Wed, 12 Jul 06
The government argues that £1 million a day is wasted when transactions break down, after buyers spend huge amounts of money on valuations, legal advice and searches. It argues, therefore, that Home information packs (Hips) will prevent wastage by providing important information at the earliest possible stage.
The plans are to introduce Hips in June next year but fierce opposition from those opposed to change is set to reach the House of Commons today as Michael Gove, the Shadow Minister for Housing, supported by high-profile TV presenter Kirsty Allsopp use an Opposition Day debate to highlight the costs and disadvantages of the packs.
Some 125 MPs, including former Labour ministers Frank Field and Kate Hoey, are said to have signed a cross-party Commons motion asking Chancellor Gordon Brown to axe home information packs.
Meanwhile, pro-Hip campaigners have said that the Tory plans to scupper Hips will cost consumers over £300 million a year and will delay the EU directive on Energy performance.
The EU directive says that from 2009 every house that goes on the market must have an Energy Performance Certificate (EPC) and the cost of producing one of these as a stand alone report will be around £250 each, a cost that will be passed directly onto the vendor at the time of selling their home.
Hips will contain the required EPC outlining the energy costs involved in running a property, and making suggestions to reduce emissions and costs. Under the plans this report will be part of the Hip Home Condition Report and as a result, the cost of producing the Energy Performance Certificate equates to less than £50 per home.
Mike Ockenden, director general of the Association of Home Information Pack Providers commented: "David Cameron is prepared to concrete his lawn and put a windmill on his London house - but when it comes to serious environmental issues he fails to take action. Hips will introduce the Energy Performance Certificate next year, two years ahead of the mandatory date of 2009."
"By including the Energy Performance Certificate in the pack consumers will save in the region of £200 for every certificate produced. Even in a slow year for home sales that equates to over £200 million per annum. According to the EU directive, all homes put up for sale will need such a certificate, and Hips will deliver compliance with the directive well in advance of the deadline of 2009."
On property chain breakdown, Ruth Kelly, secretary of state for the Department of Communities and Local Government, argues, "Hips will bring together all the information people need to buy and sell a home, to help them make informed decisions about what is probably the most expensive purchase of their lives. The packs will especially help first-time buyers as they receive the packs for free."
Despite many estate agents being pro-Hip the National Association of Estate Agents is anti-Hip and refutes the government view that Hips will reduce properly sales fall-though.
An NAEA study showed that property chain breakdown was predominantly for reasons other than poor survey findings.
The NAEA surveyed 1,466 homeowners above the age of 18 in England and Wales, of which 30% had experienced a breakdown in the house selling process.
But only 18.3% put this down to unfavourable survey findings, with the majority blaming a broken property chain or a higher offer from a competing property buyer.
However, the study didn’t address the issue of the property chain containing people that were not in the study, and hence could have been affected by someone-else’s property survey, nor the issue of the advantage buyers would have - particularly first-time buyers, so important to the industry - who under Hips, would get the chance to see a survey before entering the property chain.
Of course, chains may break for many reasons. Peter Bolton King, chief executive of the NAEA, claimed: "We have found that almost a third of sales fail due to a problem with a related sale, which proves that a house sale is only as robust as the weakest link in its related chain."
The fact remains however the figure of 18.3 % - in terms of the proportion of those who said a property transaction broke down because of unfavourable survey findings – is still significant.
Other anti-Hip issues revolve around the short time a survey would be valid for and the cost to sellers if they remove their property from the market unsold. (It’s likely that most Hips will be paid for in price competitive-ways via estate agents fees) A 14-day delay before property can be marketed is also hotly debated.
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