Jackson-Stops & Staff

Scheduled to start on 1st June 2007,
feedback from Jackson-Stops & Staff clients and contacts suggests that market reaction to mandatory Home Information Packs (HIPs) might be much stronger than the government anticipates. Talking to potential sellers in particular, two points stand out. First, general awareness of the coming changes remains very low. Second, when sellers do become aware of what they will have to do to legally market their property, most take exception and make it clear that, if they can avoid such measures by going to the market before the legislation comes into force, they will.

Despite this, our expectation is that the direct impact of HIPs on the upper market will be relatively muted. Though the packs will cost, in our view, at least £1,000 for a good country house and involve some investment of time, other factors influencing when someone decides to sell, say, a £750,000 home, will in most cases overwhelm such considerations. In the mainstream market, where the relative cost of a HIP will be larger and so-called speculative marketing is more common, the picture is likely to be very different. We believe sellers will indeed come to the market earlier in order to avoid the cost and delay of providing a HIP, causing a surge in supply in the spring of 2007. Given that spring always sees a sharp increase in newly marketed properties anyway, the effect of a ‘double surge’ could well be to create a glut, even before taking into account the views of, amongst others, the Council of Mortgage Lenders (CML) on how buyers might react.

Contents of the mandatory Home Information Pack

Terms of sale

Evidence of title

Replies to standard preliminary enquiries made on behalf of buyers

Copies of any planning, listed building and building regulations consents and approvals

For new properties, copies of warranties and guarantees

Any guarantees for work carried out on the property

Replies to local searches; and...

A Home Condition Report based on a professional survey of the property, including an energy efficiency assessment.

Also, for leasehold properties:

A copy of the lease

Most recent service charge accounts and receipts

Building insurance policy details and payment receipts

Regulations made by the landlord or
management company; and

Memorandum and articles of the landlord or management company.

Source: ODPM

Owners of mainstream price properties are more likely to be deterred by the cost of a HIP an so come to the market before June 2007.

In a report issued in February 2006, the CML expressed its concern that first time buyers and others wanting to benefit from
the information that HIPs provide might be tempted to hold back until they become available. This raises the prospect that buyers might be holding off just when sellers are flooding the market, only to then start looking in June 2007, when new sellers become scarce. Such a scenario would undoubtedly have a knock-on effect at all
levels of the market. Furthermore, those who doubt the potential of HIPs to affect the market in such a way might bear in mind the dramatic leap in transactions that took place during the ‘stamp duty holiday’ of 1991/2, during which the average financial incentive was about the same as the cost of a HIP (and well below it in real terms). To further complicate matters, the CML has also suggested, in an open submission to the Office of the Deputy Prime Minister, that the start date of 1st June 2007 will need to be reviewed “...if there is any slippage in the delivery of HIPs, which we think is likely...”

Our hope is that many of the current uncertainties will be ironed out over the coming months, enabling the obvious pros and cons of Home Information Packs to be seen by all, minimising the market impact of their introduction in the process. That said, if you do have the luxury of choice, it might be simpler to move this year, rather than next.

Top: Suffolk, £237,600 guide
Middle: Devon, £200,000 guide
Bottom: Gloucestershire, £189,950 guide