HIPs Suspended
...Kitsons reaction to today's governmental announcement...
20th May 2010 -Today, the new coalition government announced the suspension of Home Information Packs (HIPs) in what it described as an attempt to stimulate the fragile housing market and reduce unnecessary bureaucracy.
Announcing the suspension jointly, new Communities Secretary Eric Pickles and Housing Minister Grant Shapps said the suspension would take effect from 21st May, with Legislation for the full abolition of HIPs to follow in the new parliament.
Matthew Scott Tucker, Property & Tax Advisor explains:
"Previously, vendors of residential properties were legally required to produce HIPs before marketing a house for sale. Introduced in 2007, HIPs meant that sellers had to provide an energy performance certificate, standard questionnaire, title information and basic searches - all of which increased the cost of the sale as well as added another layer of regulation to the housing market. It is believed that this had led to reluctance on the part of sellers to place their properties on the market, and arguably may have contributed to lower volumes of sales, prolonging a house price correction in the south-west market."
Despite the suspension of the HIPs, it is understood that sellers will still be required to provide an energy performance certificate to a prospective buyer, in order to maintain the government's continued commitment towards green issues. However, the seller need only have commissioned the certificate at the time of instruction to marketing agents.
Matthew continues:
"As a result of these announcements, the bulk of the property search disbursement costs will now revert to the buyer. Arguably this has some disadvantages, as the cost of obtaining the searches may be wasted if the purchaser, or seller, decides not to proceed with the transaction before contracts are exchanged. This obviously puts the buyer's up-front costs at risk. On the other hand, HIPs tended to become out of date if the property for sale remained on the market for any significant period - which meant that the purchaser had to renew and pay for old searches anyway."
"It may be time for the government to look more closely at the stage at which a binding purchase contract to comes into force. At the moment, a contract may take many weeks to conclude after an initial informal offer has been accepted, during which time either party has the opportunity to withdraw, potentially wasting the other's costs."