowledge, not a single prospective purchaser has asked to see a HIP. They appear to have done nothing to improve the conveyancing process for large properties. The idea that any vendor would spend hundreds or thousands of pounds on their property in order to improve their energy efficiency or CO2 ratings is frankly ludicrous. The only people to benefit from them is the people who charge hundreds of pounds to provide them.
Guy, London,
I work as a professional broker in the mortgage market as an independent and the politicians claim that HIPS will speed up the buying process is utterly misfounded on a total lack of knowledge.
The key thing that made transactions complete faster was the introduction of title insurance and also the use of Automatic Valuation Models both of which were lender initiatives not government.
Lenders across the market have clamped down on discretionary underwriting, and first time buyers I obtained mortgages for in the summer would not be able to get it now.
If they really want to help FTB markets then they must address stamp duty once and for all.
All the HIPS serve is to force the seller to employ a self employed inspector that the government demand a copy of all data contained within the report he carries out and that you pay for it so they can create an even bigger data base.
The banks have the final decision on lending criteria as it's their money and shareholders.
David, Dunstable, Bedfordshire
So what was so wrong with the old way of doing things?
Why change things that work so well........Just another way of making money for nothing
Dave , Peterborough,
Why now? Could it be because of the data disaster happening somewhere else distracting us?
They know these Hips are unpopular, don't they?
Spin is alive and well.
Freedom and democracy are under attack from this lot like never before. We need to get rid of them and the sooner, the better.
John, London, UK
Selling a flat for 200k will typically cost the seller about 3 to 5k in estate agent fees. Legal costs will take this to around the 5 to 6k mark. It is nonsense to suggest that an extra 350 per sale is going to grind the market to a halt. Estate agents have had quite a few golden years of a booming market when they have collected their fees for doing next to nothing. Now that the bad times are here they'll just have to fork out money up front to pay for HIPs. Any sensible business person knows that boom times don't last forever and that money should be put aside for the downtimes. Sensible agents will have done this - or has all the surplus gone on Mercs, BMWs etc?
George, East Sussex, UK