Date: 15th December 2008
Release date: Immediate
Subject: Swale’s property market hit even harder
Local Conservative Candidate, Gordon Henderson, says he is worried that Government action is harming Swale’s already seriously depressed housing market.
Mr Henderson’s comments follow an announcement by the Government that Home Information Pack (HIPs) regulations will be tightened, pushing up the costs for those Swale’s residents who are trying to sell their home. This will include forcing town halls to become more aggressive in issuing fines for breaching the burdensome rules. Home Information Packs became compulsory for all homes on 14 December 2007.
Government research into HIPs has recently found that there is minimal public knowledge and interest in HIPs; that the industry thinks they are a waste of time; that they duplicate costs and that buyers are not bothering to consult HIPs; yet bizarrely the Government has announced the following changes:-
· Heavy-handed fines: Town halls will be instructed to “identify specific cases of non-compliance and enforce the requirements”. This raises the prospect that Kent County Council will be forced to start fining Swale home owners £200 a time if they do not follow the rules.
· Making it more difficult to advertise your home: From April 2009, the Government is cancelling the “first day marketing” provisions. These allow sellers to place their home on the market if a HIP has been ordered, but has not yet been completed. The cancellation will be mean that sellers will have to wait longer before they can put their home on the market. They will be fined if they advertise their property without a HIP.
· Gold-plating the Packs: The time to complete a Pack will increase, as sellers must personally fill out a detailed new ‘Property Information Questionnaire’ as part of the Home Information Pack. Yet this will be of little interest to buyers, who will instinctively treat information provided by the seller with a touch of scepticism.
Mr Henderson said:
‘I am deeply worried about the local housing market. You only have to look in our local newspapers to see the crisis engulfing Swale. There are fewer houses for sale than I can ever remember and the value has plummeted for those that are advertised.
‘Not only are home owners being hit, but estate agents and local newspapers, who rely on property advertising for their survival, are going through a really tough time.
‘Information Packs have already harmed the market and discouraged sellers. The last thing Swale needs is the prospect of heavy-handed fines being levied on home owners.
‘The housing market is on its knees and Labour’s response is to make it more difficult and expensive to sell your home. That is absolute madness.
‘I honestly believe ministers should suspend HIPs. Such action would provide a shot in the arm to Swale’s ailing market, which is why I welcome the commitment by David Cameron that he will scrap Home Information Packs altogether if he becomes Prime Minister.’
Notes to Editors
Home Information Packs became compulsory for all homes in England & Wales on 14 December 2007. The Government’s latest plans for Home Information Packs were announced on 8 December 2008.
HIPS ARE A “WASTE OF TIME” SAYS GOVERNMENT RESEARCH
Parliamentary Questions have compelled Ministers to publish opinion research into Home Information Packs provided by polling firm GFK NOP, at a cost of £60,000. Almost 4,000 buyers, sellers and estate agents across the country were surveyed. It shows:
Alarm over the worsening economy and rising cost of living: The report reveals:
· “Uncertainty and lack of confidence in economy and housing market was top of mind for buyers and sellers” (p.6).
· “Economic concern felt across South, Midlands and North: Caution – fear of negative equity; concern over ability to repay; Concern regarding economic climate, impact now being felt; recession anticipated; cost of everyday living increasing” (p.8).
Minimal public knowledge and interest in HIPs:
· “Amongst buyers and sellers: awareness, knowledge and understanding of HIPs poor; lack of engagement, experience and interest in the HIPs process” (p.6).
· “Superficial awareness of HIPS; minimal knowledge and understanding; not sufficiently aware / interested enough to ask to see HIP; rarely shown HIP; not seeing advantages of seller paying; In London, concern over HIP cost when selling property in future” (p.11).
· “Dismissive: don’t see purpose… Neither buyers or sellers are proactively enquiring about HIPs” (p.13).
Packs are a waste of time:
· “[Amongst estate agents] Attitude: resigned… Majority perceive no benefit / tend to be negative / waste of time” (p.15).
· “Estate agents struggled to think of positive comments about HIPS” (p.17).
Buyers not consulting HIPs:
· “First time buyers: Little knowledge / indifferent… Buyers and sellers: More knowledge / dismissive… Estate agents: High understanding / resigned” (p.19).
· “Buyers/first time buyers: Majority not offered to see HIP; majority not asked to look at HIP; seen as … long, boring, technical” (p.21).
· “Estate agents… Concern over houses being on market for an extended length of time and HIP becoming out of date before sale agreed” (p.26).
· “Portability of HIPs raises potential problems… Sellers may have to pay for multiple HIPs, if they change estate agents” (p.34).
Full HIPs presentation: http://www.conservatives.com/pdf/SecretHIPsResearch.pdf
MORE WOES FOR HOME INFORMATION PACKS
· The independent Carsberg Review in June warned that HIPs were the “worst of both worlds”, adding to red tape and costs, but not providing reliable information. It warned that they were duplicating costs, since “a substantial number of conveyancers ignore its existence and recommission searches on receiving instructions from their buyer client”.
RICS, Sir Bryan Carsberg’s Review of Residential Property, June 2008, p.42.
· In May, property firm MDA estimated that over half of all buyers' solicitors ignore the HIPs searches and commission their own “to maintain due diligence for their client” and make up for the deficiencies in the HIP – much of the search information is voluntary, meaning the seller has no financial incentive to pay to include potentially negative information about the property.
MDA Press Release, 22 May 2008.
· The Council of Mortgage Lenders requires mortgage lenders to ensure that a search is not more than six months old at completion. Hence, any search in a HIP practically has an extremely short shelf-life, requiring buyers to commission their own, even if they did trust the selective information in the HIP. In a falling market, when it is takes longer to sell a home, this is a particular problem.
· Analysis of the Government's own ‘area trials’ of the Packs, shows that a mere 8% of home buyers felt that HIPs had sped up the home buying process. Three-quarters of buyers felt that the Pack had no effect on their decision on what home to buy. The research by Ipsos-MORI reveals that buyers' solicitors felt that HIPs' “quality could not be trusted” and failed to offer buyers “sufficient protection”. This survey research was suppressed by embarrassed Government Ministers for months.
DCLG, Home Information Pack Area Trials - Research Report, March 2008.
· HIPs increase the cost of moving home, acting as a disincentive to sell. Ministers were warned by Oxford Economic Forecasting back in 2006 that HIPs would deter sellers and curtail the number of housing transactions, harming the economy (OEF, The Impact of Home Information Packs, 27 June 2006).