Transition period in HIP regulations

Fears that the housing market will experience a surge of activity prior to the introduction of Home Information Packs in June 2007 were alleviated slightly with the inclusion of a transition period in regulations published last week.

HIP regulations include a clause giving owners a five-month period of grace to sell their homes without packs if they go on the market before June 1.

If the properties remain unsold by October 31, owners will have to provide HIPs or risk being fined.

Peter Bruning, chief executive of HomeInformationGroup, says: “This is effectively creating a sell-by date for properties and fuels the likelihood that estate agents will encourage the use of voluntary HIPs for properties marketed before June.

“There are fears that HIPs will cause a surge of properties to come onto the market before the June 1 deadline but estate agents won’t want a glut of properties on their books. As the cost of HIPs is deferred until after completion, sellers should have no reason to rush unless they’ve got something to hide.”

But Nigel Payne, managing director of The Mortgage Business, says the transition period will create a bubble in the market come October, when up to 250,000 properties will require HIPs.

He says: “The market will have to persuade people to get HIPs in those five months or properties will have to come off the market which could result in the market becoming unbalanced.”

Paul Broadhead, deputy director- general of the Association of Home Information Pack Providers, says: “We are disappointed that sellers have to wait 14 days to put their properties on the market if they are unable to get leasehold management information.

“This should only be seven days as it’s not fair to make people wait when everything else in the HIP is ready. It will create a speed divide between freehold HIPs and leasehold ones.”