The housing market is in need of regeneration. This was the message delivered by each of the political parties in their recent conference speeches, which has been echoed on numerous occasions by trade bodies and housing associations.
Now, following a period of unease in the market as a result of the recent ‘credit crunch’, the roll out of Home Information Packs (HIPs), and industry wide calls for change in the house buying process, an independent review of the residential property sector is to take place.
Chaired by Sir Bryan Carsberg, former director-general at the Office of Fair Trading (OFT), the study will include consultations with all those affected by the residential market.
Review focus
Carsberg confirmed that the study would focus on HIPs and Energy Performance Certificates (EPCs), a move that has been largely welcomed by the market. Although HIPs were set up to improve the speed of transactions in the property buying process, the ‘watering down’ of the pack proposition has led many to question their existence.
Although the idea of EPCs has been embraced by the majority of the industry, many have suggested that they should be standalone reports rather than included in HIPs, and that the packs have little place in their current format.
The further back-tracking of the government, enforcing HIPs for four-bedroom and then three-bedroom properties, also did little to inspire confidence and the Carsberg review has indicated that particular attention would be given to HIPs and EPC strategies.
Carsberg said: “The frameworks surrounding HIPs and EPCs have introduced significant new regulatory and redress structures into relatively low risk aspects of the transaction, while leaving consumers in other parts of the sector, that may carry higher risks, apparently exposed.
This contrasts with the government’s approach to regulation elsewhere – particularly in the financial sector, where a more holistic approach has been adopted.”
He added that the study would highlight the pressure points within the residential market, with the need for innovation high on the agenda; innovation that, over recent months, has stagnated as a result of the non-conforming market turbulence.
Highlighting opportunity
As a result of the ‘credit crunch’, lenders have had to re-price their offerings or pull back from the non-conforming market altogether, which has led to a slowdown in product innovation.
The Carsberg report is seeking to highlight the opportunities still available within the residential market, for lenders, borrowers, the government and other organisations. The 12-week study will also look at the Royal Institution of Chartered Surveyors (RICS), and its role in the wider housing market.
The Independent Surveyors Association (ISA) welcomed the study and called for the consultation element to take a closer look at the holding of client money and the conduct of those operating in the market.
Although the Financial Services Authority has done much to improve the state of the market, a number of industry bodies, including the Association of Mortgage Intermediaries and the Council of Mortgage Lenders, admit that more could be done for those operating in the market. Indeed, Carsberg admitted that the role of the government would be scrutinised.
Organisations such as Which? and the OFT have also called for better regulation to aid consumers. The ISA urged RICS to look at its own structure. It suggested that the consultation should consider localised regulation and also the differences in perception between small and large firms.
“There is a perception by small firms that regulation is directed by members from larger firms to the advantage of the larger firms at the expense of the smaller,” David Hamilton, ISA director of professional standards, suggested.
It was also suggested that an overarching redress scheme should be set up for the property sector, while Steven Gould, director of regulation at RICS, called for greater cohesion between the government and the industry.
He said: “RICS can’t understand the thinking process of a government that only regulates certain parts of the property industry. We hope the upcoming review on residential property will bring some consistency to consumer protection in this sector.”
More to be done
Despite previous attempts by the government and others to improve market transparency, it is clear that more needs to be done. While this review is one of many to examine the market, the fact that the consultation will liase with all of those involved, in addition to a detailed inspection of the government’s role in the housing sector, will mean the results should help to push the market forward.
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