Assetz® News - More Hips controversy

More Hips controversy

11th April 2006 |

The National Association of Estate Agents (NAEA) has this week restated its opposition to Home Information Packs (Hips) by claiming that first-time sellers will suffer.

The government will be introducing Hips in June next year and it is a scheme that has certainly provoked a wide range of reactions.

With David Cameron claiming that they will function as a "roadblock to ownership" and housing minister Yvette Cooper championing them as the saviour of the property market, it appears that there is very little middle ground in relation to this contentious issue.

The new claim from the NAEA is that first-time sellers will be deterred from putting their property on the market because of the cost of the Hip.

Of the 24 to 34-year-olds surveyed, it was decided that 76 per cent would be discouraged from selling a house because of the prospective charges, while 80 per cent of those in the 16 to 24 bracket said the same thing.

It is a statistic which, if realised, would clearly lead to stagnancy in the market, but it is not an assessment that is supported by everybody.

The government has this week accelerated its activity in relation to Hips, whilst stating again the positive impact it expects for the overall state of the market.

Ms Cooper says that £1 million is wasted each day simply because of sales falling through. She adds that buyers and sellers both suffer from this problem, with a lack of information leading to confusion as well as the potential for dishonest behaviour.

The Office of the Deputy Prime Minister (ODPM) started a dry run to check for any teething problems in the scheme, with 45 organisations in England and Wales providing 2,500 packs on a voluntary basis.

In addition to this, the first certification schemes will soon be approved, which are being set up to ensure that Home Inspectors meet the government's standards.

It is thought that 4,000 people have now started training for the qualification, while the ODPM predicts that 5,000 Home Inspectors will eventually be needed to complete the Home Condition Reports.

The NAEA sees this as further waste because of the fundamentally negative impact on house selling.

Chief executive of the NAEA, Peter Bolton King, comments; "Those on the lower rungs of the housing ladder clearly need all the help they can get in order to find their feet financially. This is the age at which children come along, and families are most likely to be looking for more space.

"With the anticipated cost of the Hip set at between £600 and £1,000, plus VAT, and high levels of stamp duty to contend with, many first-time sellers may find that the next step up the ladder is simply too much of a stretch for them, and be forced to stay put. This will, of course, impact on the rest of the housing market, slowing it right down and causing frustration for first-time buyers and those further up the housing ladder alike."

Those in favour of Hips continue to stress that the market will be distinctly improved by the greater transparency and that the benefits will far outweigh the initial complications and frustrations.

Experts are now keeping a close eye on the dry run to see exactly how the idea will work in practice and how the property investment business in particular may be affected.