View more on these topics

GMAC-RFC calls for more robust HIP trial

GMAC-RFC has called for a more robust trial of Home Information Packs, after economic research it commissioned revealed the detrimental impact any drop in housing transactions could have on the wider UK economy.

The findings were presented this morning to all three political parties, other public policymakers and interested observers on both sides of the HIPs debate.

The independent study by Oxford Economic Forecasting looks at the economic impact of a 10% and 25% fall in housing transactions arising from the imposition of a compulsory HIP charge on a largely discretionary housing market.

In the 25% scenario, it found that unemployment would rise by 93,000, gross domestic product falls by 0.5% or 5,700m, consumer spending falls by 0.7% or 5,800m, and net revenue to the government falls by 0.9% or 5,600m.

In the 10% scenario, unemployment rises by 42,000, GDP falls by 0.2% or 2,600m, consumer spending falls by 0.3% or 2,500m, and net revenue to the government falls by 0.4% or 3,200m.

The independent economic modelling work was undertaken by Oxford Economic Forecasting who has also undertaken work for HM Treasury, the Department of Trade and Industry, the International Monetary Fund and the World Bank.

An independent academic overlay analysing the OEF output was additionally commissioned by GMAC-RFC from Mark Stephens, professor of european housing and assistant director of the Centre for Housing Policy at the University of York.

Jeff Knight, director of marketing at GMAC-RFC says: “We commissioned this work because, although there has been a lot of debate about HIPs, no modelling has been undertaken in the public domain to test the economic impact of HIPs if there were to be a fall in housing transactions. This work fills that gap and frames the economic risks.”

“The reports by OEF and Professor Stephens speak for themselves but the results do reinforce our belief, and oft-repeated request, that a paid-for HIPs dry run should be conducted so that the issue of consumer reaction to this new cost can be tested and taken into account prior to implementation.”

Ray Boulger senior technical manager at john Charcol says: “Today’s GMAC-RFC sponsored report produced by Oxford Economic Forecasting raises very serious concerns over the government’s controversial plans to introduce HIPs on June 1 2007.

“Concerns over the introduction of HIPs have increased significantly over the last few months and the government will be embarrassed by these new findings which demonstrate the potentially damaging economic impact of HIPs on unemployment, consumer spending, the gross domestic product and the government’s tax take.

“A competent government would have carried out similar research a long time ago. If such research was commissioned, choosing not to publish the results speaks volumes. If the research wasn’t commissioned it is a damming indictment of their disregard for a proper in depth study prior to introducing a major new policy.

“The report shows that the introduction of HIPs will produce a substantial rise in unemployment, a significant fall in consumer spending and a sharp fall in Government revenues, all of which will result in a significant short term reduction of GDP, and possibly even a long term negative impact.

“With the continued confusion and uncertainty over HIPs in the marketplace there is now only one way for the government to save face. Make HIPs voluntary.

“By doing so, not only will the Government avoid the problems highlighted by the report, but they will side-step the potential embarrassment of not having enough Home Inspectors trained and certified in time for the proposed start date in less than a year’s time.”

Professor Stephens says: “It is telling that at this stage we cannot be more certain about the impact of HIPs on transactions. One of the key conclusions of the government-sponsored evaluation of English Housing Policy 1975-2000 was that while policy instruments are often successful when assessed within their own terms, they frequently have unintended consequences that are sometimes unfavourable.”

Recommended

Go Business Mortgages launches in UK

A new provider of commercial mortgages has been launched in the UK called Go Business Mortgages, specialising in the sub-prime market.Go’s founder Andrew Strode-Gibbons was former chief executive officer and chairman of The Mortgage Lender Ltd which he founded in May 2000, of which he subsequently sold to Kensington Group Plc in July 2002.Strode-Gibbons, says: […]

FSA to investigate sub-prime market in the Autumn

The Financial Services Authority is to follow up the work it did in the sub-prime market in 2005 with a second round of broker visits starting this September.Robin Gordon Walker, spokesman for the FSA, says: “We will be doing the next round of work into the sub-prime market later this summer, around September. We did […]

Partners division proves success for GMAC-RFC

Since the launch of it’s Partners range in March this year, GMAC-RFC says it has experienced a strong increase in the take-up of its exclusive product range amongst packagers. To date, applications on the range have exceeded 1bn with some Partners reporting that their business levels with GMAC have increased significantly.The formulation of the tailored […]

Mortgage advisers seek cure for password pain

Up to 81% of brokers would like to see electronic passwords abolished, shows research by Origo, the standards body for e-commerce in the UK financial services industry.Origo has undergone research into the use of e-services by mortgage advisers, and attitudes to the concept of using UNIPASS digital certificates in the sector.Origo commissioned Bdifferent, the brand […]

China: growth defence or another debt-fuelled boom?

By Douglas Turnbull, Head of Chinese Equities at Neptune Following recent stimulus efforts from Beijing, Neptune’s Douglas Turnbull examines how the government’s long-term reform agenda can be balanced with supporting growth and addressing structural challenges, and the investment opportunities arising from this.Click here to read more Important information: Investment Risks Neptune funds may have a […]

Newsletter

News and expert analysis straight to your inbox

Sign up