What will HIP reports mean to the property market?
This summer the property market in England and Wales is likely to undergo some of the largest changes seen in a lifetime. If the Government gets its way, Home Information Packs will become part of everyday life for estate agents and their clients. But wil
This summer the property market in England and Wales is likely to undergo some of the largest changes seen in a lifetime. If the Government gets its way, Home Information Packs will become part of everyday life for estate agents and their clients. But will the changes make any difference to the burgeoning property market? IAN MacKELLAR finds out.
HUNTINGDONSHIRE'S estate agents and the Government are hardly joined at the HIPs.
Home Information Packs have become so contentious that some agents are so coy they make Trappist monks seem positively garrulous.
Not so Thomas Morris partner Simon Bradbury, though even he is not convinced whether they will or will not benefit people selling and buying homes.
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What he is sure about is that they will come into effect in June and they are here to stay. And they may generate a huge boom in homes for sale, as more or less serious vendors try to beat the deadline and save themselves a few hundred pounds and a lot of bother.
Only one thing is certain - the biggest winners will be paper manufacturers. HIPs will be a tree-feller's dream come true, and ink manufacturers will not be far behind.
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It started life with the best of intentions, but will it work like that in practice. Time will tell.
Estate agents willing to say what they really think about HIPs are as scarce as Vauxhall Corsas with four hubcaps. So what's the problem?
Basically, the packs are probably a good idea in theory. They should separate the genuine seller from the speculative seller, who really has no more positive idea of moving than traffic on the M25 but might if a gap opened up. And they should shorten the process for genuine buyers and sellers.
But practical difficulties over what the Government wants to see included may have diluted their value. Instead of some information being mandatory, as was originally intended, it will be sufficient for the vendor to prove that he has applied for the information.
One thing is certain, though, Mr Bradbury insists. HIPs will be in force in June, and the housing market will change dramatically. In fact, he believes, it will change far sooner than that - possibly around Easter, when buyers who believe they can save themselves between £300 and £600 by not needing a HIP put their homes on the market without one. With so many people dipping their last toe in the water, it may not be such a good time to be looking for a new home - unless agents are prepared to offer potential buyers a nod or a wink about whether the vendor in a flooded market is really serious about selling.
In a year's time, the market should be more stable. It will be unlawful even to hint that a property is for sale or even likely to come onto the market unless a valid HIP - and a couple of Brazilian rainforests (the shortest is four pages long) - is in place.
The key document in the pack has suddenly become the Energy Performance Certificate, which is supposed to tell potential buyers how much it is likely to cost to keep the place lit and warm - something most people could probably work out for themselves if they bothered to look in the loft or read their mortgage lender's condition report or a structural survey. The latter is not included in the pack, but is usually a prudent investment for someone buying any but the most modern homes.
The Government requires this to be the first document in the HIP, coming even before the index to the rest of the information.
It also believes lenders will give "green" mortgages to buyers who agree to undertake measures to reduce domestic energy consumption and that councils will reduce Council Tax for energy efficient homes. This suggests that Ministers, along with the teenage scribblers who advise them, understand little about either the financial services industry or local government finance. Ironically, it is the same Ministers who are capping Council Tax that want councils to take this financial hit.
HIPs include some "required" documents and may include other "authorised" documents. For example, the vendor has to show he owns it and is entitled to sell it. Properties last traded since around 1980 will be registered with the Land Registry. Others will need a different proof of title.
Standard local authority, water and drainage searches will be required, but may be of limited value in some cases. If there has been a planning application lodged for a nuclear power station or a bird flu virus research laboratory at the back of the property since the seller applied for the search, the buyer will know nothing of it unless his or her solicitor repeats the process in the same way as would happen now.
The biggest problem for purchasers will be in finding someone qualified to produce the energy performance certificate. Many agents have been so sceptical that HIPs would come to fruition, they have not bothered to train or engage people to do the work.
Simon Bradbury, who is this week due to advise the Prime Minister on HIP progress at a meeting at Downing Street, reckons Thomas Morris's foresight will pay off here. Its five assessors are already in place at a cost of £150,000.
"I'm still not sure whether it will be a good thing or not," he said. "I'm probably anti on balance, but it might work. I'm going to work with it, though, because I am now convinced it is going to happen in June this year and it will be fully operational by April 2008.
"How much value it will be is another question, because of what is not covered. A place could be a total fire risk, but that information would not be included unless the vendor wanted to add it voluntarily as an authorised document.
"What I do expect to happen is that in April or May this year there will be a huge increase in the number of houses on the market as vendors try to avoid paying for HIPs, and that could depress prices - at least in the short term.
"Uncertainty like this is not a good thing. It damages confidence in the market. Even someone who doesn't use an agent will be liable. "But you may have better-motivated vendors, and that will motivate purchasers to believe vendors will not pull out on a whim. It may speed the process up by a couple of weeks, or we may find the market moving from sales by private treaty to an 'open house' system, as used in the US."
But there could be another spin-off, Mr Bradbury believes. "We shall soon find out which estate agents are honest and whether people want to do business with the honest ones. Our psychology is tied up with our wealth and prosperity - that's our house. And that's why everybody is so jumpy.