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Hip bone of contention

With home information packs just a week away, fears are growing that they will put off people from testing the market.

Next week sees the introduction of home information packs despite widespread opposition and some mortgage specialists believes that Hips could hit the market hard.

The main component of a Hip is the energy performance certificate and other compulsory documents include a sale statement, evidence of title and local government searches. The home condition report was initially to be a compulsory part of the pack but is now an optional extra.

Accord Mortgages managing director Linda Will says: “It is hard to see that they will achieve anything, especially in this watered-down form.”

She says Hips might have improved the buying process if they included the HCR.

Mortgageforce chief executive Rob Clifford says: “Since the HCR was taken out, Hips are of very little value. The pack is so diluted that it is not going to have a significant impact.”

But The Mortgage Practi-tioner sole practitioner Danny Lovey believes that Hips will cause the housing market to “grind to a halt”. He says the pack will put off people from selling and reduce the already small housing supply.

Lovey says many people put their home on the market to see what happens but from June, only those who really want to sell will go through the hassle of Hips.

He says: “Hips will poten-tially stop people putting their homes on the market. At the moment, we have a free market where people will fly a kite but you cannot go out flying kites unless you have a Hip, which costs money, so many people will not try. There will be a loss of liquidity simply because buying a Hip will turn sellers off.”

A National Association of Estate Agents’ survey found that 20 per cent of homeowners would put their house up for sale if their neighbour’s property sold for a good price despite not previously considering selling.

Chief executive Peter Bolton King says: “A significant percentage of sales that go through start with a seller testing the water. The lack of ability to do this without paying for a Hip first is likely to put off many sellers.”

Lovey predicts that advisers are in for “a fallow period”. He says: “The housing market generally picks up in the autumn but it is possible that the market will not pick up this autumn. I predict that the market will grind to a halt.”

Clifford says a major reason that the Government is introducing Hips is to record the energy rating of Britain’s housing stock.

He says: “The Government has an objective to assess energy ratings on property stock but this is flawed because it will only add the sales that go through per year. Every house in Britain would need to be sold for this method to work.”

The County Homesearch Company managing director Jonathan Haward says energy certificates should be provided before exchange of contracts rather that at the start of the selling process.

He says: “This way, the housing supply will be main-tained, sales will not be affected, stamp duty revenue will be maintained, to the joy of the Chancellor, and Europe will, over time, get what it wants. The EPC is simply kowtowing to Europe.”

Many people expected a stampede of people putting homes on the market before Hips start but this is not happening, perhaps due to a general lack of awareness about Hips.

A recent propertyfinder. com survey of 1,800 people showed that most had heard of Hips but there is widespread confusion about what the pack contains. Three-fifths of buyers expect at least an HCR and two-fifths expect a full structural survey. Most people said an EPC was included.

Will says electronic conveyancing, which should come into effect late next year, will do much more than Hips to improve the buying process. She says: “There is no reason for the process to take a long time. Electronic conveyancing as well as automated valuation models and instant offers will speed up the process.”


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