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HIP mini-bonanza predicted

Surveyors are predicting a mini-bonanza in the run up to the launch of Home Information Packs for professional landlords and developers.

Lexicon Surveyors says that with HIPs set to become mandatory next year, the impact will be to force many sellers to put poorer condition properties onto the market early for a fire sale. Otherwise they could face potentially damning inspection reports and the cost of putting things right.

While poorer properties may not attract potential home movers, Mark Glithero, managing director of Lexicon, says that he suspects they will provide rich pickings for investors with an eye for a bargain.

The effect of this may be exacerbated by poor awareness of HIPs among house owners, and their likely impact.

Glithero says: “The HIP will tell the true state of the property for sale. If they don’t have the time or money to make good the recommended repairs, this will severely compromise sellers’ negotiating position. It is developers and landlords who will prosper.”

After HIPs’ introduction, Lexicon expect sales to dip for up to six months as the market adjusts.

Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, agrees and predicts there will be a stampede of potential sellers resulting in a quiet first quarter of 2007.

He says: “That’s the consensus among the practitioners I talk to. Why pay 600 when you can sell without incurring the extra cost?”

Glithero adds: “Effectively the government wants a duty of care on sellers to improve the housing stock. This is a stick with which to beat them. What’s not clear is how the cost will be borne.”

With companies on all sides looking to protect their margins, Glithero says nobody will want to pay the additional cost and take the hit on their cash flow, but whoever ends up being the ultimate supplier of the HIP will be well placed to secure the mortgage business.

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