Government plans to require home-sellers to pay up to £1000 for a Home Information Pack prior to marketing have been shelved in a dramatic U-turn which will have a fundamental effect on the housing market in 2007.
The legislation originally required prospective property sellers to commission a Home Condition Report (HCR) as part of a wider pack that would be available to prospective property buyers. Other elements of the pack include title deeds, local authority searches, answers to pre-contract enquiries, and energy performance certificates, all of which will still be required, although there is speculation that the energy performance certificate element may also be scrapped. The government is also considering allowing people to market their homes once a HIP has been commissioned, rather than waiting until it has been compiled.
This is all good news for homeowners. The principal of having many of the legal documents available up front has been one of the great strengths of the HIP concept, as it will speed up what has, until now, been one of the most cumbersome systems of property transfer in the world. However, some of the practical elements of the HCR had been met with substantial criticism.
The primary concern had been the cost of the pack overall. This was predicted to have prompted a flood of stock onto the market immediately prior to HIPs becoming mandatory on 1st June 2007, possibly causing a slump in prices. This would then have switched to a highly inflationary hike in prices as fewer speculative sellers put their property on the market thereafter due to higher costs – potentially prompting interest rate increases. It is estimated that speculative sellers, where people might sell if they happen to see the right house or sell for an attractive figure, account for about 20% of properties currently on the market.
We have always embraced the concept of HIPs and, on our clients behalf, are relieved that the major flaw in the scheme has now been withdrawn.
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