By now everyone involved in the mortgage market will be well aware of the much-discussed proposals for Home Information Packs (HIPs). The debate continues to rage around whether they can be introduced on time, with all the component elements currently specified or, in some cases, even at all.
In Scotland, the proposals around HIPs will not apply – though there are specific Scottish proposals that have some similarities to the HIP that will be required for all properties marketed in England & Wales from 1 June 2007. At AMI, we will shortly be publishing a set of briefing notes for members operating in the Scottish market – or who wish to gain a better understanding of its differences. As with all things, access to the AMI briefing notes are available free of charge to AMI members and can be downloaded from our website at the usual address.
Today’s article takes a tour of some of the key points but, for reasons of space, they not all are included here – though they are discussed at length in the briefing notes.
Some background to the issues may be helpful for those unfamiliar with the market.
The Scottish Executive established the Housing Improvement Taskforce in 2000, to address problems with housing quality in the private sector in Scotland. The taskforce issued its final report in March 2003, which recommended that the Executive should organise a voluntary market-led pilot of a single survey instructed by the vendor, rather than each potential purchaser instructing his own.
Single survey
The single survey pilot was introduced in July 2004, and operated in four areas of Scotland. It was expected that over a period of 8-10 months, 1200 surveys would take place. However, it is my understanding that nine months into the pilot, only 74 surveys had been commissioned.
In March 2005, the intention to introduce a compulsory single survey was announced. A steering group has been set up to oversee this, although, as yet, no firm timescale has been set for implementation.
PIP
The taskforce report also recommended a pilot of a Purchaser’s Information Pack (PIP), through a voluntary market-led scheme, however to date, no pilot has taken place. The Housing ( Scotland) Bill was finalised on 5 January 2006. This provides Scottish Ministers with the power to require information about a property to be made available to prospective purchasers. It is likely that secondary legislation will follow sometime towards the end of this year, introducing such requirements.
The single survey will be instructed by the vendor, with the cost being refunded to the vendor by the final purchaser. It will contain a similar level of information to a homebuyer’s report. The single survey is designed to achieve three benefits:
* to make enhanced information regarding the property’s condition available to potential buyers
* to remove the need for multiple surveys and valuations instructed by potential buyers
* to avoid vendors placing the property on the market at an artificially low initial price, in the hope of generating more interest in the property
Under the current house-buying process, the purchaser receives some information regarding the property following acceptance of the offer. The taskforce report proposed the following documents be included in the PIP:
* an explanation of the buying and selling process
* a single survey
* an energy efficiency report
* copies of any planning, listed building consent and building warrants relevant to work carried out on the property
* copy of the Land Certificate
* a summary of the relevant property management arrangements
* a coal authority report if applicable
The PIP will be required to be made available prior to the property being placed on the market. In an argument that closely resembles that made by those who are advocates of HIPs, the taskforce report argues that this will make the process faster, more transparent and consumer friendly.
There are key issues that affect when, how and if the PIP will be introduced and these are detailed in the new briefing notes. Some of them are easily recognisable from our own debates around HIPs, others are naturally, related to particular issues in Scotland.
With our market changing so quickly, there’s never been a more pressing need to keep up with the latest information and amendments to legislation. Sometimes these can seem remote from the day-to-day issues of running of mortgage broking business – but they are not because they have a direct impact on how business is done. Firms can do this themselves, with extra expense, or rely on AMI to guide them. With 80 per cent of mortgage brokers now members, if you’re not, are you sure there isn’t something you may have missed?
