As ministers came under further pressure to ditch the controversial policy, the Royal Institution of Chartered Surveyors (RICS) said that regulations laid down this week will effectively kill the scheme anyway.
The rules state that a pack has to be commissioned when a house is put on the market, however, it does not have to be ready before contracts are exchanged. The loophole will be exploited by both vendors and estate agents, says the RICS.
]]> Read this articleIt pushes the asking price of a typical home in England and Wales up to £236,490, a leap of almost £31,000 from the same period a year ago.
Property experts said the traditional "Easter bounce" had combined with a continued shortage of supply and high demand from buyers in propelling prices upwards.
This has been aided by a one-off "feeding frenzy" as stock hungry estate agents persuade sellers to put their house on the market ahead of the introduction of Home Information Packs (HIPs) in June.
HIPs - introduced in a bid to slash the number of failed transactions - are likely to increase the cost of selling a house by around £300 to £500.
Miles Shipside, commercial director of Rightmove, said: "Sellers' asking prices provide one of the earliest indicators of which way the market is headed, and whilst a boost is to be expected around Easter, £8,000 in a month is the largest amount we have ever recorded."
Every region saw major increases, with the minimum jump being £3,000.
But the high pace of increase should not be interpreted as a boom, according to Rightmove.
Mr Shipside added: "As prices go higher, few buyers can afford to get on the ladder or trade up, and that will restrain ongoing increases in many parts of the country. More affluent areas will remain the exception though."
Government research published in January provides ample evidence that home buyers and sellers in England and Wales suffer with regards to cost and stress due to the currently broken, house transaction process, a process which up until now, industry has failed to rectify.
Myths dispelled
Any market impact due to the introduction of HIPs is likely to be minimal and short lived. There is general agreement across the industry that there may be a slight increase in listings in May this year as estate agents encourage homeowners to list their properties before they are required to have a HIP from the 1st June. This may generate a small overhang of property listings, although this is unlikely to be substantial due to the fall in properties coming on to market at the present time.
The suggestion that HIPs will deter sellers from entering the market because of cost was deemed as “frankly absurd”. The overall cost of a single transaction today runs to over £5,500, and a HIP with an EPC will increase this by less than £200. In fact, overall there is likely to be no cost increase to the homeowner as HIPs will help to drive out the cost of failed transactions from the market.
The EPC – the impact of a delay
Research carried out by the Association of Home Information Pack Providers (AHIPP) suggests that, if even just 10% of consumers opt to follow the energy saving guidelines contained in the packs, C02 emissions could be reduced by as much as 320,000 tonnes every year. Those calling for the delay in the introduction of Home Information Packs are effectively calling for a delay in the potential savings of over 26,000 tonnes of carbon emissions every month.
Industry stands ready to deliver
There will be more than sufficient capacity amongst HIP providers to meet the demands on the 1st June 2007. Industry has assured Government that there will be a sufficient number of Domestic Energy Assessors and Home Inspectors, ready to deliver EPCs and the projected voluntary demand for Home Condition Reports.
Mike Ockenden, Director General, Association of Home Information Pack Providers (AHIPP) concludes: “Our recent letter which was sent directly to Yvette Cooper offers unequivocal assurance from the industry that it is ready to offer packs as of the 1st June. Calls from those who wish to see delays, for whatever reasons or vested interests, should be ignored by the Minister, who should feel confident in delivering this consumer and environmental reform on the 1st June.”
]]>RICs spokesman Jeremy Leaf said the government was ignoring the concerns of stakeholders in the residential property sector. "These are not new concerns - we have been talking with the government about them for a long time, but it has not listened.
"As implementation plans have emerged over the last 18 months, our concerns around the cost to consumers and the market consequences of the HIP have grown markedly.
"The Department of Communities and Local Government's gold-plating of the Brussels' requirements on energy performance - now the only remaining element of the HIP - is the most recent example of an approach that defies any rational explanation.
"We totally support energy performance initiatives but we believe the Department's approach will actually increase carbon emissions not reduce them."
"In their current format, HIPs will prove to be ineffective and vastly impractical," said Charles Smailes, president of the National Association of Estate Agents. "I once again urge the government to work with the stakeholders and take note of our very real concerns."
The government reckons HIPs will speed up the home sales process but opponents say their introduction could reduce the choice of properties on the market by as much as 30%.
However, the Association of Home Information Pack Providers (AHIPP) claims it is ready to deliver HIPs "effectively and efficiently".
"Calls from those who wish to see delays should be ignored by ministers, who should feel confident in delivering this consumer and environmental reform on June 1," said Mike Ockenden, director-general of the Association of Home Information Pack Providers.
]]>After that date it will be illegal to market a property through an estate agent, internet site, newspaper advertisement or privately without offering the buyer a pack of information.
The packs, which are expected to cost sellers around £500, will include deeds, replies to standard property searches, and an energy performance certificate for the property
Mr Bradbury, of Thomas Morris estate agents in St Ives, said: "What is most shocking to me is that people think they're not happening.
"It is important that the public are speaking to estate agents who are taking the appropriate action to be ready for HIPs."
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]]>"In their current format, Hips will prove to be ineffective and vastly impractical," said Charles Smailes, president of the NAEA.
"After eight years, the Hip we are now left with will serve no useful purpose and certainly will not solve the problems in the home buying and selling process that Hips were supposed to address," commented Jeremy Leaf of Rics.
The Association of Home Information Pack Providers (Ahipp) has refuted the industry claims Hips are not up to scratch, dismissing the criticisms as "myths".
It says the impact on the housing market will be "minimal and short lived", and the rolling out of the Hips on June 1st will be done "effectively and efficiently".
"The suggestion that Hips will deter sellers from entering the market because of cost was deemed as 'frankly absurd'.
"The overall cost of a single transaction today runs to over £5,500, and a Hip with an EPC [energy performance certificate] will increase this by less than £200.
"In fact, overall there is likely to be no cost increase to the homeowner as HIPs will help to drive out the cost of failed transactions from the market."
A five-strong group of housing industry stakeholders had written to the government on March 2nd about their "increasing concerns" about Hips and the energy performance certificates that go with them.
As well as Rics and the NAEA, the Council of Mortgage Lenders (CML), the Law Society and Council of Licensed Conveyancers (CLC) all said Hips were not able to meet the governments' aims for housing market reforms.
"We believe that the current proposals will not deliver the required outcomes," the group stated in their letter.
They also questioned the decision to make the packs compulsory from June 1st.
"We do not think that June 1st is a sensible date to implement nor do we understand why the Department has selected that date against industry advice on market activity through the year.
"We think there is a risk to the housing market if the government presses on regardless of the serious concerns we have expressed."
The group were "extremely dismayed" that housing minister Yvette Cooper had not agreed to meet them and she did not "appear to acknowledge our genuine and serious concerns".
]]>In a letter to housing minister Yvette Cooper, the National Association of Estate Agents (NAEA), the Royal Institution of Chartered Surveyors (Rics), the Council of Mortgage Lenders (CML) and the Law Society called for a meeting to discuss their reservations.
When a meeting was refused, a second letter was sent to communities minister Ruth Kelly, the prime minister and the chancellor, outlining again the chief concerns surrounding "this seriously flawed and extremely rushed piece of legislation".
The government argues that Hips will add transparency to the market, cutting down on the number of property transactions that collapse. Presently, a quarter of all house purchases fail before contracts are exchanged, wasting as much as £1 million every day.
While the NAEA supports attempts to improve the existing system, president Charles Smailes believes that greater care is needed to ensure the next system is effective.
"It is clear that there is considerably more work to be done if Hips are to be a workable solution and there is simply not enough time for the issues to be resolved before June 1st. In their current format, Hips will prove to be ineffective and vastly impractical," he said.
A separate letter sent to the government by the Association of Home Information Pack Providers (AHIPP) has offered reassurance that the industry is ready to deliver Hips "effectively and efficiently". AHIPP argues that it is "frankly absurd" to suggest that sellers will be deterred from marketing their properties as a result of the introduction of Hips.
]]>Who could argue with all that?
Well plenty of people in the property industry did.
For opponents, HIPs were meddling, bureaucratic and potentially costly.
"The whole thing has been a mess from the start, ill conceived," says Trevor Kent, former head of the National Association of Estate Agents and anti-HIPs campaigner.
"Most sales collapse because someone pulls out of the chain, not because of any information that is set to be contained in the HIP."
Under fire
It was the requirement for homeowners to have a home condition report - a sort of half-way house (no pun intended) between a mortgage valuation and full structural survey - which drew most fire from critics.
The homebuyers survey was meant to flag up to potential buyers any structural problems with the property.
But if the property did not sell after six months the seller would have to go to the expense of having the home condition report done again.
Some estate agents feared would-be sellers would be put off placing their homes on the market.
Instead of speeding up the sale process, they argued the scheme could potentially slow things down as mortgage companies still insist on having their own valuations done.
Last July, the government did an about turn and dropped the requirement on sellers to have a home condition report in a HIP.
As usual with the property market interest groups had a big say.
"The idea of HIPs has been nine years in the making. It was in the labour manifesto of 1997 and the Queen's speech of 2001," says Mike Ockenden, director general of the Association of Home Information Pack Providers.
"The length of time and the fact we have had six housing ministers allowed opponents to gather their strength.
"Estate agents simply did not want anyone meddling in their market and mortgage lenders saw a threat to the fees that they charge buyers for valuing a property," he adds.
'HIP-lite'
The government's decision left many people wrong footed; not least those who were planning to train as home condition report inspectors.
Many commentators thought that without the key component of the home condition report HIPs would never see the light of day.
Nevertheless, what is in effect a "HIP-lite" is set to come into force this summer.
From 1 June house sellers will be required to have a HIP containing title deeds, local searches and an energy performance certificate.
The big idea of the certificate is that, at a glance, would-be buyers will be able to see the properties energy efficiency - a bit like when buying a fridge - and if there are any planning applications that may endanger their dream move.
Energy performance certificates kill two birds with one stone - providing information for homebuyers and ensuring the UK complies with an EU directive which comes into force in 2009.
Under the directive all homes have to be energy rated once every 10 years.
However, the cost of having a property's energy performance assessed has been estimated at anything from £300 to £600.
Enough assessors?
A specialist energy assessor will be required for the task, and according to Mr Kent there are not enough to go around.
"They will need 7,000 assessors to do the job but I have heard on the grapevine they have 1,000, not enough by a long chalk," he said.
However, these figures are hotly disputed by Mr Ockenden.
"Even at a period of high market activity there will only be a need for 3,000 to 4,000 inspectors," he says.
"Remember, Hips are being launched in June when the market is traditionally quiet, there will be enough inspectors to go round."
Searching question
There are also fears that the requirement to include a search in the HIP is flawed.
"Local authority searches are only going to remain relevant for a few weeks," Mr Kent said.
"No solicitor worth their salt is going to accept a three or four month old search supplied by the buyer. After all, they risk being sued if things go wrong," he added.
In addition, lenders told the BBC that they reserve the right to ask borrowers to conduct fresh searches if they feel it necessary.
Launch delayed?
With less than three months to launch, there is still some uncertainty over whether HIPS will go ahead.
The government has just finished a fresh consultation and pilot projects are running in six British cities: Newcastle, Southampton, Huddersfield, Northampton, Cambridge and Bath.
The overwhelming call from the industry is for the launch of HIPs to be delayed.
The Council of Mortgage Lenders (CML) and the Royal Institution of Chartered Surveyors are amongst the leading voices now calling for delay.
"There is not enough time to test to see if this system is rigorous enough to work," says Bernard Clarke, a CML spokesman.
If HIPs do bite the dust, proponents suggest this could be negative for house buyers.
"The house buying system as it stands does not work for buyers and sellers," Mr Ockenden says.
"One in 4 transactions fail between offer and completion and the length of time taken to complete is excessive and causes huge stress."
Whatever happens though the requirement on homes to be energy assessed has to happen - it is, after all, an EU directive.
"The government has said time and again that HIPs are going ahead. I suggest the industry accept this reality and get on with making it work," Mr Ockenden says.
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