Following the Home Information Pack (HIP) regulations that were published this month, I personally welcome the introduction of the ‘long stop’ deadline, as it not only closes a loophole in the law, but will help ensure that a housing ‘bubble’ isn’t forced, prior to the introduction of HIPs.
The long-awaited government regulations announced that owners will be given a five month ‘transition period’ to sell their homes without a pack if they go on the market before June. However, if the property remains unsold by 31 October 2007, it will have to have a pack.
The legislation closes a loophole that at least one company had advertised that it was going to exploit, as previously any house placed on the market before 1 June 2007 would have been permanently exempt from the HIP legislation. However, this will put an end to opportunistic companies hoping to make money from prospective sellers, who as yet as unsure of the benefits of HIPs.
Uncertain times?
There are indeed few pieces of legislation that have gone out of their way to regulate an industry more so than the 2004 Housing Act and the introduction of HIPs has sent many reeling as its impact on the market is assessed. People within the industry fear it will lead to an uncertain time for the property market in the next few years, as they speculate there will be a rush to sell a property before the introduction of HIPs, which will be followed by a glut in activity immediately after June 2007. The ‘long stop’ deadline will certainly help put an end to sellers rushing to the housing market prior to the deadline.
However, I believe companies that thought they could manipulate the loophole to their advantage were misguided, as post-June 2007, I believe that sellers without a pack will struggle to sell their homes.
Properties without HIPs will stick out like sore thumbs, be viewed with suspicion and consequently left on the shelf. Any home without a HIP, which will contain local authority searches, environmental searches and a Home Condition Report (HCR), on the market after June next year will be at a distinct disadvantage against properties that do have a HIP.
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Vendors run the risk of being unable to sell their house quickly or not at all. Market forces rather than legislation will make certain properties will be marketed with a pack, as most sellers will realise the benefits and purchase a pack or they face selling a ‘second rate’ home next to those with a HIP in place.
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First-time buyers (FTBs), who are in a particularly advantageous position, are unlikely to opt for a property that does not have a pack, because they will get for free a HCR, the searches and other information which they would normally have had to pay for. And homeowners selling without a pack could find themselves paying out searches if they, in turn, buy a pack-less property.
Educating the public
With the regulation details announced this month, I have no doubt that HIPs will become mandatory in June next year and those in the industry who are not ready will suffer. With less than a year to go, now is the time to educate the general public about the consumer benefits of the pack as the majority of people still do not know what HIPs are about and the benefits they offer.
The introduction of HIPs has certainly left some professionals in the industry reeling. However, I can’t help thinking this was never a case of ‘it isn’t broke, so don’t fix it’.
Who is prepared to claim the existing process is just, when the current system leads to millions of pounds being wasted when sales fall through as the truth about a property emerges? Buyers and sellers with more information upfront, will be able to make a better informed and faster decision, as HIPs will highlight any problems with the property upfront. The level of transparency will help reduce the number of failed transactions which could save buyers and sellers thousands of pounds.
