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Packs 'to cause spike in property supply'

18th November 2005 | back to article listings BACK    print this article PRINT

The government's decision to bring forward the release of its heralded Home Information Packs could cause a huge disruption in the market during the industry's busiest period next year, according to the Council of Mortgage Lenders (CML).

Lenders had advised that the introduction of the packs be delayed until later next year. But the government yesterday announced that they will become mandatory for the housing market from June 1st, sparking fears that the market would be swamped with properties for sale before the change takes place, which could force house prices down further.

Under the new rules, all sellers will be required to complete the pack prior to putting the house on the market detailing the value, condition and surveys of the property concerned. The government says that the new scheme will reform the property market, helping potential buyers and investors by preventing waste and significantly cutting the number of sales that fall through.

At present, the Office of the Deputy Prime Minister estimates that potential house buyers waste £1 million every day on failed transactions, often spending hundreds of pounds on valuations, legal advice and searches on transactions that ultimately break down. Under the new legislation, brought in under the Housing Act last year, the seller will be required to face up to the one-off fees.

The CML said that it expects that many sellers will start to put houses on the market earlier to avoid the charges: "On the basis of previous market interventions, it seems likely that a number of people will bring forward their attempts to sell their homes to before the compulsory deadline to try to save money, creating a "spike" in properties put up for sale immediately before the implementation date.

"To minimise the effect of this, the CML believes that it would have been better to choose an implementation date when the market is quieter and more able to cope," the organisation said in a statement. It had advised that the rules be introduced later in the year when the market is less busy.

Nevertheless, buyers will be looking at the plans with glee, as it might be possible to snap up some bargains with so many looking to sell. The market has seemed to be picking up of late. Sales activity has seen a modest increase and surveyors are reporting a rise in buyer activity of eight per cent from their low in February, though the figures are still five per cent down on a year ago.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2325.html. Alternatively, please see our full press release archive.

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