Scrapping HIPs will ‘help boost the housing market’
The Government believes that its decision to scrap Home Information Packs (HIPs) will encourage sellers back into the market and help the economy recover.
The decision was first announced in a joint policy document published by the Conservatives and the Liberal Democrats within days of the coalition being formed.
Ministers then moved quickly to suspend HIPs from May 21st to prevent any uncertainty that might disrupt the housing market. Primary legislation will be needed to abolish them permanently and that will be introduced in due course.
It means that HIPs, which have been widely criticised since they were introduced by the Labour Government three years ago, are no longer needed when selling a home. However, Energy Performance Certificates (EPC), which many people considered to be the most important component of HIPs, will be retained.
EPCs rate a property’s energy efficiency from A to G and are seen as an important part of the new Government’s policy to protect the environment. Sellers will still have to commission an EPC before marketing their property. The EPC must then be available within 28 days of the property being put up for sale.
Abolishing HIPs means the burden of paying for searches will now fall back on the buyer and so will add to their costs.
The new communities secretary, Eric Pickles, said: "The expensive and unnecessary Home Information Pack has increased the cost and hassle of selling homes and is stifling a fragile housing market.
"That is why I am taking emergency action to suspend the HIP, bringing down the cost of selling a home and removing unnecessary regulation from the home buying process.
"This action will encourage sellers back into the market, and help the market as a whole and the economy recover."
The Law Society welcomed the decision to scrap HIPs and is calling for further reform to improve the system for both buyers and sellers. It says it wants to develop new approaches that will improve efficiency, value and transparency.
The Office of Fair Trading (OFT) also say it’s time for a “shake-up” in the system of buying and selling houses in the UK.
It has just completed a study which found that the housing market is dominated by traditional estate agents with “weak competition between them on prices”.
The OFT report says that as “property prices rise during housing booms, so too do estate agents’ fees”. It calls for legislation to allow new entrants into the market with more competitive business models to provide better value for money for the consumer.
It also calls on the Government to consider additional regulation relating to the fees estate agents receive for referring consumers to providers of ancillary services such as mortgage advice and surveys.
Please contact us if you would like more information about the new developments or any aspect of buying and selling a home.
Published: 02 June 2010