Mortgage Strategy readers will be well aware that government requirements mean that from June 2007 sellers will be required to produce HIPs which will provide buyers with information about properties. The cost of a HIP is estimated to be as high as £1,000, and failure to provide one will be punishable by a fine.
The BSA recently surveyed society chief executives to learn their views on the impact of HIPs. Comments from society chief executives included:
- They will add costs without tangible benefits.
- They won’t reassure buyers.
- They won’t speed up housing transactions as lenders will still require valuations.
- The number of properties for sale will fall dramatically, creating supply and demand imbalances.
Making HIPs voluntary would allow market forces to determine the demand for them and how they operate. It would also allow buyers and sellers to fully acquaint themselves with HIPs and the implications for property sales. And it would minimise the impact of unforeseen consequences that the introduction of the packs may have.
Society heads also feel that the potential reduction in the number of properties coming onto the market is particularly worrying. This is because of the effects it could have on house prices, not just over the summer of 2007 but also in the longer term. Any rise in prices after the introduction of the packs will further worsen the already acute affordability problems that buyers face in many parts of the country.
People’s homes represent their most important asset and it is imperative they have confidence there will not be any unexpected fluctuations in the market next year.
With so much uncertainty among consumers and the industry over how HIPs will work, it is wrong that it will be an offence to try and sell a house without a pack. Making them voluntary will lessen any negative impact on the market and minimise the effect of problems that might occur.
A fine will punish someone selling their home without a HIP. If people feel the packs will be of benefit they won’t need compulsion.
The government claims HIPs will bring major benefits to the house buying and selling process. Yet with so many fears being voiced, not just by BSA but a wide range of organisations, it is clear that not everyone shares this confidence.
We should let the market determine the value of HIPs in the home selling process by making them voluntary.