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HIPs are redundant before they start

Kevin Paterson takes a weekly look at the latest developments in the market and brings you what’s hot and what’s not in the world of mortgages

There is still uncertainty about whether Home Information Packs will be introduced as planned on June 1 this year. It seems the government is determined to stick to the date while just about every other interested party is calling for a postponement.

In my opinion, the only thing that HIPs will achieve is an artificial market spike followed by a slump. The spike will be caused by estate agents across the land claiming that sellers have a once-in-a-lifetime opportunity to get their houses on the market without the unnecessary ex-pense of buying HIPs.

This will be quickly followed by the market’s complete depression as many prospective sellers withdraw rather than pay for packs.

Let’s not forget that the primary reason HIPs were introduced was to speed up purchasing. Now the original proposals have been watered down and the great leaps in technology needed are pretty much already with us. This leaves Energy Performance Certificates, which rate the energy-efficiency of houses for prospective purchasers, as the only true innovation that will be delivered by HIPs. The certificates now seem to be the flagship element being promoted by the government rather than the original propositions of speeding up the house purchasing process and minimising gazumping. Both of these goals seem to have taken a back seat.

Interestingly, a report published recently by reveals that more than 82% of consumers would disregard EPCs. And of those, a staggering 90% wouldn’t believe them.

Of course, the irony about how much energy we’re going to expend to obtain energy ratings for houses seems to have been lost on politicians.

Meanwhile, we have seen the rise of e-conveyancing as a genuine alternative to the slowcoach solicitors who used to corner this market.

At the same time, the Land Registry has been moving records and transactions online. And when its new system goes live later this year the whole transaction chain will become transparent, so there will be no hiding place for anyone holding things up. Put all this together and it seems obvious that HIPs are redundant even before they start.

TCF ignorance is no defence

Hot on the heels of the Association of Mortgage Intermediaries’ research into brokers’ readiness for the Treating Customers Fairly deadline comes more research from Mortgage Next, conducted with its members.

The findings are a barometer for appointed representatives and directly authorised firms alike.

As Justine Tomlinson indicates in her column this week (see Help networks to help smaller firms)Mortgage Next’s findings show that just 6% of brokers were aware of the Financial Services Authority’s deadline for TCF. Even more staggering is their belief that their existing documentation will be sufficient to demonstrate that they have got to grips with it. I’m not sure how they can think that if they have made no changes.

At one stage, the regulator had more people working on TCF than it had on mortgage and general insurance regulation combined which rather gives the impression that it views this as an important area that should be taken seriously.

To say that smaller firms have been left out of the communications loop is a bit weak. They want to run their own shows after all. But with that power comes responsibility. They can’t simply wait for someone else to make them compliant. And let’s face it, if you haven’t heard of TCF after all that has happened, you really do deserve to be slapped.

Labour’s graveyard robbery

Inheritance tax is unfair. You work all your life to build something for your family and when you die the government taxes your estate for the privilege of passing a proportion of it onto your next of kin.

This is a stealth tax that Labour has managed to increase significantly since coming to power. A recent report by Halifax revealed that 236 postcodes are now above the IHT threshold compared with 117 in 2001.

It predicts that this will rise to 480 by 2020 – that’s a staggering 23% of all the properties in England and Wales.

Had the IHT threshold taken into account the rise in house prices over the past 11 years it would now stand at £460,000, Halifax’s economist explains. In reality it stands at £285,000.

A recent survey showed that only 8% of people think IHT is a fair tax compared with more than 75% who consider it unfair. Perhaps the figures would have been slightly different had the respondents known that IHT is expected to raise £3.6bn for the government this year compared with £1.7bn a decade ago.

What started out as a tax on the rich is now almost mainstream. It’s yet another example of how Labour has successfully fleeced us all.


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