Home Information Packs could spell disaster for the housing market

The Office of the Deputy Prime Minster has today published the new Housing Bill, including proposals for the introduction of Home Information Packs (previously called Sellers Packs. See Notes to Editors for background information.)

The Bill has ignored all the issues and concerns communicated by the NAEA. In particular, the Bill has completely failed to address the following:

HIPs will damage, not improve the housing market

- The production of HIPs by the sellers will typically take 2 weeks to prepare, cost around £600, and must be completed before a property is marketed. This will take the spontaneity out of the housing market:

? Many prospective sellers seeking to test the market will not do so. Many actual transactions presently are initiated by such activity.

? Quick deals between sellers and buyers will not be allowed.

- A research report by Friends Provident indicated that housing transactions could fall by as much as 30% as a result of the introduction of the packs.

The Home Condition Report (the survey of the property to be carried out by the seller and included in the packs) will have limited use and value.

- The Home Condition report is likely not to be accepted by lenders for valuation purposes thus creating the need for two surveys.

- As the Home Condition survey is initiated by the seller, the buyer must take the information on trust. Those carrying out the survey will not be fully qualified surveyors but so-called “Home Inspectors”.

- It will have a short shelf life if a buyer is going to safely rely on it. Can be quite expensive each time (circa £500).

- Extra costs to the home buying process is £500m (based on the fact that 80% of current market transactions do not have a formal survey associated with them).

- There is a major concern over Professional Indemnity Insurance. At present, the insurance industry is unwilling to cover the Home Inspectors. How will home-owners gain recompense if the Home Inspector’s work is faulty?

HIPs are totally unnecessary due to the advent of e-conveyancing and the National Land Information Service.

- E-conveyancing is being rapidly introduced and all communications and exchanges of documentation between practitioners, lenders, the Land Registry etc, will be undertaken electronically.

- National Land Information Service will provide an online one-stop-shop for land and property related transactions. This should be 90% in place by end of this year.

The Government should be concentrating on supporting the above processes rather than HIPs. The Council of Mortgage Lenders agrees with the NAEA in this respect.

Julie Westby, President of the NAEA comments: “The proposed introduction of HIPs is a dangerous move by the Government. It has been poorly researched, and imposes extra costs and bureaucracy in and already complex market. It could have serious repercussions on housing transactions, and consequently on house prices. The vast majority of our members view Home Information Packs as detrimental to the home buying process and not at all in the best interest of consumers.”

“We urge the Government to listen to our concerns and incorporate much needed changes to these proposals. HIPs is yet another nanny state policy produced by a Government with honourable intentions but a complete lack of understanding as to how the housing market works”.