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Rooftop Mortgages managing director Jonathan Naylor says the Government still aims to bring in home condition reports at some point despite its U-turn and the problem of Hip double costs remains while the real priority should be regulating estate agents

If you had asked three weeks ago whether we could expect a change of heart from the Department of Communities and Local Government on any aspect of house information, from timing to home condition reports, I think most in the industry would have answered with an emphatic no.

So it was a big shock when it was announced that HCRs will not be mandatory from June 1.

The real shock was there had not been any leaked rumours or hints in the runup to the announcement. In fact, the DCLG was bullishly talking about a big bang launch in 2007 right up to the U-turn itself.

Housing minister Yvette Cooper’s comments, which aired on Radio 4’s Inside Money the weekend before last, are a prime example. Apparently, the comments were recorded at the start of July but were not broadcast until four days after the U-turn.

What happened was the programme-makers got a member of the public to interview Hip stakeholders and then sat him down in front of the housing minister. He presented his personal concerns and those of the industry expected to implement the scheme – n particular, duplicating costs for the consumer and the lack of qualified home inspectors.

The minister dismissed these concerns as the grumblings of parties with “vested interests” and said everything was on track for a successful June launch.

It is nonetheless encouraging to hear the minister subsequently say that the DCLG had been listening to the industry and its feedback played a part in the decision to delay the introduction of HCRs.

It seems that industry concerns about launching with insufficient numbers of home inspectors have also not fallen on deaf ears. But on this point, the danger is that we might find ourselves in a Catch 22 situation as the impetus to qualify quickly is lost through making HCRs voluntary.

What the minister does not appear to have taken on board, though, is the fact that the cost of the Hip will fall on both the buyer and the seller, which has been a primary concern of lenders and brokers.

This U-turn does not eradicate that duplication, it just limits the amount of the duplicated costs in the short term.

What is also important to remember is the fact that the Government may have done a U-turn on the implement-ation date but it says it has not turned its back on HCRs altogether. Cooper has been quoted as saying that the Government aims to work with the industry to help with market-led take-up of full HCRs.

As part of this approach, it will explore with the sector a wide range of options to enable a successful and innovative market for HCRs, including options for supporting the provision of necessary systems, effective demonstration projects for HCRs, and will consider the case for pump-priming funding.

The minister also made the important point that mandatory HCRs will remain on the table if the industry fails to make a success of the rollout. This must just be political wishful thinking.

Rightmove has withdrawn its support for Hips, No one in their right mind will seek to qualify as an inspector with no immediate employment prospects and the rump end of the Hip is the subject of relentless political mockery.

If HCRs are made mandatory in their present form, most lenders will still require borrowers to have a traditional valuation carried out on top of the HCR – and we are back to increased duplication of costs.

This is a major stumbling block for lenders. The lack of a traditional valuation element in the HCR means they are fundamentally flawed. Not only is a valuation an important indicator for buyers that shows the property is not overpriced but it is also vital for lenders when reviewing a mortgage application.

People who do not have the property valued professionally will have to rely on estate agents to determine market value.

That is sadly where we come full circle. When Hips were first conceived, Hilary Armstrong made it clear that the aim was to stamp out gazumping and to make the homebuying/ selling process simpler and more transparent.

But Hips as they stand will do little to achieve that as they have proved to be little more than tinkering at the periphery of the real problem – unregulated estate agents.

To its credit, the DCLG has said it plans to set up an ombudsman for estate agents as part of “the next phase of reform” to strengthen consumer protection. But why wait until then? The danger is real and present and should be addressed immediately.

This deep-seated reluctance to regulate estate agents is indefensible. The sector is wide open to abuse, yet even the plans to put in place even a basic consumer safety net have been relegated to “the next phase of reform”.

As an industry we should be demanding that estate agents come under the watchful eye of the FSA as a matter of course.

As it stands at the moment, we have the worst of both worlds – the only unregulated link in the housebuying/selling chain has gained in influence and that can only be to the detriment of the public.


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