The Conservative party’s Home Buying Review has come in for much industry criticism since its October launch. It is easy to see why, with the broad Tory claims about the so-called ‘negative impact of Home Information Packs (HIPs)’ showing a very shaky understanding of current market conditions. The overly simplistic promises made by the Conservatives – to abolish HIPs and cut Stamp Duty – and their lack of credible, concrete policies mean that at the moment it is difficult to see the Home Buying Review as anything but political posturing.
Misleading claims
Claims that the implementation of HIPs has created a slowdown in the market are not only misleading, but also untrue. When HIPs for four-bedroom homes were implemented last August, estate agents reported that August’s sales were below that of the year before – this fact has been much trumpeted by the Conservatives. They did not, however, mention that this was the third month of a slowing trend in the traditionally fallow Summer season. Conservative predictions of a rush to put properties on the market before HIPs were introduced have also proven false. The market was quiet before HIPs were implemented; the market fluctuations are much bigger
than HIPs.
These claims serve to illustrate the Tory Home Buying Review’s lack of depth and focus on solid economic findings. The housing market, as we are all aware, is in a pressured state at the moment. This is due to a multitude of factors, including a lack of social housing to rent, the moratorium on council house building over the last decade, and an ‘investment’ culture surrounding property.
Despite all of these pressures, the Conservatives have been quick to blanket-blame any slowdown in the housing market on a £300 report.
Assumptions
The Conservatives still seem to be working under the assumption that the average HIP would cost around £1,000, when in reality the packs are being produced for around £300. Some entrepreneurial estate agents and intermediaries are offering the packs for free, at reduced prices, or even on a ‘buy now and pay later’ basis. The Tories complain that the charges incurred in a HIP will be passed on to the buyer; not recognising that the buyer has historically paid for all of the information provided in the pack. To gather all of the details on a property provided by a complete HIP has previously been far more expensive and protracted; a HIP streamlines and simplifies the entire process.
Conservative MP, Grant Shapps, asserts that the party appreciates the value of an Energy Performance Certificate (EPC), and that it would seek to keep this ‘important facet’ of a HIP. Well might the Tories back this point, as in fact it is European law for every property to be sold with an EPC. What the Home Buying Review does not do, as it tears HIPs apart, is to provide any kind of sustainable and practical alternative for the presentation of EPCs into the market. The Conservatives suggest that the EPC should be completed at the time of mortgage valuation, but this suggestion undermines the usefulness of the EPC even further – if a buyer cannot view a property’s energy efficiency rating before they pay money to have a valuation done, then the EPC is rendered impotent.
Of course, the Home Buying Review’s intentions to increase affordability measures for first-time buyers are shared by the entire industry. However, the pledge to abolish Stamp Duty at the £125,000 threshold will not necessarily do this – it will just cause a bulge in the market. House prices will simply adjust upwards, as the market tends to do. Stamp Duty must be introduced incrementally – it makes no sense that a buyer of a property of £250,000 would pay nothing, but spending £251,000 on a property could cost £7,500.
Political pawns
How many people in the industry would be made redundant by scrapping HIPs? The government may have made a mistake in promoting the idea that a domestic energy assessor (DEA) would immediately earn £70,000 a year – one of many mistakes that was made during the implementation of HIPs. Many DEAs that spent their savings on training and left their jobs were messed around for months waiting for full roll-out. To treat them as political pawns any further would be unthinkable. Were the Conservatives to simply ‘scrap HIPs’, tens of thousands of people would be left without income, and the loss of their training fees.
I am sceptical that a Conservative government would compensate these individuals for taking training that they did not sanction in the first place. It is, after all, not the politicians or television presenters that will foot the bill for this political posturing; it will be the industry.
