Mark Harris is managing director of Savills Private Finance
But should we have been that surprised? The Government has an impressive track record on U-turns. There was last December’s Sipp debacle, when it was decided at the 11th hour that pensions would not be able to invest in residential property after all. This came despite the fact the Government had been warned many times of the implications of the introduction of the new legislation and that wealthy people would benefit most, not those with the least pension provision. In the same week as the Government made its Hip U-turn, it also announced that is was delaying the introduction of the tenancy deposit scheme. The October launch date has been ditched in favour of next April, a brief reprieve for landlords but hardly a move likely to generate much confidence. When politicians start meddling in matters they know little about and do not bother asking those who know better for advice, it is bound to end in disaster. The Government has made a mockery of the whole Hip exercise. One wonders whether the packs will now appear in any form at all or if they will be quietly dropped. Who would invest any cash in them now in case the Government changes its mind again? What about the millions of pounds the industry has had to shell out – yet again – to prepare itself for something that has then been withdrawn late in the day? Instead of working out at the consultation stage that the plans were flawed, the Government blundered on, discussing launch dates, compulsion and penalties. Businesses and individuals sank money into preparing for the scheme. Is there any compensation to those who stand to lose out financially? You must be joking. What about the individuals who paid out up to 10,000 to train as a home inspector? There is little public sympathy for estate agents but many have invested millions of pounds on the back of the Hip promise. Rightmove, the online property search company, is one of the most high-profile casualties. It had nearly 100m wiped off its stock market value after the U-turn as the full Hip played such a central part in its earnings’ forecast. It did not make a kneejerk decision to abandon its plans to provide a Hip but has understandably decided to cut its losses and pull the plug on its investment but it has spent 8.5m in preparation for the introduction of the packs. There are plenty of lessons that can be learned from the whole sorry affair but unfortunately it is unlikely that the government will take any of them on board. A detailed consultation process would have unearthed the many problems with the packs. Instead, the Government launched its bright idea, set a date for its introduction and then finally listened to those in the industry who said it would not work, before changing its mind at the last minute. To prevent such a failure in future, it should establish a balanced committee made up of a cross-section of people across the industry. This could discuss proposals, identify potential pitfalls and suggest improvements. Then, and only then, should an announcement be made and a launch date set. Introducing bright ideas and then doing U-turns is confusing for the consumer and damaging and costly for the industry. The Government owes it to all of us to take heed before doing it again.