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ESTATE AGENTS FIGHT FOR CONSUMERS’ INTERESTS.

Property professionals tell government “You’ve got it wrong” over plans for compulsory Home Information Packs.

Bychoice Estate agents of Sudbury have linked up with a powerful group of estate agents, joined by chartered surveyors and solicitors has written to Housing Minister, Yvette Cooper MP calling on her to drop plans for the introduction of Home Information Packs (HIPs) in June 2007. The group say HIPs will be “detrimental to the consumer; could dislocate the property market and will fail to significantly improve the home buying process.”

500 heads of firms representing over 1,650 offices in England and Wales are warning government that HIPs will cost home sellers and buyers over £600 million pounds every year in extra costs yet will fail to deal with the problems of delay, frustration and abortive cost in home buying.

The letter’s signatories include household names such as Knight Frank and Savills, but it is not only top firms that are up in arms. Hundreds of smaller firms and local agents from all over the country, dealing in all price ranges, have signed up too. Todd Lewis MNAEA commented “this will hundreds of pounds to the cost of moving and add further delay in marketing”
London estate agent, Nick Salmon, a fellow of the National Association of Estate Agents leads the group and says that HIPs will have very serious consequences for the public.

“The government is about to con the consumer that HIPs is a magic cure for the problems incurred in home buying whereas in fact it will be an expensive disaster for everyone except the commercial enterprises that have set up to cash in on this new, annual billion pound market. There will be a 30% reduction in the number of properties put up for sale each year as sellers are deterred by the £700 to £1000 cost of a Pack. That reduction in supply will cause massive house price inflation.”

“Buyers and sellers will be disappointed and angry to discover that the expensive HIP will leave them still facing most of the problems currently inherent in the property buying system including gazumping, gazundering, and chains. The government are forcing us over the edge of a precipice by pushing this through and it is the consumer who will pay. This is ‘Prescott’s Penalty’ on the housing market and it must be stopped.”

“We would all like to make home buying easier but the government is deaf to any constructive criticism levelled at HIPs. So now the property industry is coming together to protect the interests of the consumer and calls upon the Housing Minister to shelve the implementation.”

ENDS

Further Information:

Todd lewis MNAEA
Bychoice
6 King Street,
Sudbury
Suffolk
CO10 2EB
Tel 01787 468400 option 1

Nick Salmon FNAEA
Lurot Brand Ltd
37-41 Sussex Place
London W2 2TH

020 7479 1999
Mobile: 07831 805455

NOTES FOR EDITORS:

The Home Information Pack is being promoted by the Office of the Deputy Prime Minister.

COSTS
The Home Information Pack (formerly the Sellers’ Pack) will comprise a bundle of legal documentation (deeds; searches; lease; service charges etc) relating to the residential property coming on the market. It will also contain a mini-survey called a Home Condition Report and an Energy Efficiency Report, to comply with a directive from Brussels. It will cost on average £635. In metropolitan areas the likely average cost is over £1,000. The Home Condition Report will not give the buyer any indication of the cost of necessary repairs so further inspections will have to be commissioned at more expense.

DELAYS
Sellers will have to wait until the HIP is assembled before any marketing of the property can commence. The enforced delay of up to two weeks will be highly unpopular where a seller has found a property to buy and is in a hurry to find a buyer for their own.

FAILED TRANSACTIONS
The government say that 28% of all sales fall through between acceptance of offer and exchange of contracts and that most the failures are caused by an unexpected bad survey. However they lump together surveys and mortgage valuation inspections. ‘Surveys’ account for less than 4% of all failed sales. 9% of failures are caused by mortgage valuation inspections that say the property is unsuitable for lending the buyer the amount they want. The HIP will not contain a valuation and so will not deal with this issue. The Council of Mortgage Lenders has recently stated that separate valuation inspections will still be required after HIPs come in.

Most failed sales are caused by people changing their minds; sellers not finding a property to move to; or buyers changing their minds. The HIP will not deal with these issues.

ABORTIVE COSTS
The government say that consumers waste £350 million a year in abortive costs caused by failed transactions. The £350 million figure was arrived at in the government’s 1998 research document ‘Key Research into Easier Home Buying and Selling’ and was deduced by analysing less than 30 failed transactions. This is a statistically negligible number when set against the 1.3 million transactions taking place each year. Further, in 1998 most conveyancing solicitors charged for abortive costs and this practice has by and large ceased in the last 8 years. The abortive cost figure is therefore highly questionable.

NO SHELF LIFE

The HIP contents will have no shelf life and will quickly become out-of-date. Consumers will then have to pay for the documents to be updated. No prudent buyer will rely upon a survey that could have been carried out months before they have seen the property. The Law Society recently issued a statement saying that the Pack should carry a ‘health warning’ against buyers relying on its content without seeking professional advice.

CONSUMERS TO PAY EXTRA £600 MILLION EACH YEAR
The government say that HIPs are broadly ‘cost-neutral’ because most sellers are also buyers. But the HIP is imposing the obligation for every seller to have a Pack and the Home Condition Report contained in it will cost consumers an EXTRA £600 million every year.

Nick Salmon who leads the group that has written to the Minister is also head of the SPLINTA campaign, an anti-pack lobby group that has consistently criticised the HIP since 2001. Full details on SPLINTA can be found on their website: www.splintacampaign.co.uk



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