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Hip hope

A no sale, no fee home information pack has been set up to try to prevent a slowdown of the housing market.

Spring Move will offer the service once the Hip regime comes into force in June 2007 and its decision has been backed by many in the industry.

The only question mark is whether other Hip providers will follow suit and make the offer a market-wide solution that may encourage those to speculatively put their houses on the market that might otherwise have not done so.

Money Marketing understands that at a recent Association of Mortgage Intermediaries’ summit on Hips, most providers and brokers said they would wait until the next scheduled Government announcement in September before making any plans.

Put plainly, the industry does not trust the Government and fears another U-turn as seen last month when home condition reports were made voluntary.

Spring chief executive Stephen Foden says: “Hips will go a long way to reducing the stress of homebuying and selling but people should not be forced to pay twice if their sale does not go through for reasons beyond their control.

“We believe a no sale, no fee offer is simple fairness. The industry needs to work together to do all it can to make homebuying and selling easier and should not be seeking to profiteer and a no sale no fee offer helps to achieve that.”

In May, Money Marketing reported the possibility that no sale, no fee Hips could take off after Association of Home Information Pack Providers deputy director general Paul Broadhead revealed that such initiatives were in the pipeline to address concerns about the potential for a housing sector slowdown.

Spring’s move is not the first of its kind to try to reduce the cost to consumers. Asda has promised to offer a free Hip once its estate agency business is fully up and running.

The only catch with the Spring launch is that when a house is sold, it will cost the seller an extra 150 on top of the Hip price, although that reflects the risk the provider is taking by effectively giving away many Hips for free if the property is not sold.

Hamptons International Mortgage director Jonathan Cornell, while acknowledging the approach shown by Spring, is not convinced the idea will necessarily take off across the industry.

He says: “It is an interesting idea but most people in the industry are waiting for the next U-turn before they announce any plans. It is very distracting as people should be planning for Hips but you have no idea if the Government will change its mind again.

“The Spring initiative will appeal to some people but if you look at the cost of a Hip without an HCR, it is not that expensive so it is not such a big deal anymore.

“If you were asking people to pay 750 for a Hip, that is a lot of money but the reduced rate without the HCR which could be as low as 250 gets lost in the whole cost of moving.”

GMAC director of marketing Jeff Knight is another who applauds Spring’s plans to “come up with solutions”. GMAC commissioned a report in early July which claimed that any major downturn in the housing market as a result of Hips could see the UK’s GDP plummet and unemployment rise.

Knight says: “The no sale, no fee Hip was one of the ideas mooted in the House of Commons and it is the principle of how estate agents work and seems to work. This could be a good compromise for the industry.

“It is a difficult one to call, as to how successful the plan will be, as the costs need to be put through a proper market test even though the speculative buyer might not be put off as a result.”

Another idea being bandied about is for the Government to invest large sums of money effectively to subsidise home condition reports during the Hips dry run so it can assess their suitability by ensuring that they are provided.

A Department for Communities and Local Government spokeswoman says on the Spring launch: “We are aware that the market will set the cost of Hips and there are a number of innovative ideas and moves such as a buy now, pay later plan and Asda’s offer. We know the cost of Hips will be driven down by competition and it is good to hear that a number of different options are on the table for consumers.”

The fallout still continues over the Government’s U-turn on home condition reports.

The Council of Mortgage Lenders has revealed that neither it nor any stakeholder was consulted about the U-turn before the change.

Money Marketing has also learned that one provider approached the DCLG half an hour before the U-turn was made public about a press release it was due to issue but was only told at that stage that HCRs would no longer be compulsory.

The CML is also questioning whether any potential new provider will now enter the market because of the uncertainty. This follows property website Rightmove’s decision last month to pull the plug on its Hip offering.

Despite the troubles in the market, Ahipps has revealed that its dry run will take place in Southampton, Newcastle, Northampton, Bath, Huddersfield and Cambridge in November.

Broadhead says: “The Government’s decision to make the HCR a voluntary part of the Hip was spineless and unnecessary and was a decision made purely for political reasons. It is now up to the industry to pick up the pieces and deliver its benefits to the consumer.”

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